Speaker 1: Bloomberg Audio Studios, podcasts, radio news. So let's turn out
Speaker 1: to another sock that we're watching, which is Airbus. The
Speaker 1: American depository receipts on Europe's largest aeronautics and space company.
Speaker 1: They're higher after reporting results, Airbus saying it'll stick with
Speaker 1: the goal to deliver about seven hundred seventy aircraft this year,
Speaker 1: really underscoring its focus on ironing out some supply chain
Speaker 1: glitches that have gotten in the way. We're joined now
Speaker 1: by Guillom Fouri. He is the CEO of Airbus. Thank
Speaker 1: you so much for speaking with us. Giome, Welcome to
Speaker 1: Bloomberg Television and Bloomberg Radio. I think the big story
Speaker 1: here with Airbus is that it has struggled to ramp
Speaker 1: up output. And I know you've spoken a lot about
Speaker 1: the supply chain being severely degraded. Just give us a
Speaker 1: sense of what the state of your supply chain looks
Speaker 1: like right now.
Speaker 2: So it's quite similar to what we had by the
Speaker 2: end of the previous quarter. We are limited by some
Speaker 2: bottlenecks in the supply chain, which are primarily the engines
Speaker 2: on the Singer I Fiamily the eight three twenty family,
Speaker 2: but also we have issues with seats, with interiors and
Speaker 2: to limited extent landing gears.
Speaker 3: Those problems are being managed.
Speaker 2: So we have difficulties month after months to execute on
Speaker 2: the wramp up. We have quite cult end of the
Speaker 2: year ahead of us, the year enerally as we call
Speaker 2: it as we anticipate to have more than two hundred
Speaker 2: planes to deliver in the last two months of the
Speaker 2: year to reach the around seven and seventy, which is
Speaker 2: the guidance.
Speaker 3: So that's the environment we're in. It's a difficult one.
Speaker 2: We deploy a lot of resources of our own teams
Speaker 2: to our suppliers to be able to help. But when
Speaker 2: one of our important partners like CFMGE is hit by
Speaker 2: the hurricane, the Milton hurricane in the US, but as repercussion.
Speaker 3: On our own ability to deliver. So that's where we are.
Speaker 1: So where do you expect to see meaningful improvements in
Speaker 1: the supply chain over the next year. I mean, for instance,
Speaker 1: could we get a resolution on the engines and the
Speaker 1: eight three twenty.
Speaker 2: We know that Free twenty is relying on two engine makers,
Speaker 2: two engines, the GTF from AT and the Leap engine
Speaker 2: from CFM. They have different situations to manage. On the
Speaker 2: parut side, there is an ongoing record campaign and that
Speaker 2: is leading to a lot of planes of our customers
Speaker 2: being so called ags on the ground because the engines
Speaker 2: need to be retrofitted, and that's a vast plan that
Speaker 2: Pratt is managing. They're on their plans, so we believe
Speaker 2: next year and the year after we'll see the number
Speaker 2: of ags going down and we will progressively be able
Speaker 2: to have more engines for line fit for the delivery
Speaker 2: of our own planes.
Speaker 3: And when it comes to CFM.
Speaker 2: We think it's a more short term crisis that they
Speaker 2: have to manage. They are very mobilized and focused. It
Speaker 2: will continue to impact us later this year beginning of
Speaker 2: next year, but it should get much better by the
Speaker 2: second half of twenty twenty five and hopefully much better
Speaker 2: or later.
Speaker 3: So these are prices of different nature.
Speaker 2: We're on it, our suppliers CFM and are also managing
Speaker 2: those situations, and we think that's something that is temporible.
Speaker 4: So Gay, are you comfortable now though, given everything that
Speaker 4: you just said, with the current cost structure right now
Speaker 4: at Airbus or do you need to make tweaks there?
Speaker 2: You know, we were preparing for a ramp up that
Speaker 2: was supposed to get better earlier.
Speaker 3: So we have emboarded a lot of resources.
Speaker 2: We have sized the air Bus capabilities when it comes
Speaker 2: to production to final assembly lines for more airplanes.
Speaker 3: Than what we are delivering today.
