Airbus Trims Targets, Takes Space Charge as Supply Chain Woes Bite

In a significant development for the aerospace industry, Airbus, the European multinational aerospace corporation, has announced that it is cutting key targets and taking a hefty charge in its Space business. The company has lowered its 2024 total delivery target to around 770 airplanes from the previously anticipated 800. Additionally, Airbus has delayed its target of reaching a production rate of 75 narrow-body airplanes per month to 2027 from the earlier goal of 2026.

The decision to cut targets comes as the company grapples with renewed constraints in its supply chain, making the original targets unrealistic. This move is a reflection of the challenges facing the aerospace industry, particularly in the wake of the global pandemic and its impact on supply chains and demand. In addition to the delivery and production targets, Airbus has also announced that it will book a charge of 900 million euros for its satellite business. 

This charge is related to "certain telecommunications, navigation, and observation space programs," according to the company. The decision to take this charge reflects the commercial and technical challenges that Airbus has identified in these programs. Despite these setbacks, Airbus remains optimistic about its overall performance. The company has revised its guidance for FY24, forecasting an EBIT Adjusted of €5.5 billion and a Free Cash Flow before customer financing of €3.5 billion.

The impact of these changes on the broader aerospace industry and Airbus's competitors, such as Boeing, remains to be seen. However, it is clear that the aerospace sector continues to face significant challenges in the post-pandemic era. As the industry navigates these challenges, it will be crucial for companies like Airbus to adapt and innovate. The company's ability to manage risks effectively and learn from setbacks will be key to its long-term success. As the aerospace landscape continues to evolve, Airbus's strategic decisions and their outcomes will be closely watched by industry observers and stakeholders alike.