Airbus's post-pandemic recovery tested as engine faults trigger massive recall

  • Pratt & Whitney is recalling 1,200 of its engines due to a metal fault, potentially impacting Airbus's delivery plans.
  • Airbus still targets to deliver 720 commercial aircraft this year, despite the recall's uncertain long-term effects.
  • The engine recall could disrupt airlines' summer schedules, with the potential for ticket price adjustments.

PARIS — Amid the aviation industry's post-pandemic revival, Airbus confronts unforeseen challenges as Pratt & Whitney, the engine manufacturer, recalls 1,200 of its geared-turbofan engines due to a detected metal fault. While this safety concern doesn't directly compromise the aircraft, it creates significant logistical complications for Airbus's delivery timetables.

European budget airline Wizz Air foresees potential scheduling disruptions as the recall includes 12 of its engines. Predictions indicate a decrease in capacity growth during the busy summer season, which could potentially lead to increased ticket prices, offsetting any profit losses. Other airlines are also grappling with the uncertainty of how these recalibrations might affect their summer plans.

Airbus's net income experienced a 20% drop in the first half of the year, settling at roughly $1.69 billion. This decline has been linked to higher factory preparation costs associated with ramping up production rates. However, it's not all grim; sales have seen an 11% boost, fueled primarily by the heightened delivery of new commercial jets.

Despite these setbacks, Airbus remains steadfast in its commitment. CEO Guillaume Faury announced the company's ambition to meet its 720 aircraft delivery target for the current year. However, he acknowledged the strain the recall places on their future projections, particularly in 2024 and 2025. He commented on the extensive work involved, from establishing maintenance facilities to the intricate process of uninstalling and inspecting the engines.

While airlines have been keen on placing orders after the pandemic-induced lull, the A320 by Airbus has emerged as a preferred choice. On the contrary, the Boeing 737 MAX, Airbus's main competitor, has seen a decline in interest due to past mishaps. This shift has propelled Airbus to a dominant position in the profitable single-aisle market segment. Yet, production challenges, partly from the recent engine recall, have stymied Airbus's efforts to fully capitalize on this lead.

The company has set an ambitious goal, aiming to escalate A320 deliveries to 75 a month by 2026, a significant jump from the scaled-back rate of about 40 during the pandemic's height. Meanwhile, Boeing aspires to hike its MAX production to 38 per month this year, with sights set on 50 by 2026.

Supply of engines is emerging as a bottleneck for Airbus. Both Pratt & Whitney and CFM International are struggling to keep pace with Airbus's aggressive production goals. Pratt's recent engine model, although groundbreaking in fuel efficiency terms, has faced performance issues, especially in drier regions like India and the Middle East. This led to engines being taken off for frequent maintenance, an issue separate from the recent recall. Such hurdles have even caused significant clients, like India’s Indigo Airlines, to reconsider their engine choices for massive orders.

Wrapping up, Pratt's recalibration journey commences with inspecting an initial set of 200 engines, aiming to complete the remaining by the close of next year.