By Robert Wall
LONDON-- Airbus Group NV's shares fell Wednesday after it said
it is likely to further cut production of its A330 long-range jet
and that it faces a delay in delivering the first A350 jetliner to
Qatar Airways.
Airbus this year announced plans to cut production next year of
the A330 to nine aircraft a month from 10 jets amid weakening
demand for the widebody aircraft. Output will fall further in 2016,
Chief Executive Tom Enders told investors in London.
Even as the airline confirmed its earnings targets for the year,
Chief Financial Officer Harald Wilhelm said inventory levels would
rise next year amid the production ramp up for the new A350 jet and
that cash flow could be negative. Cash flow should reach break-even
this year, Airbus reaffirmed.
The A330 is an important contributor to Airbus profits and the
company's cashflow is a closely watched metric.
Mr. Enders said the decision to curtail production would affect
the company's sales and profit. The company isn't certain, yet, how
far production may fall, he said.
Airbus plans to replace the jet with an upgraded model, called
the A330neo, with delivery from 2017.
The Toulouse-based plane maker also said its handover of the
first A350 to Qatar Airways planned for this weekend has been
delayed in the face of a commitment to deliver the jet by
year-end.
"We are working very closely with Qatar Airways to meet our
common goal to deliver their first A350 XWB very soon," Airbus
spokesman Stefan Schaffrath said.
Airbus shares plunged more than 10% in Paris trading after the
announcements.
RMC Capital analyst Robert Stallard said: "Investors had hoped
to see steady 2016 profit growth." Instead, Airbus has warned that
the period could see an earnings drag from the output cut, pricing
pressure, and cash management concerns, he said.
Qatar Airways, which has ordered 80 of the new long-range jets,
said the "ceremonial transfer of title has been postponed until
further notice." Neither the airline or plane maker gave a reason
for the delay.
Qatar Airways earlier this year held off taking delivery of its
first A380 superjumbo from Airbus after its Chief Executive Akbar
Al Baker took issue with some of the wallpaper and flooring on the
plane. Delivery was delayed by several months.
Mr. Enders said "the first two aircraft are ready for delivery
on the tarmac."
The airline plans to begin commercial services on the route
between its Doha hub and Frankfurt next month. "With the imminent
launch of the new Airbus A350 program, both entities are committed
to introducing the A350 very soon," the carrier said.
Airbus is spending about $15 billion to develop the new
long-range jet aimed at competing with rival Boeing Co.'s 787
Dreamliner and larger 777 widebody.
Airbus and Boeing have struggled to sell some plane types
despite bulging order books that stretch out to the end of the
decade. Boeing said Tuesday it would cut output of its 747 jumbo
that has been selling poorly, while the Chicago-based plane maker
projected strong demand for jetliner financing to fund airlines'
appetite for new planes.
Mr. Enders also said Airbus wouldn't be rushed into making a
decision on whether to upgrade the A380 super-jumbo. "We need to
have a convincing customer base," he said, as well as a strong
business case.
Emirates Airline, the largest buyer of the double-decker
passenger jet, has been urging Airbus to upgrade the plane with new
engines.
Airbus also is studying production plans for its A320
single-aisle jet amid strong demand. "The market is clearly there"
to boost output beyond the 46 aircraft-per-month build rate planned
in 2016, Mr. Enders said.
Write to Robert Wall at robert.wall@wsj.com
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