WEBVTT - Airbus CEO Guillaume Faury Talks Earnings, Delivery Delays 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.800 --> 0:00:10.840 Let's talk about Airbus shares just barely finishing the day 0:00:10.880 --> 0:00:13.960 in the green. That's after they reported third quarter adjusted 0:00:14.040 --> 0:00:17.280 EVA that beat estimates. But it's not all good news. 0:00:17.360 --> 0:00:21.480 The CEO also sounding the warning bell that Airbus deliveries 0:00:21.600 --> 0:00:24.919 remain very backloaded. I'm pleased to say that that CEO 0:00:25.079 --> 0:00:27.800 joins us now. His name is Gium Fory. He is 0:00:27.840 --> 0:00:31.120 the CEO of Airbus Gium. Great to have you with us. 0:00:31.200 --> 0:00:33.840 Let's talk about this target. You say that you're sticking 0:00:33.880 --> 0:00:36.960 to the target to deliver eight hundred and twenty aircraft 0:00:37.000 --> 0:00:40.040 to customers this year. You've only delivered about five hundred 0:00:40.040 --> 0:00:41.800 and seven through September. 0:00:41.880 --> 0:00:43.080 So what gives you the. 0:00:43.040 --> 0:00:45.400 Confidence that you'll be able to hit those numbers come 0:00:45.400 --> 0:00:46.600 the end of twenty twenty five? 0:00:47.800 --> 0:00:49.919 And the fact that we are fully prepared and that 0:00:50.000 --> 0:00:55.120 we're already close to end of October, and the fact 0:00:55.160 --> 0:00:59.240 that the one of the reasons for being backloaded is 0:00:59.320 --> 0:01:03.680 the likeability of engines for our single aisle. We were 0:01:03.800 --> 0:01:09.320 with sixty gliders media we closed the third quarter in 0:01:09.520 --> 0:01:11.920 down to thirty two gliders, and we think we're going 0:01:12.000 --> 0:01:14.639 to have the engines. We need to deliver those planes 0:01:14.680 --> 0:01:17.360 before the end of the year, so it's indeed a 0:01:17.400 --> 0:01:19.760 lot of work in the last quarter of the year. 0:01:20.040 --> 0:01:21.600 But we think we have the ingredients. 0:01:21.640 --> 0:01:25.679 We're prepared to come close to the eightal and twenty deliveries. 0:01:26.160 --> 0:01:26.960 We have guided form. 0:01:27.640 --> 0:01:30.080 And would you say that the engines are still your 0:01:30.080 --> 0:01:33.600 biggest bottleneck at this moment? You mentioned the gliders for example. 0:01:33.640 --> 0:01:36.000 I know you had to park some ready made planes 0:01:36.040 --> 0:01:39.679 because of that engine issue, So is that the biggest issue? 0:01:39.720 --> 0:01:41.280 Would you say when it comes to the state of 0:01:41.319 --> 0:01:42.039 your supply chain. 0:01:43.760 --> 0:01:46.280 The majority of what we're delivering are the A three 0:01:46.360 --> 0:01:50.440 twenty familiar aircraft, and indeed for those aircraft, the main 0:01:50.440 --> 0:01:54.840 bottleneck is the engine. Is the engine availability from both 0:01:55.200 --> 0:01:58.120 CFM and PRAT. We were with a very difficult situation 0:01:58.240 --> 0:02:01.600 at MEDIAIR. Things are improving. We think we're going to 0:02:01.680 --> 0:02:04.559 reach our numbers, as I said before for twenty twenty five, 0:02:04.840 --> 0:02:08.359 but we will have persisting tensions on availability of engine 0:02:08.440 --> 0:02:10.760 in twenty six and maybe in twenty seven as well. 0:02:11.280 --> 0:02:13.320 I am curious though, Gil. I mean, we've heard from 0:02:13.360 --> 0:02:16.680 a lot of the major airline executives that have raised 0:02:16.680 --> 0:02:19.800 some concerns here about the backlog, in addition to just 0:02:20.160 --> 0:02:23.679 the general problems in getting those engines onto those gliders. 0:02:23.720 --> 0:02:25.800 There's now, at least here in the United States, the 0:02:25.840 --> 0:02:29.079 issue of a government shutdown that of course effectively brings 0:02:29.080 --> 0:02:30.799 to a halt or at least a slowdown and any 0:02:30.840 --> 0:02:34.080 sort of certification. Here have you had to address that 0:02:34.360 --> 0:02:37.560 at all so far, not. 0:02:37.639 --> 0:02:41.840 To a major extent. We are not significantly exposed to 0:02:41.919 --> 0:02:46.760 this situation. Again, the main challenges we have are really 0:02:46.800 --> 0:02:50.120 on the delivery of aircraft, not on the certification of them. 0:02:50.960 --> 0:02:54.959 We have recently certified, I mean last year, the ecceler 0:02:55.160 --> 0:02:57.440 that's behind us, and the Acceller the eight three twenty 0:02:57.440 --> 0:03:00.960 one ECCELERA is a great airplane is now in service. 