Airbus is cutting it fine
Record breaking December needed to meet guidance
I highlighted last month that Airbus had its work cut out to meet its 2016 delivery target of 670 aircraft, needing to deliver 154 in two months. Well the latest statistics show 61 aircraft were delivered in November, leaving 94 to be delivered in December. I previously said that “I am not generally predisposed to bet against Airbus when it comes to them achieving delivery targets” and I think I still feel the same as their track record is strong, but it feels as though the risk is increasing of Airbus not meeting FY16 guidance.
December is always Airbus’ busiest month for deliveries. Since 2008 it has shipped between 10-12% of its total annual deliveries in December. In order to meet guidance for 2016 it will have to deliver 14%. Given that there are 21 working days in the month, Airbus needs to be pushing 4.5 aircraft out the hangar door every day. The company has said that the delivery schedule remains feasible and that they have a large number of aircraft in the Final Assembly Line (FAL) and on the Flightline ready for delivery. If Airbus pulls this off then December 2016 will be record breaking for the company.
The extreme back-end loading of 2016 deliveries raises the question of why does this continue to happen year after year? And why is 2016 more extreme than previous years? It seems to me there are three theories. Firstly customers could be dragging their heels accepting aircraft, due to issues with the performance, finish quality or customer financing. Secondly Airbus’ supply chain is possibly struggling to keep up with the ramp up and so certain parts are delaying what are otherwise finished aircraft. Thirdly, perhaps the company is employing an element of bravado to keep the industry and market guessing. In truth it is likely that a combination of all three factors is at play here. None of these in isolation is particularly sinister, although customer financing issues would carry financial risk for Airbus. We expect the company to be questioned about these issues during the New Year Press conference in January.
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