Zodiac says heeds Airbus wrath over output delays

PARIS (Reuters) - Embattled aerospace supplier Zodiac Aerospace ZODC.PA said on Thursday it had heard loud and clear an angry warning from planemaker Airbus AIR.PA about delays in production of cabin equipment and vowed to sort out the problem.

People are silhouetted past a logo of the Airbus Group during the Airbus annual news conference in Colomiers, near Toulouse January 13, 2015. REUTERS/Regis Duvignau

The pledge came two days after the world’s second-largest planemaker accused Zodiac’s management of being “in denial” about repeated delays in seat production and announced it had thrown the French company off one of its projects.

Boeing BA.N has also expressed concerns about the delays.

“The message from Airbus was, ‘OK, Zodiac, we’ve had enough. Any time there is a delay on a single seat, you need to fix it as quickly as possible because it is intolerable’,” Zodiac Chief Executive Olivier Zarrouati told shareholders.

He said Zodiac had spent 300 million euros ($325.71 million) to deal with the crisis which triggered several profit warnings, but had wasted six months trying to assess the situation.

“Errors were made,” Zarrouati said, adding that he was confident with the solutions now in place.

He said the company still faced a backlog of 300 delayed seats, but the level was stable compared with the one of mid-December, and down from 500 in November.

He predicted the delays would be eliminated by September.

Airbus said on Tuesday it had missed its delivery target for the new A350 by one aircraft in 2015, delivering 14 instead of 15, due to the late arrival of onboard toilets built by Zodiac.

Chief Executive Fabrice Bregier said he had lost patience after repeated delays in Zodiac’s production, which has focused especially on two factories in the United States..

In a rare public scolding, he also cast doubt on the pace of Zodiac’s recovery, saying the company remained “in the ditch”.

His ire was reinforced by a decision by Airbus to remove Zodiac from its list of suppliers for the A330neo aircraft so that it can remain focused on meeting its current obligations.

Zarrouati said he “regretted” that decision, adding that the contract would have allowed Zodiac to improve its delivery thanks to recent innovations.

Zodiac's shares which have lost 12 percent since the start of the year, after falling by 21 percent in 2015, were down 2.03 percent to 19.285 euros at close on the Paris bourse, slightly underperforming the CAC 40 .FCHI which was down 1.8 percent.($1 = 0.9211 euros)

Additional reporting by Tim Hepher; Writing by Bate Felix, Tim Hepher; Editing by Andrew Callus and Adrian Croft