Speaker 2: So we are actually more costs on our P and
Speaker 2: L than what we would need for the number of
Speaker 2: airplanes we are delivering. But the good side of it
Speaker 2: is that we have teams that have time to be
Speaker 2: trained to be qualified to be onboarded on their jobs.
Speaker 2: We can also deploy teams experts to our suppliers to
Speaker 2: help easing the situation. And indeed this is waiting on
Speaker 2: our cost on the short term, but this is to
Speaker 2: some extend the price to pay for the rompup that
Speaker 2: is ahead of us, which is an incredible ramp up
Speaker 2: because we target the rate seventy five by twenty twenty seven,
Speaker 2: and that's obviously unprecedented.
Speaker 4: Talk to me about how the defense and space business
Speaker 4: falls into that. Should investors anticipate any material changes in
Speaker 4: the structure of those businesses within Airbus.
Speaker 2: We are at the moment changing the structure of our
Speaker 2: Defense and Space division. We used to have an integrated division.
Speaker 2: We're transitioning to a division that will be organized around
Speaker 2: three product lines, and we're transferring a lot of resources
Speaker 2: that were allocated transversely to the businesses. We want more accountability,
Speaker 2: we wire moret agility. We want to be able to
Speaker 2: benefit from the very different dynamics that we see in
Speaker 2: air power, which is our strongest business in defense and space.
Speaker 3: This is the military aviation.
Speaker 2: Partir to space and to what we call the connected intelligence.
Speaker 2: So we are transforming the shape of defense in space
Speaker 2: the better fit.
Speaker 3: Well, we're living in that field.
Speaker 4: So will this stay underneath the umbrella of air Bus
Speaker 4: or are you willing to entertain offers for potential separation
Speaker 4: of these businesses.
Speaker 3: So the air power is the core of what we do.
Speaker 2: Military aviation is really what we've been doing for long
Speaker 2: and we think we're competitive in that field. So this
Speaker 2: will obviously remain now when it comes to space, as
Speaker 2: we have already indicated, it's another large business of our
Speaker 2: Airbus defense and space activity that we.
Speaker 3: Are turning around.
Speaker 2: But we think the situation is such that it is
Speaker 2: worth looking at options for consolidation for more strategic option
Speaker 2: on the space business. And that's something that is ongoing
Speaker 2: in a business the space business that is very much
Speaker 2: disruptive when it comes to the small part of our
Speaker 2: connected intelligence. Yes, we are willing to cooperate to bring
Speaker 2: those businesses with others.
Speaker 3: When and if this is meaningful. So we want to
Speaker 3: be with what we are.
Speaker 2: Doing in defense and space more agile in our ability
Speaker 2: to combine businesses with others. But we will continue to
Speaker 2: remain a strong player in defense, in military and also
Speaker 2: in space, but probably in different forms when it comes
Speaker 2: to space. Moving forward, as we have to find solutions
Speaker 2: to this difficult business environment.
Speaker 1: Again, one thing that we haven't talked about is that
Speaker 1: strike at Boeing's an ongoing strike and it's led us
Speaker 1: some suppliers are Boeing to warn about being forced to
Speaker 1: consider furloughs and job cuts. And I know that air
Speaker 1: Bus and Boing share many of the same suppliers. How
Speaker 1: are you looking at the situation at Boweling right now
Speaker 1: and thinking through what it means for Airbus down the
Speaker 1: road in twenty twenty five.
Speaker 2: Yeah, thanks Scarlett, It's a great question. Actually, as I
Speaker 2: said earlier, we have a challenging situation in the supply base,
Speaker 2: actually the situation at Boeing, including the strike, but not
Speaker 2: limited to the strike is adding complexity and challenges for
Speaker 2: the supply chain of going. Unfortunately or fortunately, I don't know.
Speaker 2: We see can be seen both ways. Part of this
Speaker 2: supply chain is also our supply chain, So we are
Speaker 2: monitoring very closely what it means for them, and we
Speaker 2: are taking preventive actions for the difficulties that they might
Speaker 2: have with going to not have repercussions on our own
Speaker 2: relationship with them. But that's another area of concern that
Speaker 2: we have to manage in this current environment.
Speaker 4: Keon, I appreciate you taking time to be with us today.
Speaker 4: We'll let you get back to work.
Speaker 1: Keyon for it.
Speaker 4: There is a CEO over an airbus