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Airbus Confident in Supplier’s Plans to Fix Engine Delays

September 22, 2016

Operations Inside The JetBlue Airways Corp. Terminal Ahead Of Earnings FiguresOperations Inside The JetBlue Airways Corp. Terminal Ahead Of Earnings Figures
A JetBlue plane.Photo by Patrick T. Fallon—Bloomberg via Getty Images

The commercial aircraft unit of Airbus is confident in plans from engine maker Pratt & Whitney to solve production delays for its next-generation single-aisle planes, the A320neo, chief operating officer for customers John Leahy said Thursday.

“It is disappointing the situation we find ourselves in. But it’s a good engine for everything we can see. They have some production difficulties that they’re working their way through,” Leahy told reporters in New York after a gathering of aviation executives and analysts known as the Wings Club.

United Technologies (UTX) said earlier this month it would deliver 150 of its Pratt & Whitney engines this year, missing its target of 200 and pressuring cash flow.

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Separately, Leahy dismissed doubts over demand for the world’s largest passenger plane, the double-decker A380, after Airbus lowered production targets in July.

“Every 15 years, the industry is doubling in size,” Leahy said. “So here you have London Heathrow, totally congested. JFK, congested. Los Angeles, congested. Hong Kong, congested. How are we going to double the traffic flows in the next 15 years if we don’t use larger aircraft like the A380?”

Despite that longer-term optimism, Airbus (EADSY) now is lacking in new orders for the A380. In 2018, the company plans to cut the A380’s delivery target to 12 a year from 27 in 2015 and about half what is projected for this year, to prevent a glut of unsold planes.

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Singapore Airlines said this month it will not extend a lease that expires next year for one of its A380s. Leahy said the move was not surprising because Singapore tends to fly newer aircraft and has A380s still in the queue for delivery. The airline was the first to put A380s into service and currently has 19 in its fleet.