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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Going taking the spotlight for all the wrong reason. Airbus

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Speaker 2: cracking on and delivering planes to its customers. But the

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Speaker 2: Q one numbers little lights on where I think analysts

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Speaker 2: were expecting them to be. So I think investors this

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Speaker 2: evening here in Europe are wondering why costs are so

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Speaker 2: highed Airbus right now? Why is cash.

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Speaker 1: Flow so light?

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Speaker 2: Why is this company carrying the kind of levels of

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Speaker 2: inventory that nobody thought they really would be having to

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Speaker 2: do so at this point. So let's try and find

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Speaker 2: out some of the answers to those questions. Guiel four

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Speaker 2: E is the CEO of Airbus and joins us right now. Guillem,

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Speaker 2: welcome to the program. Thanks for taking the time to

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Speaker 2: join us. Let's talk a little bit about where we

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Speaker 2: are with these Q one numbers. As I say, cash

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Speaker 2: flow looks a little light. We're wondering why you're carrying

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Speaker 2: so much inventory. We're wondering why costs are so high.

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Speaker 2: Are these one offs? Are the just associated with the

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Speaker 2: first quarter or there is going to be numbers that

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Speaker 2: are going to linger into the last part of the year.

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Speaker 1: Hello a guy, good to see you. We've indeed released

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Speaker 1: our Q one numbers. We've delivered one hundred and forty

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Speaker 1: two commercial airplanes in the quarter, which is the twelve

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Speaker 1: percent higher than last year. So in terms of production deliveries,

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Speaker 1: we feel we're on track and that's very important. The

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Speaker 1: quarter is indeed a bit soft, but it's again on

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Speaker 1: track with our expectations to keep our guidance unchanged for

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Speaker 1: the year, and we're building need a lot of inventory.

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Speaker 1: We're operating in complex and difficult supply chain environments and

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Speaker 1: we want to make sure that we have the resources

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Speaker 1: that we have the in the hardware, the equipment and

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Speaker 1: everything we need to keep ramping up in a year

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Speaker 1: that weill that we'll be backloaded a bit like what

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Speaker 1: it was last year.

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Speaker 2: Okay, so we're gonna see more aircraft than ever reason

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Speaker 2: in the back half of the year. There's a line

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Speaker 2: geon that stands out from the press statement and it's

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Speaker 2: right at the top, and I think it's worth repeating

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Speaker 2: to the audience. We delivered first quarter twenty twenty four

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Speaker 2: results against the backdrop of an operating environment that shows

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Speaker 2: no signs, no signs of improvements. Geopolitical and supply chain

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Speaker 2: tensions continue. Gil Why are we still dealing Why are

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Speaker 2: you still dealing with supply chain issues? Many other industries

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Speaker 2: face these kinds of problems during the pandemic, but they

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Speaker 2: are long in the rear view mirror. Why is aerospace

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Speaker 2: still still struggling with these issues? Why are they so

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Speaker 2: hard to fix? Why is the supply chain not being

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Speaker 2: sorted out more quickly?

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Speaker 1: Yeah, guy, into a very important question. Actually, we are

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Speaker 1: in the long term industry. We employ people which are

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Speaker 1: highly skilled and qualified, and a significant number of the

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Speaker 1: workforce of the people left the companies in the supply

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Speaker 1: chain at abbuts with other companies during the pandemic. So

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Speaker 1: we are re hiring people, but it takes a lot

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Speaker 1: of time to onboard them, to train them, to give

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Speaker 1: them the qualifications, and to have them at full speed.

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Speaker 1: And this is a bit across the supply chain. But

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Speaker 1: there is another reason why we are in this difficult

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Speaker 1: environment and we will remain in a challenged supply environment,

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Speaker 1: is because we're ramping up. We're ramping up at full

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Speaker 1: steam at the maximum speed we reasonly we can, and

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Speaker 1: this will continue until we reach the rate seventy five

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Speaker 1: on the eight three twenty, which is expected in twenty

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Speaker 1: twenty six, and you see that now we decide to

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Speaker 1: continue to ramp up on the three fifty beyond the

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Speaker 1: rate ten that was already announced up to rate twelve

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Speaker 1: in twenty twenty eight. So we are victims sort of

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Speaker 1: of our own success. We have a lot of demand,

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Speaker 1: the higher than the supply, and this will continue to

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Speaker 1: stretch the supply chain for some else.

