Airbus Hit With New Supply-Chain Hurdle in Race With Boeing

Pratt & Whitney Engines from Company website.
Pratt & Whitney Engines from Company website.

Summary

  • Engine maker Pratt to recall 1,200 engines over 12 months just as Airbus is trying to cement its supremacy in narrow-body jets

LONDON—Airbus faces another high hurdle in delivering its bestselling jets as it races to solidify a commanding lead over rival Boeing.

Airbus has been working to rapidly increase output of its bestselling A320 family of aircraft as it seeks to deliver on a backlog that now stretches out into the early 2030s. Many of those planes are powered by a certain type of Pratt & Whitney engine, which the engine maker said earlier this week will need to be recalled and inspected.

Pratt said it would need to inspect 1,200 of its geared-turbofan engines after it discovered a fault in the metal that could lead to cracking. Both Pratt and Airbus have said the issue doesn’t impact the safety of the aircraft.

The recall could further slow Airbus’ plans for higher production rates of the jet. With the affected engines being taken out of service, Pratt will need to hold on to more of its new engines for a spare-engine pool.

It keeps those reserves for planes needing engine maintenance. That in turn means it can provide fewer engines needed by Airbus for new aircraft deliveries.

Analysts at Citi said at worst the company could fall 50 aircraft short of its goal to deliver 720 aircraft this year. Airbus has said Pratt’s recall doesn’t affect engines currently being delivered. It reports earnings later Wednesday.

The recall could also affect airlines’ busy summer schedule. European discount airline Wizz Air said Wednesday that 12 of its engines are included in the first set of recalls and will lead to a “mid-single digit" reduction in capacity growth over the summer. The capacity reduction could lead to higher ticket prices which in turn should offset any impact on profit, the company said.

After the no-fly days of the pandemic, airlines are back in the air and ordering lots of new planes. Airbus’ A320 has been a popular option. Many airlines, meanwhile, had previously canceled orders for the A320’s main rival, the Boeing’s 737 MAX, after two fatal crashes and a long grounding.

That has supercharged Airbus’ share in the single-aisle market, the industry’s most profitable segment. But production challenges have been holding Airbus back from fully capitalizing on its advantage.

Airbus has repeatedly pushed back efforts to reach an ambitious production goal: delivering 75 of its A320 aircraft a month in 2026. At the onset of the pandemic it had cut that rate back to about 40-a-month.

Boeing is currently aiming to increase monthly production of the MAX to 38 this year.

Airbus’ delays in ramping up production have led to monthslong waits for its airline and lessor customers. Frustrated Airbus’ sales teams, meanwhile, can’t promise plane deliveries for the rest of this decade amid Airbus’ long and growing backlog of orders.

“For Airbus, we see this as adding further stress to the production ramp," Chloe Lemarie, an analyst at Jefferies, wrote in a note.

One of the biggest production holdups is the supply of engines. Both Pratt & Whitney, a unit of RTX, formerly Raytheon, and CFM International, a General Electric joint venture, have struggled to meet Airbus’ aggressive production ambitions.

Pratt’s geared turbofan engine is billed as a new technology that delivers a step-change in fuel efficiency. But the new design has been underperforming, particularly in dry and arid conditions, most notably in India and the Middle East. That has required Pratt to take engines off for maintenance earlier and more regularly than expected—a separate problem to the more recent recall.

Pratt’s problems have already led to fallout with some of its biggest customers. India’s Indigo Airlines, has previously switched from Pratt to GE’s rival engine. The airline hasn’t yet announced an engine option for the 500 jet mega-order it placed last month for the Airbus model.

Pratt on Tuesday said that the recall would begin with the inspection of 200 engines. The remaining 1,000 turbines will be inspected by the end of next year.

Write to Benjamin Katz at ben.katz@wsj.com

Catch all the Technology News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
more

MINT SPECIALS