Airbus Cash Flow Hurt as Parking Spaces get Jammed by Undelivered Airbus Jets

Cash generation for the start of the year for Airbus is being put under pressure by a growing backlog of Airbus undelivered passengers jets, stranded outside their factories due to supplier problems, reports Reuters quoting industry sources and analysts.

There is increasing congestion due to undelivered jets in the parking space at Toulouse airport in France, and at Hamburg in Germany after a slow first quarter in deliveries, claims Reuters based on photographic evidence dating some time back.

Technical problems and delays at engine maker Pratt & Whitney has resulted in the number of A320neo passenger jets standing without engines and waiting for delivery rise to more than two dozen, two industry sources told Reuters.

A senior aviation finance source said that this situation could tie up around one billion euros ($1.14 billion) in cash.

Sources also said that shortages of cabin equipment have also caused Airbus A350 deliveries to be continued to be delayed. Reuters observed at least six parked A350s apparently waiting for delivery in Toulouse.

Airbus declined to comment on specific airplanes but said it remained confident of meeting its published delivery targets, reports the news agency.

Recurring and continued production bottlenecks in cabin equipment including seats and toilets have resulted in the hampering of deliveries of the A350, which competes with the Boeing 787, the sources said.

A source close to the planemaker said that these delayed supplies include delayed shipments from France’s Zodiac Aerospace, which has issued a series of profit warnings, but also involve other unidentified suppliers.

Zodiac Aerospace declined comment ahead of quarterly earnings on Wednesday.

Compared with a target for the whole year of more than 50, Airbus delivered four A350s in the first quarter.

In total Airbus targets more than 650 deliveries in 2016.

Most of the company’s cash is generated by the carbon-composite A350 is the planemaker’s most ambitious development and which is financed partly by the best-selling medium-haul A320 series.

Due to commercial jet delays and problems with the A400M army plane, analysts expect Airbus Group to report a larger than usual seasonal outflow of cash in the first quarter.

An upgraded version of A320 entered service this year. Due to teething problems with engines, which Pratt & Whitney expects to resolve by the summer, there has been delay in the deliveries of the revamped A320neo.

Reuters reported that seeing around a dozen A320neos, some in crammed parking lots, waiting for engines late last week. Sources said that Hamburg, where the jet family is also assembled, there are a similar number of aircraft waiting for delivery as of Tuesday.

The delays come as Airbus prepares to deliver its first A320-family jet from a new U.S. plant in Alabama next week.

(Adapted from Reuters)

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