Airbus Faces Challenges From Growing U.S. Tariffs

Airbus airplane flying over a Boeing facility

Airbus braces for potential U.S. tariffs amid soaring profits and supply chain hurdles, as global aviation demand reaches new heights.

At a Glance

Airbus prepares for possible 10% U.S. tariffs, planning to pass costs to airline customers
Company reports 22% profit surge despite supply chain disruptions affecting deliveries
Airbus outpaces Boeing in sales for five years but faces production delays
Global travel demand rises as Airbus navigates complex geopolitical landscape

Airbus Prepares for Potential Tariffs

Airbus, the European aerospace giant, is gearing up for a potential shift in U.S. trade policy that could impact its bottom line. The company is preparing for the possibility of new tariffs on imports, which may be imposed following the upcoming U.S. presidential election. This strategic move comes as former President Donald J. Trump, a Republican candidate, has proposed sweeping tariffs as part of his economic platform.

Guillaume Faury, Airbus CEO, addressed the issue, stating, “So that’s something we will be discussing with our customers.” He added, “But it puts them in a difficult place of adding an additional cost on what they have ordered and what they’re procuring.” This approach indicates Airbus’s intention to pass on any new tariff costs to its airline clients, potentially affecting the pricing of aircraft orders.

Airbus sticks to delivery target despite supply chain woes https://t.co/NtJyPBkDGC

— Financial Times (@FT) October 30, 2024

Supply Chain Challenges Amidst Rising Demand

Despite the looming threat of tariffs, Airbus has reported a remarkable 22% increase in net profit for the first nine months of the year. However, this financial success is tempered by ongoing supply chain disruptions that are impacting plane deliveries. The company has delivered 497 aircraft in 2024, with a target of around 770 for the year, highlighting the production challenges it faces.

“The supply chain is in trouble as we can see at both Airbus and Boeing. It seems like any plans for a rate beyond 60 [aircraft per month] is going to be too much stress for the current capabilities,” notes Addison Schonland, an industry expert.

These supply chain issues have forced Airbus to delay its ambitious target of building 75 A320 jets per month to 2027, a year later than initially forecast. This setback comes at a time when global travel demand is surging, putting pressure on aircraft manufacturers to increase production rates.

Competition and Innovation in the Aviation Industry

While Airbus grapples with these challenges, its main competitor, Boeing, faces its own set of difficulties. Boeing is currently dealing with a strike by its largest union and $5 billion in new costs, potentially giving Airbus an edge in the market. Airbus has outpaced Boeing in sales for five consecutive years, solidifying its position as a market leader.

Despite the hurdles, Airbus continues to innovate and secure new orders. The company recently delivered its first long-range single-aisle new generation aircraft to Iberia Airlines and secured an order for 60 jets from Riyadh Air. These developments underscore Airbus’s commitment to advancing aviation technology and meeting the evolving needs of airlines worldwide.

As the aviation industry navigates these turbulent times, Airbus remains focused on overcoming supply chain obstacles and potential trade barriers. The company’s ability to adapt to changing market conditions and geopolitical landscapes will be crucial in maintaining its competitive edge and meeting the rising global demand for air travel.