Bad News For Airbus

Airbus' continued struggles with the A220 are no closer to reaching their end point after fresh developments. Exclusive reporting from Reuters following comments from industry sources says that Airbus will push back production targets because of the delayed assembly of A220 jets. Those aircraft that are seeing assembly delays come from jets part of the production schedule being reportedly taken out of planning schedules. Across North America, there have been reports of shortages of parts such as engines and other components. Shock horror there. While industry sources also point interestingly to production line errors that have further complicated matters for Airbus. The planemaker hoping to reach a target of producing 14 of the regional A220 aircraft by next year. This very much determined as a key production metric for the program's stability and to eventually achieve profitability, but that is looking like an increasingly larger challenge. With more supply chain disruptions, sources indicate that Airbus would likely only hit the monthly target of 14 units by the end of 2026, ideally right before December. If there's one thing we've learned across now almost the last 6 years is that it's very difficult to stick to timeframes. And this timeframe which is based on current forecasting leaves one thing, that is a very limited window to make this happen. Analysts argue that with such pressure on supply chains in the United States and Canada, the timeframe is increasingly tight and growing tighter by the day. Therefore, there's no room for error. As I'm sure you are able to understand, this could then very easily balloon out to 2027 even with the most minor hiccup, which would be not out of the realm of possibilities. For many reasons, Airbus's increased production of its A220 is critical and the struggles to reach 14 units per month have become noticeable as the year and months have progressed. While Airbus took over the A220 formerly known as the C-Series in 2018 after lengthy discussions and it has sold very well, the plane has continued to make losses and has been a bit of a problem child for the business. Time and time again, Airbus has reaffirmed that a key way to make the A220 profitable is to increase the monthly output rate and thereby reduce the costs of assembling the aircraft. Additionally, with heightened interest from customers of a prospective A220-500, this would be the highest capacity model in the program if launched. The launch of this jet is directly tied to production increases and profitability across the program. Airbus absolutely not ruling out moving ahead with an A220-500 model at some point in the future as airlines such as Air Baltic and Breeze Airways have called for the aircraft. But it has also been open about the need to ensure profitability before anything else. The planemaker simply cannot justify further investment in the program without stability. Achieving that has been strenuous. In August, the company's CEO was non-committal about the prospects of a stretch and said that with new endeavors, decisions can be made at the last moment and many studies simply do not get off the ground. The hardest hurdle is the last one, getting the all clear to move ahead with it. The A220-500 as it has been known is in essence a stretch. It's a capacity jump and offers airlines such as Breeze Airways, which believes it could have a fleet of as many as 400 aircraft, not need to make the jump to the A320neo family. This US carrier believing it's not ideal for its operations, ultimately feeling it's another aircraft type that would just add unnecessary complexity. So, they turn to the A220-500 as that answer. You can see there's a lot riding on these production increases. So, for them to continue being deferred and simply not pan out as intended, puts hiccups not just on Airbalts, but its customers, the possibility of launching new models and so forth. I'm keen to hear your take though down below in the comments. Thanks for watching, take care, do be safe and I'll see you tomorrow for your next industry recap.