0:03:01.120 --> 0:03:04.760 That's behind us. And the next certification moving forward will 0:03:04.760 --> 0:03:08.600 be for the E three fifty fraighter. But that's not 0:03:09.400 --> 0:03:14.680 today a short term bottleneck. We have to start flying 0:03:14.680 --> 0:03:16.480 with the aircraft. That will be the case in twenty 0:03:16.560 --> 0:03:20.000 twenty six, so certification is for later. We planned into 0:03:20.080 --> 0:03:23.040 service in twenty twenty seven, so we hope that in 0:03:23.080 --> 0:03:27.480 the meantime we will be able to restart or to 0:03:27.560 --> 0:03:33.000 have appropriate and efficient certification. Work with the FAA the 0:03:33.080 --> 0:03:36.880 primary certification authority is YASA, and we're currently working with 0:03:36.920 --> 0:03:40.000 the YASA for preparing the certification file of the three 0:03:40.000 --> 0:03:40.600 fifty Fraser. 0:03:41.240 --> 0:03:45.760 With regards to your operations here in the United States, 0:03:45.960 --> 0:03:47.880 whether it has to do with the certification, whether it 0:03:47.880 --> 0:03:50.360 has to do with the shutdown or the broader issues, 0:03:51.080 --> 0:03:54.720 what are the deliveries. The timeline for delivery is coming 0:03:54.760 --> 0:03:56.120 out of the plant in Alabama. 0:03:58.280 --> 0:04:01.760 Well, Alabama is one of our production sites. 0:04:02.280 --> 0:04:05.080 You know that for the eight three twenty family, we 0:04:05.120 --> 0:04:08.920 are now relying on Mobile in the US in Alabama, 0:04:09.320 --> 0:04:14.040 in Toulouse and Hamburg in Europe, and on changing in 0:04:14.120 --> 0:04:19.200 China for a mobile. We have recently inaugurated the second 0:04:19.240 --> 0:04:21.720 final assembly line for the three twenty, so we are 0:04:21.720 --> 0:04:25.479 clearly ramping up proportionally more in the US than in 0:04:25.520 --> 0:04:27.520 the rest of the world, and we have an eight 0:04:27.560 --> 0:04:30.920 to twenty final assembly line, so Mobile Alabama will soon 0:04:31.000 --> 0:04:35.680 become the fourth largest production site of commercial aircraft in 0:04:35.720 --> 0:04:38.239 the world, and it's another site in the US. 0:04:38.960 --> 0:04:41.400 But basically we're jumping up eight three. 0:04:41.240 --> 0:04:45.680 Twenty globally towards the Red seventy five, and Mobile Alabama 0:04:45.680 --> 0:04:46.440 will take each. 0:04:46.320 --> 0:04:49.599 Air And you mentioned the A to twenty. When it 0:04:49.640 --> 0:04:52.720 comes to your production target, you actually lowered that as well, 0:04:52.760 --> 0:04:54.600 and I would love a little bit more detail on 0:04:54.960 --> 0:04:57.479 what led to that decision and when you know, we 0:04:57.600 --> 0:04:59.839 might see some of these supply chain challenges that you're 0:04:59.839 --> 0:05:02.520 do going with beyond snarled when it comes specifically to 0:05:02.600 --> 0:05:03.120 that body. 0:05:04.480 --> 0:05:06.560 Yeah, I like to highlight the fact that we are 0:05:06.560 --> 0:05:10.400 not reducing production. We are reducing the speed of ramp 0:05:10.480 --> 0:05:14.080 up on the eight to twenty. We are actually doubling 0:05:14.120 --> 0:05:18.400 production roughly within two years from twenty four to twenty six, 0:05:18.880 --> 0:05:22.560 and we have decided to go from what we were 0:05:22.600 --> 0:05:25.880 anticipating for next year that was rate fourteen to actually 0:05:25.960 --> 0:05:29.560 rate twelve, So moving up from rate six a few 0:05:29.800 --> 0:05:32.720 quarters ago, a few years ago to the rate twelve. 