Airbus SE and Safran SA expect supply-chain disruptions to continue at least into 2023, complicating output for some of Europe’s biggest aerospace companies just as airlines are clamoring for new jets.
Airbus chief executive officer Guillaume Faury, speaking with France Inter radio on April 26, said component snarls could last until the end of 2024 or even into 2025. Safran, which provides engines for the European planemaker’s A320 family of single-aisle jets, said separately that securing a steady flow of parts and materials remains its number one issue, and that glitches might extend into 2024. Shares of both companies fell.
“The mismatch between demand and supply is the big problem we’re handling today,” Faury said. Airplane parts such as seats “are missing, equipment is missing, people are missing, semiconductors are missing, raw materials are missing.” Global logistics are also still a problem, he said, adding that the industry will have had “5 or 6 years of crisis in terms of production capacity” following the COVID-19 health crisis.
The component shortages have forced Airbus to slow an ambitious output increase for the cash-cow A320. Sanctions tied to Russia’s invasion of Ukraine have also made it harder for Airbus, Boeing Co. and their subcontractors to secure raw materials like titanium, driving up prices. China’s COVID Zero policies further disrupted parts flows, and post-pandemic labor shortages have affected suppliers.
Safran is struggling to access materials including steel, aluminum, titanium and even resins, according to CEO Olivier Andries.
“We fight every day, every day, every day” to obtain raw materials and help suppliers do the same, Andries said. Shortages are impacting forge and foundry activities for all of Safran’s products and the situation on semiconductor supplies also remains “tense,” he said.
Airbus shares fell as much as 2.6% and were down 1.4% at 10:52 a.m. in Paris, April 26. Safran was off 2.1% after dropping as much as 3.6%.
Both CEOs flagged an added difficulty as their vendors struggle to hire employees that can help ramp up production. Attracting new and diverse talent will be at the forefront of CEOs’ minds at the air show due to take place in Le Bourget, close to Paris, in June, Faury said.
“There are three million pieces in an airplane and, if only one is missing, the airplane can’t take off,” Faury said. “This is the big challenge ahead of us and this is why we are trying the best we can to support our suppliers.”
General Electric Co., Safran’s partner building LEAP engines used by Airbus and also on Boeing 737 narrow-bodies, said April 25 that it’s seeing progress with suppliers.
“But it’s still challenging,” CEO Larry Culp said on a conference call. “I don’t want to in any way suggest otherwise.”
Raytheon Technologies, whose Pratt & Whitney unit makes the competing GTF engine, reported stabilization in some areas. The company continues “to experience challenges in castings, forgings, raw materials and machining,” operating chief Chris Calio said on a conference call.
Still, “we are lockstep with Airbus on their demand for the year,” Calio said. “That will continue to increase as we move into the back half of the year.”
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