Airbus faces pressure over supplies from Spirit Aero, sources say

By Tim Hepher and Allison Lampert

PARIS/MONTREAL (Reuters) - Airbus is facing concerns over supplies of key structural parts for its largest and smallest jets from Spirit AeroSystems (NYSE:SPR ), part of a cascade of supply chain problems challenging growth in deliveries, several industry sources said.

The problems mean airlines face a growing prospect of delays in deliveries of some jets including the long-haul A350 next year given long lead times for parts, two of the sources said, prompting the planemaker to deploy extra resources to keep them moving.

Data issued on Wednesday showed Airbus needs to boost total deliveries by 11% in the fourth quarter to reach a target of 770 jets for the full year. Some analysts have lowered their forecasts towards 750 or 760 planes.

Spirit mainly supplies Boeing (NYSE:BA ), which is in the process of buying back its former subsidiary. But Airbus also relies on the company for major parts for its A350 twin-aisle and A220 single-aisle jets.

The sources, who were not authorised to speak publicly about the matter, cited concerns over the production of fuselage parts built in Spirit's Kinston plant in North Carolina. Separately, Airbus has intervened to speed up the supply of wings for the smaller A220 by airlifting parts from the supplier's factory in Belfast, Northern Ireland, they said.

In July, Airbus agreed to take on the two loss-making plants as Boeing moved to buy back the rest of Spirit to stem a growing industrial crisis following the mid-air blowout of a door plug.

Spirit said its production remained on track. "We are delivering Airbus product based on our customer's schedule,” spokesperson Joe Buccino said.

An industry source familiar with the matter said recent problems include production of composite stringer clips that are used to attach supporting parts. Buccino said this activity had "not impacted deliveries to Airbus' final production line".

Airbus has also put employees into the Kinston plant to monitor performance, the sources said. Buccino said the presence of Airbus staff was part of a longstanding joint improvement program and did not indicate new or urgent production issues.

Airbus said Spirit was on its radar along with other suppliers.

"We have indicated multiple times that we are facing challenges with the supply chain, particularly in aerostructures, and Spirit is part of that," a spokesperson said. Airbus is working hard to meet targets and is boosting its presence at suppliers "where it is most needed", the spokesperson added.

SPECIAL FLIGHTS

In the latest sign of stress to supply chains, reports have emerged of rare movements of one of the world's largest cargo planes, an Antonov An-124, which sources said had been used to ferry wings for the A220 by air rather than sea.

Quebec media TVA Nouvelles said the plane flew on Sept. 14 to Quebec City where it attracted crowds on its way to a plant outside Montreal, where the Canadian-designed A220 is built.

According to planefinder.net the plane has been tracked flying from Belfast, where Spirit constructs A220 wings, to Montreal three times since mid-September.

A source at the A220 factory said the costly freighter had been deployed to help keep production moving. It was not immediately clear how many trips had been made in total.

Spirit confirmed an unspecified number of flights, citing "a substantial increase" in A220 production. An Airbus spokesperson said the measure was designed to anticipate production needs.



Airbus Chief Financial Officer Thomas Toepfer told analysts in July that it was facing supply problems, mainly with engines and landing gear, but analysts have voiced concerns that problems are rippling to other critical parts of the supply chain.

"Our greatest concern here is that what Airbus needs to do is not just fix one supplier situation, but multiple ones," Bernstein analysts said.

Source: Investing.com