Undelivered Airbus jets jam parking spaces, hurt cash flow
By Tim Hepher and Regis Duvignau
PARIS (Reuters) - A growing backlog of undelivered Airbus passenger jets, stranded outside their factories due to supplier problems, is putting pressure on the planemaker's cash generation for the start of the year, industry sources and analysts said.
After a slow first quarter in deliveries, parking space at Toulouse airport in France, and at Hamburg in Germany, is increasingly congested due to undelivered jets, according to industry sources and recent Reuters photographs.
The number of A320neo passenger jets standing without engines and waiting for delivery, due to technical problems and delays at engine maker Pratt & Whitney, has risen to more than two dozen, two industry sources said.
After taking into account price discounts and deposits already received, that could tie up around one billion euros ($1.14 billion) in cash, a senior aviation finance source said, asking not to be identified.
Airbus A350 deliveries also continue to be delayed due to shortages of cabin equipment, the sources said. Reuters observed at least six parked A350s apparently waiting for delivery in Toulouse. One industry analyst, asking not to be named, said the figure could be higher based on a study of jet serial numbers.
Airbus declined to comment on specific airplanes but said it remained confident of meeting its published delivery targets.
Analysts said underlying output on the company's assembly lines did not appear to be disrupted.
Deliveries of the A350, which competes with the Boeing 787, are being hampered by continued production bottlenecks in cabin equipment including seats and toilets, adding further pressure to the planemaker's quarterly cash position, the sources said.
These include delayed shipments from France's Zodiac Aerospace, which has issued a series of profit warnings, but also involve other unidentified suppliers, a source close to the planemaker said.
Zodiac Aerospace declined comment ahead of quarterly earnings on Wednesday.
Airbus delivered four A350s in the first quarter, compared with a target for the whole year of more than 50.
In total Airbus targets more than 650 deliveries in 2016.
The carbon-composite A350 is the planemaker's most ambitious development, financed partly by the best-selling medium-haul A320 series, which generates most of the company's cash.
CASH OUTFLOW EXPECTED
So far, the A350 does not appear to face problems on the same scale as 787 delivery delays that strained the finances of rival Boeing earlier this decade.
But analysts expect Airbus Group to report a larger than usual seasonal outflow of cash in the first quarter due to commercial jet delays and problems with the A400M army plane.
UK-based Agency Partners predicts a cash drain of 3.2 billion euros in the first quarter, compared with an outflow of 1.1 billion euros a year earlier, and a 23 percent drop in operating profit. Airbus Group is due to report on April 28.
U.S. engine maker Pratt & Whitney says it is fixing hardware and software problems on early versions of its new engines for the A320neo and expects to resolve the issue by the summer.
Late last week, however, Reuters observed around a dozen A320neos waiting for engines in Toulouse, some in crammed parking lots.
On Tuesday, sources said at least as many aircraft were awaiting delivery in Hamburg, where the jet family is also assembled.
The delays come as Airbus prepares to deliver its first A320-family jet from a new U.S. plant in Alabama next week.
(Editing by Susan Thomas and Alexander Smith)
