Chapter 1: What is the main topic discussed in this episode?
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You certainly ask interesting questions.
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News. Let's talk about Airbus. Shares just barely finishing the day in the green. That's after they reported third quarter adjusted EBIT that beat estimates. But it's not all good news. The CEO also sounding the warning bell that Airbus deliveries remain very backloaded. I'm pleased to say that that CEO joins us now. His name is Guillaume Faury. He is the CEO of Airbus.
Guillaume, great to have you with us. Let's talk about this target. You say that you're sticking to the target to deliver 820 aircraft to customers this year. You've only delivered about 507 through September. So what gives you the confidence that you'll be able to hit those numbers come the end of 2025?
And the fact that we're fully prepared, that we're already close to end of October. And the fact that one of the reasons for being backloaded is the lack of availability of engines for our single aisle. We were with 60 gliders yesterday.
Mid-year, we closed the third quarter in down to 32 gliders, and we think we're going to have the engines we need to deliver those planes before the end of the year. So it's indeed a lot of work in the last quarter of the year, but we think we have the ingredients, we're prepared to come close to the 820 deliveries we have guided for.
And would you say that the engines are still your biggest bottleneck at this moment? You mentioned the gliders, for example. I know you had to park some ready made planes because of that engine issue. So is that the biggest issue, would you say, when it comes to the state of your supply chain?
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Chapter 2: What are Airbus's expectations for aircraft deliveries in 2025?
We were with a very difficult situation at mid-year. Things are improving. We think we're going to reach our numbers, as I said before, for 2025. But we will have persisting tensions on availability of engine in 26 and maybe in 27 as well.
I am curious, Guillaume. I mean, we've heard from a lot of the major airline executives that have raised some concerns here about the backlog.
In addition to just the general problems in getting those engines onto those gliders, there's now, at least here in the United States, the issue of a government shutdown that, of course, effectively brings to a halt or at least a slowdown in any sort of certification here. Have you had to address that at all so far?
Not to a major extent. We are not significantly exposed to this situation. Again, the main challenges we have are really on the delivery of aircraft, not on the certification of them. We have recently certified, I mean, last year, the XLR that's behind us. And the XLR, the A321 XLR is a great airplane. It is now in service. That's behind us.
And the next certification moving forward will be for the A350 freighter. But that's not today a short-term bottleneck. We have to start flying with the aircraft. That will be the case in 2026. So certification is for later. We plan entry into service in 2027. So we hope that in the meantime, we will be able to restart or to have appropriate and efficient certification work with the FAA.
The primary certification authority is EASA, and we are currently working with EASA for preparing the certification file of the 350 freighter.
With regards to your operations here in the United States, whether it has to do with the certification, whether it has to do with the shutdown or the broader issues, what are the deliveries, the timeline for deliveries coming out of the plant in Alabama?
Alabama is one of our production sites. You know that for the A320 family, we are now relying on Mobil in the US, in Alabama, in Toulouse and Hamburg in Europe, and on Tianjin in China. For Mobil, we have recently inaugurated the second final assembly line for the A320. So we are clearly ramping up proportionally more in the U.S. than in the rest of the world.
And we have an A220 final assembly line. So Mobile, Alabama will soon become the fourth largest production site of commercial aircraft in the world. And it's a nervous site in the U.S.
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Chapter 3: What challenges is Airbus facing with engine availability?
But basically, we're ramping up A320 globally towards the Raid 75. And Mobile, Alabama will take the chair.
And you mentioned the A220. When it comes to your production target, you actually lowered that as well. And I would love a little bit more detail on what led to that decision and when we might see some of these supply chain challenges that you're dealing with be unsnarled when it comes specifically to that body.
I'd like to highlight the fact that we are not reducing production. We are reducing the speed of ramp-up on the A220. We are actually doubling production roughly within two years, from 24 to 26. And we have decided to go from what we were anticipating for next year, that was rate 14, to actually rate 12. So moving up from rate 6, a few quarters ago, a few years ago, to the RAID 12.
We are on that trajectory. Things are moving forward quite well in 2025. But RAID 12 is a challenging target. We have to integrate as well the work packages from Spirit on the A220, the WINS and other smaller work packages. So we have a lot on our plate. We're also introducing progressively engine improvements to improve the durability of the engine for our customers.
So a lot of work on the A220, very fast and steep ramp up. And we think that's good enough in terms of quantity of work and challenges moving from 25 to 26.
I have to ask you about the defense business. Obviously, that was a bit of a boost for you in the most recent period. Guillaume, is this a long-term story or a one-off?
It's a mid-term story for sure, maybe a long-term one as well. You know that Europe has relied on the United States for a very long time when it comes to security of Europe and we are now in different times. Europe is really ramping up in its ability to secure itself, to defend itself and
which means significant increase in defense budgets for the main countries of Europe and the NATO members in Europe. So from that perspective, it's a mid-term or even long-term perspective. And on the short term, it comes with orders for more equipment, for development of new ones.
And indeed, we have a tailwind when it comes to our numbers and our growth coming from defense against that backdrop.
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Chapter 4: How is Airbus managing its supply chain bottlenecks?
All right, Guillaume, really appreciate you taking time for us. The CEO of Airbus there, Guillaume Foray, on the heels of the earnings just out most recently, but a big focus right now on potential delivery delays.
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