European plane maker Airbus SE faces another year of scrambling to meet full-year delivery targets after falling behind in the first three months because of problems with a key engine supplier.
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Airbus expects to build a record 720 planes this year including 200 of its new A320neo single-aisle jet. But it only delivered 26 of those A320neo airliners in the first three months, fewer than expected, Chief Financial Officer Harald Wilhelm told reporters Thursday.
A rush to the finish line is nothing new for Airbus, the world's No. 2 plane maker behind Boeing. The Toulouse, France-based plane maker was forced to crank out a record number of planes in December to meet its full-year target after it fell behind earlier. Airbus was hoping this year would be less of a wild ride, even if it projected in January most plane deliveries would fall in the second half.
Pratt & Whitney, a unit of United Technologies Corp., has had to replace faulty engines, called the geared turbofan, on some A320neo planes already delivered to airline customers, which has reduced the number of turbines available for new airliners. United Technologies Wednesday said 26 of 70 geared turbofans delivered last quarter were used as spares.
Mr. Wilhelm called it a "tough quarter" for the Pratt engine and that the demonstrated performance was "not satisfactory." Airbus is sticking to its A320neo plane delivery target for now, he said, but still is awaiting proof from Pratt that the engine issue will be fixed as promised.
United Technologies Chief Executive Gregory Hayes said fixes to the engine were either approved or in development and that additional tests were being performed to identify any other potential faults early. He acknowledged the reliability issue was painful for customers. The company stuck to its target of building 350 to 400 geared turbofan engines this year, also for other plane makers.
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Airbus also gets A320neo engines from a joint venture of General Electric Co. and France's Safran SA. Each engine supplier is expected to power about half the planes due for delivery this year.
Airbus reported a sharp drop in first-quarter profit, hobbled by delivery of less profitable planes and higher costs on new models even as its net result benefited from the sale of some defense activities. The company's closely watched earnings before interest and taxes stripping out some one-time items fell 52% to EUR240 million ($261.7 million). Airbus delivered 136 planes in the first three months of 2017, 11 more than a year earlier, but those included more newer-model airliners that tend to be less profitable than versions that have been in production for longer.
Sales rose 7% to EUR12.99 billion on a rise in plane deliveries.
Net profit rose 52%, boosted by a EUR560 million gain from the divestment of Airbus's defense electronics unit. The sale will lower full-year adjusted earnings per share by around EUR0.14, it said.
Airbus CEO Tom Enders said the company was on track to meet full-year targets.
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(END) Dow Jones Newswires
April 27, 2017 03:11 ET (07:11 GMT)