Airbus and the shock of A320 double failure, company capitalization evaporated billions of dollars

(Dan Tri) - Before the software error could be resolved, Airbus encountered another A320 quality problem, its stock price plummeted, causing its capitalization to "evaporate" billions of dollars, threatening its year-end target.

The world aviation industry is going through a rough end to the year. While Boeing is still struggling to regain its position, its biggest rival - Airbus - has just experienced a week of "unfortunate events".

In just a few days, the "golden goose" that lays the A320 aircraft has had consecutive problems, from software sensitive to solar radiation to metal body defects, causing panic among investors and raising big questions about the airline's ability to reach the 2025 finish line.

"Misfortune never comes singly" when one mistake is added to another

Earlier this week, Airbus was forced to confirm some unpleasant news. The company had discovered an industrial quality issue related to metal panels on its A320 aircraft. Notably, this news came less than 72 hours after the company issued an urgent warning about a software error on the same aircraft.

Specifically, the new problem is located on the metal panels on the cockpit roof and on both sides of the fuselage near the front door area. According to Airbus representatives, this is a "supplier quality problem" - a familiar but haunting phrase in the complex aviation supply chain.

While the company declined to name specific suppliers, Reuters sources said the A320’s structure is a mix of sources. The front section is mostly made in France, the rear section in Germany, and the upper fuselage panels are often produced in-house. Pinpointing where the faults came from in this complex web is a challenge.

Not yet able to "recover" from the huge software recall last weekend, Airbus continues to face new trouble from the body metal panels on the "golden goose" A320 (Photo: AP).

The only silver lining in this “storm” is that there have been no immediate safety risks to aircraft in service. The issues are mainly related to component age and incoming quality control procedures. However, with around 50 aircraft (according to estimates from inside sources) directly affected, delivery schedules are sure to be disrupted.

The hardware failure was the "last straw" because last Friday, Airbus had to perform an unprecedented software "major surgery" in its 55-year history.

A cockpit software bug that can cause planes to suddenly pitch down in high solar radiation has prompted regulators to issue an emergency order. More than 6,000 A320s, more than half the world’s fleet, must be patched immediately.

Although by Monday (December 1), Airbus announced that it had handled most of the problems and that there were only less than 100 planes that needed deeper hardware intervention, the psychological aftershock left for the market was huge.

The billion-dollar "misstep" and the obsession called quality

The reaction in financial markets was swift and devastating. As soon as news of the faulty metal panels broke, Paris-listed Airbus shares fell as much as 11% in early trading, hitting the bottom of Europe’s Stoxx 600 index. Although they later recovered slightly, the close of nearly 6% was enough to wipe out billions of dollars in market value in just a few hours.

Why did the market overreact so much to a technical glitch that was supposed to pose “no immediate safety risk”?

The answer lies in the "ghost" of Boeing. The global aviation industry has not yet recovered from the series of years of quality crises of its rival Boeing, from the 737 MAX to the recent fuselage problems. Investors are currently extremely sensitive to any signs of laxity in the quality control (QC) process. When Airbus, which is considered a safer and more stable place than Boeing, also has consecutive failures, confidence is severely shaken.

The pain is not just for Airbus, it is also spreading to the entire ecosystem. Shares of major partners and customers such as Lufthansa and easyJet are also in turmoil. Thales, a supplier of flight software systems for Airbus, also recorded a 2% drop. In the US, shares of airlines that use A320s a lot, such as American Airlines, are also under pressure to decrease.

This shows the global aviation industry's extreme dependence on the A320 narrow-body aircraft - the best-selling aircraft in history and the "backbone" of short-haul routes, especially in the Asian market.

Airbus shares listed in Paris fell as much as 10-11% at times in the first trading session of the week, wiping out billions of dollars in market capitalization (Photo: AFP).

December Sprint: Mission Impossible?

The timing of the incident could not have been worse for Airbus, which is entering December – the most important month of its financial year – with huge delivery pressure.

Airbus has delivered only 657 aircraft as of the end of November, according to figures. The company has committed to shareholders a target of around 820 aircraft for the entire year of 2025. Simple math shows that Airbus needs to deliver more than 160 aircraft in December alone. This is a figure that analyst Rob Stallard calls “extraordinary,” if not impossible, given the disruption to the supply chain.

The A320 is key to this plan. Since the pandemic, Airbus has been working hard to ramp up production of the plane to clear a backlog of more than 7,100 orders. Any delay, even the smallest, from replacing a sheet metal or updating software, could cause a domino effect, derailing the entire year’s plan.

"Meeting the 2025 delivery target was already a huge challenge for Airbus. The fuselage failures are a real blow at the worst possible time," said an aviation expert from Vertical Research Partners.

While analysts like Chloe Lemarie of Jefferies and Rob Morris remain optimistic that Airbus can hit the 800-odd figure—a level that would be acceptable for “success”—the risk of missing the target is real. This incident is not just a technical issue, it is a risk management and supply chain management problem that Airbus must solve if it wants to maintain its lead over a resurgent Boeing.

Source: https://dantri.com.vn/kinh-doanh/airbus-va-cu-soc-a320-gap-loi-kep-von-hoa-hang-boc-hoi-hang-ty-usd-20251202092525155.htm