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Speaker 2: The supply chain, as you say, is stretched. You are

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Speaker 2: having to support the supply chain in many different ways,

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Speaker 2: putting staff into their factory, supplying or helping out with financing,

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Speaker 2: or at least telling the banks how the kind of

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Speaker 2: the order book is going to look. Gilm. You getting

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Speaker 2: to the point though, with the supply chain where you're

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Speaker 2: going to have to start taking bits of it over.

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Speaker 2: You're gonna have to start taking equity stakes in order

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Speaker 2: to make sure that you can deliver on that ramp

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Speaker 2: up in production that you're talking about and supply the

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Speaker 2: aircraft that you have promised.

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Speaker 1: Actually, we can't on the financial institutions to do the

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Speaker 1: financing to play their role. We are the end customer.

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Speaker 1: We are the OEM, and the support with providing to

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Speaker 1: our suppliers is mostly in the form of technical support,

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Speaker 1: sending our own teams on site, understanding the the rump

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Speaker 1: up plans are secured if not working together to adapt

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Speaker 1: and anticipate as much as we can. And we have

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Speaker 1: some suppliers which are in real difficulties that have to

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Speaker 1: do transfer of work and in that case it's a

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Speaker 1: lot about anticipating, making sure that the execution is okay,

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Speaker 1: that the quality for the new site goes as expected.

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Speaker 1: So I think we are more attributing people's skill, know

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Speaker 1: how competencies that money to the supply.

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Speaker 2: Do you think though, that you are going to have

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Speaker 2: to go further than that? Could you be buying some

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Speaker 2: of these companies to make sure that your supply chain

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Speaker 2: is secure.

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Speaker 1: There are a few cases where we have to take

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Speaker 1: this kind of decisions. We like to be making those

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Speaker 1: decisions when there is not only a defensive approach to

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Speaker 1: a difficult situation to manage, but also a strategic intent,

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Speaker 1: a strategic relevance to the case. And you might remember

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Speaker 1: that we acquired two ors ago together with Saffran a

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Speaker 1: company called Uberndugan because that was making a lot of

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Speaker 1: sense for us strategically on those special alloys for the

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Speaker 1: long term future. There are other ways of dealing with

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Speaker 1: the situation with national associations that go deep into the

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Speaker 1: supply chain, with mediation, and with brokering relationship between suppliers

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Speaker 1: and financial institutions. As I said earlier, that's mostly what

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Speaker 1: we do.

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Speaker 2: Okay, we've seen what happens when the supply chain can

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Speaker 2: cause problems. Let's talk a little bit about what's happening

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Speaker 2: with Spirit right now. Boeing Dave Calhoun obviously in the

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Speaker 2: process of retaking over that business in which it are.

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Speaker 2: He says though that he will not be held hostage

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Speaker 2: by the air Bus portion of Spirits. He wants that

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Speaker 2: deal to go ahead and go ahead quickly. He sounds

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Speaker 2: like he's saying that he basically wants that whole transaction

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Speaker 2: to go hairpace. Are you comfortable with going hispace?

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Speaker 1: Well, I fully respect what Boeing is trying to achieve

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Speaker 1: with Spirits. As you know, we are at Airbus with

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Speaker 1: a very vast majority of our aerostructures of our fuselage

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Speaker 1: coming from make from core business and companies that we own,

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Speaker 1: so we respect what they try to achieve by buying

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Speaker 1: back Spirit. Now, there are some important work packages of

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Speaker 1: Airbus planes that are with spirits, mainly the eight three

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Speaker 1: fifty section fifteen and the eight to twenty wins, and

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Speaker 1: we want just to be clear on the fact that

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Speaker 1: we don't want those work packages to be with our

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Speaker 1: main and direct competitor, So we need to find a

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Speaker 1: way forward that works for both parties. But we don't

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Speaker 1: want to take anybody hostage. We just want to do

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Speaker 1: what is right for Ebbus.

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Speaker 2: When do you think therefore you'll be in a position

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Speaker 2: to make all that happen. Airbus obviously needs this to work,

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Speaker 2: but does it need it to work quickly?

