[LONDON] Airbus said it will not cover the cost of tariffs on its planes imported by US airlines, setting up a clash with carriers unwilling to shoulder surcharges imposed by US President Donald Trump.
The European planemaker is responsible for any added duties on supplies it imports to its own aircraft assembly plant in Mobile, Alabama, and then sells on to customers, Airbus chief executive officer Guillaume Faury said on a conference call after reporting first-quarter results.
“However, when we are exporting from Europe to United States, that’s an import for the customers,” Faury said. “They are also not very much willing to pay tariffs, but it’s on them.”
The comments show how the aviation industry is scrambling to adjust to new fees filtering through an aerospace supply chain that’s been shielded from tariffs for decades. Faury said Airbus is working to mitigate the surcharges, though the process has strained a fragile system that already relies on the free flow of thousands of components across borders.
“I can tell you that the Airbus perspective is that they are not good for us and for the European industry, but they are not good as well for the US industry,” Faury said of the tariffs, advocating for a return to a duty-free status.
Airlines including Delta Air Lines and American Airlines Group have said they are not willing to pay the extra cost for planes. However, there are workarounds in some cases – Delta, for example, is routing a new Airbus A350-900 built in Toulouse, France, through Tokyo, Bloomberg reported this week, echoing a similar strategy the airline took in 2019 when a trade dispute led to short-lived US tariffs.
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“We are looking at opportunities to export to somewhere else than the US, especially for airlines who have international operations,” Faury said. “We are finding arrangements with several customers, with their network, their partners on how to deal with the situation.”
With its first-quarter results, Airbus cautioned that tariffs have injected further uncertainty into an aviation industry supply chain that still has not fully recovered from Covid-19.
The shares have declined 4.9 per cent this year. Thursday is a market holiday in France.
The company reiterated that it still aims to deliver about 820 commercial aircraft this year, though the target does not include the fallout from tariffs and assumes “no additional disruptions to global trade or the world economy”, according to a statement on Wednesday (Apr 30). Deliveries this year will be backloaded, “reflecting the specific supply chain challenges we are facing”, Airbus said.
Engine supplier Rolls-Royce Holdings said on Thursday that it expected to meet its financial targets this year as finds ways to mitigate the impact of announced tariffs. The UK manufacturer provides the engines for all Airbus wide-body aircraft.
Airbus has struggled to get engines for narrowbody planes, which constitute the bulk of deliveries. It said it expects output to be soft in the first half of 2025 as it builds planes that do not yet have engines, and so can’t be handed over to airlines.
In the first quarter, Airbus reported adjusted earnings before interest and tax of 624 million euros (S$709 million) on revenue of 13.54 billion euros. Net income came in at 793 million euros, beating the estimate of 532.6 million euros in a Bloomberg survey, after the company revalued certain equity investments.
Boeing has also been affected by Trump’s tariff onslaught. China retaliated with its own fees, and told its carriers that they should refrain from taking Boeing jets.
While Faury acknowledged the move by the country might be “good news” for the European planemaker, he said it’s in the interest of the entire industry to roll back the levies. BLOOMBERG