0:05:33.200 --> 0:05:36.159 We are on that trajectory. Things are moving forward quite 0:05:36.240 --> 0:05:39.400 well in twenty twenty five, but right twelve is a 0:05:39.520 --> 0:05:42.640 challenging target. We have to integrate as well the work 0:05:42.640 --> 0:05:46.120 packages from spirits on the AD to twenty, the wings 0:05:46.160 --> 0:05:48.840 and other smaller work packages, so we have a lot 0:05:48.880 --> 0:05:52.880 on our plate. We're also introducing progressively engine improvements to 0:05:54.040 --> 0:05:57.120 improve the durability of the engine for customers, so a 0:05:57.120 --> 0:06:00.360 lot of work on day to twenty very far and 0:06:00.640 --> 0:06:03.599 steep ramp up, and we think that's good enough in 0:06:03.680 --> 0:06:06.440 terms of quantity of work and challenges. Moving from twenty 0:06:06.440 --> 0:06:07.600 five to twenty six. 0:06:07.960 --> 0:06:10.160 I have to ask you about the defense business. Obviously 0:06:10.240 --> 0:06:11.840 that was a bit of a boost for you in 0:06:11.880 --> 0:06:15.240 the most recent period. Is this a long term story 0:06:15.360 --> 0:06:15.960 or one off. 0:06:17.839 --> 0:06:20.599 It's a mid term story for sure, maybe a long 0:06:20.680 --> 0:06:23.560 term one as well. You know that Europe has relied 0:06:23.600 --> 0:06:26.520 on the United States for a very long time when 0:06:26.560 --> 0:06:29.559 it comes to security of Europe, and we are now 0:06:29.600 --> 0:06:32.960 in different times. Europe is really ramping up in its 0:06:33.000 --> 0:06:38.000 ability to secure itself, to defend itself, which means significant 0:06:38.640 --> 0:06:42.960 increase in defense budgets for the main countries of Europe 0:06:43.000 --> 0:06:46.200 and the Natal members in Europe. So from that perspective, 0:06:46.360 --> 0:06:49.599 it's a midterm or even long term perspective. And on 0:06:49.640 --> 0:06:53.279 the short term it comes with orders for more equipment 0:06:53.360 --> 0:06:56.560 for development of new ones. And indeed we have a 0:06:56.640 --> 0:06:59.679 tailwind when it comes to our numbers and our growth 0:07:00.040 --> 0:07:02.800 coming from defense against that backdrop. 0:07:02.920 --> 0:07:05.800 And we shall also talk about your ambitions when it 0:07:05.839 --> 0:07:08.640 comes to space as well, and to compete against elon 0:07:08.720 --> 0:07:11.360 musk SpaceX I know that you're merging some of your 0:07:11.440 --> 0:07:15.000 operation with regional peers trying to create a regional venture. 0:07:15.120 --> 0:07:18.960 That project expected to be running in twenty twenty seven GM. 0:07:19.240 --> 0:07:21.840 Would you anticipate though you might run into any sort 0:07:21.840 --> 0:07:25.240 of regulatory challenges? Here is twenty twenty seven looking like 0:07:25.280 --> 0:07:25.840 a firm date. 0:07:27.440 --> 0:07:30.000 Well, we just signed the memo honub of understanding with 0:07:30.120 --> 0:07:34.280 Talis and Leonardo to create that European player and that 0:07:34.560 --> 0:07:37.480 is able to or will be able to compete at 0:07:37.520 --> 0:07:39.280 scale on the global. 0:07:40.480 --> 0:07:42.800 Competitive landscape. So that's really good. We are not. 0:07:42.880 --> 0:07:48.240 Only willing to compete with SpaceX and starting obviously that's 0:07:48.760 --> 0:07:51.520 a big player and a fast moving player, but we 0:07:51.600 --> 0:07:55.680 are serving many other needs, including defense in. 0:07:55.600 --> 0:07:58.960 Europe and across the world. That creates a. 0:07:58.920 --> 0:08:00.760 Company that has the put on sun to be very 0:08:00.760 --> 0:08:05.880 competitive to serve the interest and the needs of the 0:08:05.920 --> 0:08:09.360 European players and more global players. As I said, we 0:08:09.480 --> 0:08:13.000 have to go through the regulatory process to the anti trust. 0:08:13.520 --> 0:08:15.120 That's something that is now ahead of us. 0:08:16.360 --> 0:08:20.520 Well, I think Europe has moved forward as well, understanding 0:08:20.560 --> 0:08:23.440 that it needs to be able to compete globally, and 0:08:23.480 --> 0:08:25.720 we hope that we will be supported for what we're doing. 0:08:25.960 --> 0:08:29.040 We have to demonstrat compliance with the European regulations and 0:08:29.080 --> 0:08:30.040 other regulations. 0:08:30.480 --> 0:08:32.440 We're starting at work now, all right. 0:08:32.800 --> 0:08:34.920 Really appreciate you taking time for us and CEO of 0:08:34.960 --> 0:08:37.199 the air Bus theregy for on the heels of the 0:08:37.280 --> 0:08:40.120 earnings just alt most recently, but a big focus right 0:08:40.160 --> 0:08:42.040 now on potential delivery delays.