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Speaker 1: Against the backdrop of this change of situation with the

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Speaker 1: recent announcement that Boeing wants to acquire a spirit. We

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Speaker 1: have started to work. We have engaged with Spirit, but

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Speaker 1: I can't be precise on the time it will take.

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Speaker 1: We have just started the discussion. We are engaging in

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Speaker 1: a very constructive and active manner obviously, but it's premature

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Speaker 1: to give a timeline.

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Speaker 2: Okay, So when Dave Calholeen talks about maybe the end

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Speaker 2: of this course, that doesn't sound familiar.

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Speaker 1: To you, Well, there are different ways of dealing with

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Speaker 1: the situation. As I said, we are very constructive and

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Speaker 1: we don't want to take anybody hostage. But we want

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Speaker 1: our interest fights and the discussion with spirits to be

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Speaker 1: smooth and efficient, and we're engaging for that.

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Speaker 2: He said earlier this week, Gail, that you are turning

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Speaker 2: customers away when it comes to the narrow bodies. You

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Speaker 2: are sold out many years ahead. How many customers are

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Speaker 2: you turning away at the moment? How many people are

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Speaker 2: coming to you and saying, can you sell us some airplanes?

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Speaker 2: The guys are talking about this just a moment ago.

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Speaker 2: You can't just pick up the phone and kind of

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Speaker 2: order an air bus. There's a long timeline here. But

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Speaker 2: how many customers are ringing you up saying if you've

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Speaker 2: got any slots? How many people are you having to

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Speaker 2: turn away right now?

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Speaker 1: Well, I don't like the idea of turning away. We're

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Speaker 1: always welcoming customers reaching out to us. Now. The facts

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Speaker 1: are what they are. We have no available slot for

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Speaker 1: the YE three twenty family now before twenty thirty, and

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Speaker 1: that's the reality. So we have to face that reality.

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Speaker 1: And there is indeed in the market or shortage of playing.

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Speaker 1: There is more demand than supply. We're training to do

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Speaker 1: our very very best, but we are with an adult book.

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Speaker 1: That is what it is. It's a very big one

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Speaker 1: and for new customers coming, they have to understand, they

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Speaker 1: have to respect the fact that available slots now for

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Speaker 1: the eighth twenty family are in the next decade.

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Speaker 2: How far into the next how far out assuming you

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Speaker 2: get to your seventy five per month level, how far

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Speaker 2: out are you sold out?

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Speaker 1: We have, as I said, available slots in twenty thirty onwards.

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Speaker 2: Okay, twenty thirty onwards. Let's talk about the white body market.

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Speaker 2: The white body market has come back and looks pretty healthy.

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Speaker 2: Right now. You've announced that you are, as we were

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Speaker 2: discussing earlier, going to be ramping up your production of

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Speaker 2: the A three fifty, but it's not going to be

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Speaker 2: until twenty twenty eight. Indigo from India earlier today announcing

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Speaker 2: a fairly substantial order. You say that the supply chain

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Speaker 2: is in a position to make that ramp. Why are

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Speaker 2: you waiting as long as you are? Why twenty twenty

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Speaker 2: eight Is that something that you could potentially do earlier.

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Speaker 1: No, that's not something we can do earlier, And actually

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Speaker 1: that's quite early. You might remember that we were at

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Speaker 1: rate four during COVID and we have started to ramp

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Speaker 1: up from rate four to rate five this year and

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Speaker 1: to the rate ten in twenty twenty six, so that's

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Speaker 1: a quite steep ramp up. Already we have assessed the

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Speaker 1: readiness of the supply chain to go beyond the rate

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Speaker 1: ten and we've come with a successful outcome of this

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Speaker 1: assessment and with the possibility to go to rate twelve

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Speaker 1: by twenty twenty eight. So that is indeed a steep

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Speaker 1: ramp up, and that is freeing up some spots between

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Speaker 1: twenty six and twenty eight and obviously more capacity beyond

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Speaker 1: twenty eight.

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Speaker 2: Gil, great pleasure to catch up. Thanks you for spending

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Speaker 2: some time with us on the program The Saving Game

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Speaker 2: four Ree the CEO of Airbus