This year-end push has brought the preliminary total for 2024 deliveries to 766 jets, which is a 4% increase from 2023. However, this number is still subject to internal audits, so it might drop by one or two jets before the final figures are announced on Thursday.
Despite this, the world’s largest aircraft manufacturer is likely to celebrate, as they’ve set a minimum target of 750 deliveries, which aligns with their earlier guidance of “around 770” shared with analysts in October.
Airbus chose not to comment on the situation. According to a Reuters report from Friday, they have provisionally delivered over 765 jets.
The company has been under pressure to hit its targets and keep investors happy after issuing a profit warning back in July. However, unions and some airlines are worried that the rush to speed up deliveries is leading to quality issues.
For instance, Malaysia Airlines recently grounded a brand new A330neo due to quality concerns. Airbus stated they are working with the airline and engine manufacturer Rolls-Royce to resolve the issue.
With supply chains struggling, aircraft manufacturers are increasingly offering compensation to airlines for minor defects or covering extra maintenance costs if they agree to accept jets ahead of schedule, according to insiders.
The risks of this approach were highlighted when Airbus agreed to pay $200,000 per day for each plane with surface flaws on A350 jets, under certain conditions, if Qatar Airways accepted a jet on the last day of 2020.
This agreement allowed for a crucial year-end delivery but also set the stage for a massive court battle that concluded with a settlement in 2023.
During the dispute, Qatar had grounded 30 jets and aimed to invoke the new clause more for financial reasons than safety concerns, which left Airbus facing a potential liability of $2.1 billion annually. Both Airbus and regulators have consistently denied any safety risks.
Two years later, sources indicate that the massive financial stakes have diminished, but the trend of tough negotiations driven by end-of-year delivery deadlines is becoming more common.
They mentioned that Airbus had to make financial commitments or provide other commercial perks to ensure several deliveries in December went through. There’s no indication that any issues in the year-end delivery talks pose safety risks.
These so-called “concession letters” can involve significant sums, sometimes tens of thousands of dollars, and in rare cases, up to one or two million for larger aircraft, according to three individuals familiar with Airbus's handover process.
Airbus stated that it doesn’t comment on negotiations with customers.
While the topic of concessions rarely comes up amid discussions about whether the industry has hit its volume targets, it’s particularly relevant as Airbus tries to manage costs.
The idea is to take a practical approach to minor issues to keep deliveries on track and reassure airlines. For instance, if a panel needs replacing, Airbus might promise that the repairs won’t be more expensive than usual. However, critics argue that excessive use of concessions can undermine value and damage trust with airline customers.
Airbus is also under pressure from unions regarding the effects of the delivery rush on workers.
This month, however, it’s facing a new slowdown.
Typically, Airbus ramps up deliveries in December and then takes a break in January. This year, the difference might be more pronounced due to fluctuating engine supplies.
In November, Airbus managed to avoid a second downgrade in its targets by striking a deal with supplier CFM to redirect engines to its assembly lines that were originally set for CFM maintenance.
The head of CFM’s parent company, Safran, has cautioned that this agreement will lead to a corresponding decrease in engine supplies to Airbus for January.
Airbus is set to announce its 2024 orders on Thursday. While they don’t share specific order goals, insiders have mentioned that they were initially looking for around 1,100 to 1,200 net orders following a record-breaking 2,094 in 2023. As of the end of November, they had already secured 742 net orders.