Airbus Walks a Tightrope Between Production Hiccups and a Decadelong Engine Gamble

Airbus shares hit oversold RSI of 10.9, down 13.88% YTD, as A350 delays persist and next-gen engine decision pushes launch to 2031+.

The stock has been pummelled. Airbus shares closed at €42.20 on Monday, nudging up 1.44 percent, but the year-to-date loss stands at 13.88 percent. The relative strength index at 10.9 screams oversold. Behind that number sit two very different but equally pressing challenges: a stubborn production snag in North Carolina and a strategic engine decision that could define the company for the next decade.

The A350 bottleneck that won’t go away

Airlines waiting for their A350s are facing further delays thanks to a factory Airbus bought last year from Spirit AeroSystems in North Carolina. The site was meant to secure fuselage production, but it is now being held back by labour shortages and manufacturing problems. The medium-term target remains unchanged: twelve A350s per month by 2028. For now, though, the assembly line is not running as smoothly as planned, and Pratt & Whitney’s engine shortage is adding to the frustration.

To protect margins without hitting the production floor, management has imposed a 10 percent cut in non-industrial spending. The axe falls hardest on headquarters and administrative budgets, and the use of external contractors is being scaled back. This cost drive sits alongside the existing LEAD efficiency programme.

Despite these headwinds, the 2024 guidance stands. Airbus still expects to deliver around 870 aircraft this year, with an adjusted operating profit of €7.5 billion and free cash flow of €4.5 billion. The order backlog – a hefty 8,665 commercial jets – provides a long runway, equivalent to roughly twelve years of output at current rates.

The next-generation gamble that slipped into the 2030s

While the immediate focus is on fixing the supply chain, the company is simultaneously plotting its first all-new aircraft family since the A350. The internal name is Next-Generation Single-Aisle, the successor to the A320neo. But the timeline has shifted. Airbus CEO Guillaume Faury had previously flagged a programme launch around 2030, contingent on roughly two years of flight testing with CFM’s RISE open-fan engine. Those tests were originally due to start in 2027. They now begin in 2029.

That makes a launch before 2031 unlikely. Work on an earlier A380 from Malaysia Airlines (serial number MSN114) will start in 2027 to turn it into a flying testbed. The gap between the A350 programme start and the NGSA start will stretch to about 27 years – the A220 is excluded here because it was acquired from Bombardier.

The engine puzzle: open fan, ducted fan, or something else?

The single biggest uncertainty is what will power the new jet. CFM International is pushing the RISE open-fan architecture, which promises to cut fuel consumption and CO? emissions by more than 20 percent versus today’s best engines. Sustainable aviation fuels and hydrogen are also in the mix. It is a big efficiency leap, but a big technical risk too.

CFM is keeping its options open. At Safran, a parallel project called “Advanced Ducted-Large” leans toward a more conventional layout. Safran chief Olivier Andries said the joint venture wants to be “ready for every scenario”. Pratt & Whitney is offering a new generation of its geared turbofan, and Rolls-Royce is working on a similar approach.

Leadership change adds another layer

The person who will steer this decision has just changed. Christian Scherer, a strong advocate of the CFM RISE open-fan concept and of a stretched A220, retired as head of the commercial aircraft division on 31 December. His successor, Lars Wagner, is known to be open to the A220 stretch, and an announcement could come this year. Wagner previously ran the engine division at MTU, a key partner of Pratt & Whitney on the geared turbofan. That does not commit him to any particular path, but it underscores how tightly the A220 question and the engine strategy are interwoven.

Alongside the engine work, Airbus is developing new wing concepts through the “Wing of Tomorrow” programme, including folding wingtips for a span of around 45 metres, and the “eXtra Performance Wing” for active load alleviation. If and when the NGSA enters production, the company plans to build up to 100 units per month – almost double the current A320neo rate.

Time is on Airbus’s side – for now

With 8,665 jets on order and the A320neo family still selling strongly, there is no immediate need to rush the next big thing. The risk is a long transition period. Until the RISE tests on the A380 begin in 2029, the engine choice remains the pivotal milestone. Any further slip pushes the NGSA first delivery deeper into the 2030s, leaving the A320neo as the workhorse for even longer. For the stock, the immediate task is simpler: get the A350 production up and running in North Carolina. Solve that, and the share price may find some altitude.