Airbus Hit With New Supply-Chain Hurdle in Race With Boeing

livemint.com:

LONDON—Airbus faces another high hurdle in delivering its bestselling jets as it races to solidify a commanding lead over rival Boeing. Airbus has been working to rapidly increase output of its bestselling A320 family of aircraft as it seeks to deliver on a backlog that now stretches out into the early 2030s. Many of those planes are powered by a certain type of Pratt & Whitney engine, which the engine maker said earlier this week will need to be recalled and inspected.

Pratt said it would need to inspect 1,200 of its geared-turbofan engines after it discovered a fault in the metal that could lead to cracking. Both Pratt and Airbus have said the issue doesn’t impact the safety of the aircraft. The recall could further slow Airbus’ plans for higher production rates of the jet.

With the affected engines being taken out of service, Pratt will need to hold on to more of its new engines for a spare-engine pool. It keeps those reserves for planes needing engine maintenance. That in turn means it can provide fewer engines needed by Airbus for new aircraft deliveries.

Analysts at Citi said at worst the company could fall 50 aircraft short of its goal to deliver 720 aircraft this year. Airbus has said Pratt’s recall doesn’t affect engines currently being delivered. It reports earnings later Wednesday.

The recall could also affect airlines’ busy summer schedule. European discount airline Wizz Air said Wednesday that 12 of its engines are included in the first set of recalls and will lead to a “mid-single digit" reduction in capacity growth over the summer. The capacity reduction could lead to higher ticket prices which in turn should offset any impact on profit, the company said.