Phase-out of Airbus, Boeing jets depresses plane parts maker FACC’s operating profits

AUSTRIA – Austria based plane parts maker FACC’s operating profit fell 6% in the second quarter as it produced fewer components for the Airbus A380 and Boeing 737NG jets currently being phased out.

Chinese-owned FACC which makes components for wings, tail assemblies and fuselages as well as engines and cabin interiors for all major plane makers also attributed its depressed profits to the start-up costs for new cabin interiors bit.

The year 2019 has So far been a slow for the commercial aerospace industry, beset by negative headlines on safety following two deadly plane crashes and the U.S.-China trade war.

In its half annual reports released in October this year, FACC that while production rates of all major aircraft types had stabilized at a high level, no significant increases were expected for 2020.

“We expect sustained growth in the aviation industry in the long run but are currently observing a slight flattening of the growth curve,” Chief Executive Robert Machtlinger said.

“This trend is reflected in our sales development, which shows a smaller increase than planned,” added Machtlinger.

However, operational measures to reduce costs were progressing and would lead to stable profitability from the second half of 2020, he said.

Owned by China’s Aviation Industry Corporation (AVIC), the group reported earnings before interest and tax of US$9.5 million (8.6 million euros).

The company also reported that new orders surpassed $800 million although it was on a largely flat revenue of 179.7 million in the three months through end-August.

Around half of FACC’s revenue comes from Airbus, which reported a 13.5% rise in nine-month deliveries, well ahead of U.S. rival Boeing, whose deliveries nearly halved due to the grounding of the B737 MAX.

FACC however revealed that it does not supply the new aircraft, which has been grounded following two deadly crashes.

The plane part maker also revealed that the trade tariffs to be imposed on Airbus aircraft by the United States, does not cover aircraft components “and thus products of the FACC Group are not affected.

FACC also produces components for Chinese plane maker COMAC, which Machtlinger expects to become a fierce rival to Airbus and Boeing within 10 years.

Revenues for COMAC’s ARJ 21 regional jet and the narrow-body C919 increased in the first half and have become a major revenue driver at the cabin interior unit, FACC said.

FACC expects sales of around US$662.2 million (600 million euros) and an EBIT margin of close to 6% for its shortened March-December 2019 financial year.