Leonardo has detailed additional diversification efforts at its Grottaglie aerostructures plant in southern Italy, including the likely transfer of parts production for the AW101 heavy military helicopter, as it moves to reduce the site’s “dangerous” overreliance on the Boeing 787.
In addition, the Italian aerospace champion is seeking an expanded relationship with Airbus on the A220 programme as part of a broader plan to return the aerostructures division to profitability.
Revealing the latest industrial strategy for the aerostructures business during a half-year results call on 30 July, Leonardo chief executive Roberto Cingolani said improving the division’s performance was now a company-wide effort.
“Before, if aerostructures had a problem it had to fix the problem on its own. Now the one company is working like a company: we can move production from one site to another because this is in the interest of the one company, not a single division,” he says.
Even before the disruption wrought by Covid-19, Leonardo had been attempting to fix the underperforming division; its most recent target was to hit break-even in 2025, a goal now likely to be pushed into the following year.
In addition to supplying the A220 and A321 and ATR joint-venture with Airbus, Leonardo builds composite centre fuselage barrels for the Dreamliner at Grottaglie and horizontal stabilisers in Foggia.
However, Boeing’s decision earlier this year to reduce output of the 787 on safety and quality concerns has hampered the recovery process.
Monthly deliveries to Boeing have fallen from around 10 shipsets to just three, a position that Cingolani says “we cannot stand as a business” and which has led to an accumulation of “more than 40 fuselages” at Grottaglie.
Although it shipped 18 787 fuselages in the first quarter of 2024, up on the 12 delivered to Boeing in the same period a year earlier, just five fuselages were handed over in the subsequent three months, Leonardo’s accounts show.
In the short-term, the business is reducing output from the plant to better align with current demand, in mid-July securing an agreement with trade unions to reduce operations at the site to a single shift, a pact that avoids a proposed four-month shutdown.
While Leonardo is confident that Boeing will return to the 10-per-month output in 2025 – and likely higher in the following years – Cingolani says the restructuring at Grottaglie needs to go further.
“The limit is that this is a single provider on a single model. We believe we cannot stand – it is too dangerous for the company and we would like to diversify and contribute to the relaunch of this plant,” he says.
Leonardo has already announced it will open a second final assembly line for the AW609 at Grottaglie in anticipation of the tiltrotor’s certification, a milestone now envisaged in 2025.
Between the new line and the existing AW609 facility in Philadelphia, the company will be able to produce around 30 aircraft per year at peak output, Leonardo says.
But to further diversify Grottaglie, the manufacturer will also introduce the fabrication of components for the AW101, transferring the work from its helicopter division’s plant in nearby Brindisi. Final assembly of the AW101 will continue to take place in Yeovil in the UK, Leonardo stresses.
In addition to bolstering Grottaglie’s workload, the move will also create additional capacity at Brindisi, helping the company to deal with an expected ramp-up in helicopter production in the coming years.
On top of the plans for future production increases, Leonardo has for some time been negotiating a rate increase with Boeing; praising the “constructive” nature of the talks, Cingolani is hopeful they can be finalised in September.
Meanwhile, to further shore up the aerostructures business, the firm has “opened discussions” with Airbus to “expand the collaboration” on the A220, for which it currently makes the vertical and horizontal stabilisers.
“We plan to sign by the end of the year a new agreement for the fabrication of the rear parts of the A220,” says Cingolani.
In the first six months of the year, aerostructures revenues climbed slightly to €353 million ($385 million), up from €327 million in the first half of 2023, yielding a negative EBITA figure of €76 million, a negligible 1.3% improvement on the €77 million loss recorded a year earlier.
