02 March 2014

A350 recurring costs higher than planned. Why? (2/2)

The €434m charge reflects extra work on late design changes, as well as costs associated with improvements to capabilities in the supply chain, both outside and inside Airbus.

The challenges of an industrial ramp up are beginning to kick in and more supplier issues are emerging. “We are stepping up the industrial ramp-up” said CFO Harald Wilhelm, chich has led to “higher costs” than expected.

According to Wilhelm, additional work for late design modifications are partly to blame, but he also pointed at “some manufacturing disruption” at Premium Aerotec. The Airbus Group subsidiary, based in Augsburg (Germany) builds the A350´s fuselage sections 13/14 and the panels for section 17/18.

Premium Aerotec is in the throes of transitioning to a new technology while setting up its corporate structures. And, like other A350 risk sharing partners and suppliers, it faces a steep ramp-up.

According to industry sources, Premium Aerotec is due to deliver 20 shipsets in 2014, 43 in 2015, 82 in 2016, 116 in 2017 and 139 in 2018. This reflects Airbus´ target to gradually raise A350 output to 2 units per month by end of this year to 10 units per month by 2018.

The charge on the A350 reflects a “reassessment of actual and estimated unit cost”, Airbus said. Improvement actions have been launched to converge on costs targets” it adds.

Based on the article “Airbus Boosts A320 Output, Takes Large A350 Charge” published in AviationWeek.

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