Airbus slumps 10% on report of A320 quality issue, software recall

Investing.com -- Airbus (EPA:AIR) shares slumped more than 10% on Monday after reports that the planemaker is confronting a new industrial quality issue on its A320-family jets, adding to pressure from a global software recall affecting roughly 6,000 aircraft.

Reuters said Airbus has identified a problem involving fuselage panels on several dozen A320-family jets, citing industry sources who said the flaw has begun delaying some deliveries.

The report said the origin of the issue had not yet been identified, and there was no indication that aircraft in service had been affected. Airbus had no immediate comment.

The share drop accelerated losses from earlier in the session, when airlines continued to work through an emergency software update triggered by a flight-control vulnerability linked to intense solar radiation. 

The issue emerged after an October 30 JetBlue A320 experienced an uncommanded altitude drop, leading investigators to link the malfunction to corrupted data in the aircraft’s elevator aileron computer.

Most A318, A319, A320 and A321 jets required a rapid rollback to an earlier software version, while older aircraft need physical hardware replacements to the flight-control computer. 

Deutsche Bank analysts said about 85% of the fleet could be repaired through the software update, with 15% requiring hardware work that involves ferrying aircraft to maintenance facilities. 

The brokerage noted that “Airbus, as the prime integrator and certifying authority for the aircraft, bears the ultimate responsibility for the safety and functionality of the system.”

Global operations remained uneven as carriers applied the fix. American Airlines said four of its 209 affected aircraft still needed attention by late Saturday. 

JetBlue cancelled dozens of flights for Sunday. Europe’s easyJet, Wizz Air and Lufthansa Group completed updates overnight and expected normal operations. 

In Asia-Pacific, ANA cancelled 95 flights on Saturday, affecting about 13,200 passengers, while Jetstar Airways and Air New Zealand grounded parts of their fleets. India’s IndiGo completed checks on 160 of 200 aircraft without cancelling flights. In Latin America, Avianca paused bookings through December 8.

The software recall and new quality concern come as Airbus works toward its year-end target of “around 820” deliveries. Industry sources told Reuters the company delivered 72 aircraft in November, bringing its total for the year to 657. The planemaker would need to exceed its December 2019 record of 138 deliveries to meet the goal. 

Analysts quoted by Reuters were divided on whether Airbus would reach the target, with Jefferies noting November performance was weaker than expected and independent aviation analyst Rob Morris estimating the final tally could be about 800.

RBC Capital Markets analyst Ken Herbert said Airbus indicated it “will not use this issue as a reason for not hitting its 2025 delivery guidance.” 

Goldman Sachs said attention now shifts to parts availability for hardware replacements and the “risk of aircraft delivery disruption” in 2026. 

Deutsche Bank said Airbus has not revised its FY25 guidance and highlighted press indications that about 95% of the software-affected fleet could be operational by December 20, with remaining aircraft returning between January and March 2026.

Deutsche Bank said the coordinated global response underscored the strength of the A320 support network and noted Airbus prioritised safety during a period of heavy travel demand.