Wednesday, December 30, 2015

Airbus Delays Delivery of First A320neo Until 2016: Airbus and Pratt & Whitney have to address issues with documentation for the aircraft, the Toulouse-based plane maker said

The Wall Street Journal
December  30, 2015 9:06 a.m. ET

LONDON—Airbus Group SE on Wednesday said it wouldn’t meet a pledge to deliver the first of its new A320neo aircraft by the end of this year.

Airbus had long promised to hand over the first of the upgraded single-aisle planes before the end of the year, but issues with the aircraft has pushed the deadline back to the new year.

Deutsche Lufthansa AG was poised to receive the first A320neo (new engine option), but on Wednesday the German airline said the delay until early 2016 was agreed late Tuesday owing to greater technical complexity in the acceptance process for the plane.

Airbus said it decided to delay the handover in agreement with Lufthansa and engine maker Pratt & Whitney, a unit of United Technologies Corp. Airbus and Pratt & Whitney have to address issues with documentation for the aircraft, the Toulouse-based plane maker said, to ensure a “service-ready A320neo from Day 1.”

The A320neo will now be delivered “within the next weeks,” Airbus said.

Delaying the first delivery will have a negligible financial impact on Airbus, though it marks a black eye for the company’s ability to hand over planes on time. It faces huge pressure to build A320neo planes at a rapid pace after it garnered orders of more than 4,400 for the planes through November.

One of the biggest challenges Airbus faces in 2016 is the “huge ramp up” in building A320 planes, Chief Executive Tom Enders said recently.

Airlines have flocked to the A320neo, which Airbus said will be 15% more fuel efficient than existing narrowbodies. The plane features new engines, which is designed to consume less fuel, and other enhancements.

Strong demand drove Airbus to decide this year to boost output of single-aisle planes. The aircraft maker plans to build at least 60 A320-type planes a month from mid-2019. It currently builds on average 42 planes a month.

Airbus’s A320neo has outsold Boeing’s 737 Max, a similar upgrade the Chicago-based company is making to its narrowbody jet. Boeing plans to deliver the first 737 Max aircraft in 2017.

Nevertheless, Airbus has encountered some setbacks in delivering its plane. Indigo, or InterGlobe Aviation Ltd, earlier this month said it was notified by Airbus that its first A320neo plane wouldn’t arrive as promised on December 30. The airline said Airbus cited unspecified “industrial reasons” for the delay.

Qatar Airways, which was due to be the first A320neo operator, stepped back from that role while Pratt & Whitney worked to address some shortcoming with the engine.

Pratt & Whitney has faced challenges in developing the new engine. Airbus had to halt flight trials of the A320neo earlier this year as the engine maker fixed a parts problem. Pratt & Whitney also faced other obstacles in developing the engine that has become the backbone of its business to power airliners.

“The engine is ready to enter service and is meeting or exceeding all performance requirements,” Pratt & Whitney said, while acknowledging documentation items remained to be “closed out.”

Both the European Aviation Safety Agency and the U.S. Federal Aviation Administration last month granted so-called type certification for A320neo planes powered by PW1100G engines from Pratt & Whitney. Those approvals clear the way for plane deliveries.

Airbus also is working with a joint venture with General Electric Co. and France’s Safran SA on an alternative engine for the A320neo family of jetliners. Planes powered by that engine are due for first customer deliveries next year.

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