A320 Engine Issues Threaten Recent Airbus Successes
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Airbus has enjoyed a great deal of success recently. Its new A350 XWB model has proven quite popular among carriers who fly ultra-long-haul routes. The new model has put the French plane maker a year or two ahead of Boeing in this important market niche. Airbus also beat Boeing to Iran, scoring more than 100 orders before its American competitor even started negotiations.
Recent success in China has also given Airbus the evidence to claim that it is currently the top airplane manufacturer in the world.
These recent gains are only part of the story, however. Orders have slowed significantly in the first quarter of 2016, and the company's stock is falling. There are still plenty of positives, especially the record number of orders for the new A320neo aircraft
Banking on the A320neo
The A320neo is meant to be the next in the successful line of short-haul and medium-range planes that are the backbone of many commercial fleets. With a new version of the 737 almost ready for delivery and recently announced orders for upstart Bombardier’s C Series planes, the success of the neo line is very important for Airbus going forward.
The roll out of these highly anticipated planes has been anything but smooth, however.
Major engine issues
Engine issues have plagued the A320neos over the past few months. Airbus is pushing engine-maker Pratt and Whitney to find a fix to the problem, which involves faulty coolant systems.
This is more than a simple glitch. Airlines who have ordered the A320neos have known about the issues for some time already, and they are still waiting for the fix. Lufthansa is currently flying the planes. However, it is only using them for short routes over Germany. This keeps them close to mechanics and engineers who can quickly fix any problems that pop up.
The engine flaws have also created a serious image problem. The new, more fuel efficient engines are THE main selling point of the A320s. “neo” actually stands for “new engine option,” so the plane's biggest selling point has become its biggest fault.
Airlines putting orders on hold
Airbus admits that as many as 10 deliveries have been put on hold during the first quarter because of the engine problems. Qatar Airways has ordered a number of the jets, but CEO Akbar al-Barker voiced major concerns during a recent interview with Al-Arabiya News. The outspoken exec said what is probably on many airlines’ minds: "When we buy an aeroplane, we expect all the terms and conditions and performance guarantees that are in the agreement to be followed by the manufacturer. This is not the case with the Airbus 320neo and the engine is underperforming. There are other issues with the airplane. So unless these issues are fully resolved as per the contract that we have signed, we will not take the delivery.”
Qatar was supposed to receive the first of 50 A320neos in December. It did not accept the order, and the planes instead went to Lufthansa. Now, it looks like the Gulf carrier could be giving up on the neos altogether.
Will Airbus opt for Plan B?
Airbus does have a Plan B. It could switch to engines made by a joint venture company called CFM International. This firm is a partnership between GE Aviation and French multinational Safran.
Airbus has promised investors that it will make up for the current delivery delays by producing more A320neos during the second half of the year. If Pratt and Whitney has not fixed the coolant issues by then, Airbus will have no choice but to make the change to CFM.
Could continued problems actually bring down the entire company? It is not likely, but the new A320s have already earned a record 4,500 orders. If things do not get fixed soon, other carriers could start following Qatar Airways' lead, and there could be a mass migration to whatever alternative Boeing (and Embraer and Bombardier) can offer.
At the very least, the issues have caused Airbus to lose a lot of the momentum that it gained from the Iran and China orders.
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