Highlights

• Airbus publicly rebuked Pratt & Whitney for insufficient engine deliveries, trimming A320neo production goals as 600-700 engines require inspection and shop visits through 2026 due to powder metal defects.
• Modern aircraft electrification dramatically increases dependence on rare earth permanent magnets (neodymium, dysprosium, samarium) for critical systems, while China controls the entire vertically-integrated supply chain.
• U.S. aerospace resilience now requires securing domestic magnet-grade rare earth supply from mining to production, with new DoD sourcing restrictions taking effect in 2027 and at least a decade of supply chain rebuilding ahead.

---

Did Airbus Fire a Shot Across the Bow?

Yes — and it was deliberate.

REEx Reflection

Airbus recently criticized Pratt & Whitney, saying it is not delivering enough engines to keep up with planned airplane production. Because of engine shortages and required inspections, hundreds of engines must be removed and repaired before they can fly again. That means fewer engines are available for new aircraft, slowing deliveries. At the same time, modern planes are using more electrical systems, which depend on powerful magnets made from rare-earth minerals. The United States is concerned because China controls much of the world’s rare earth processing and magnet production. So while the engine problem itself is about metal parts, it highlights a bigger issue: America’s aerospace industry depends on secure supply chains for critical materials. To stay competitive, the U.S. will strengthen its domestic production of rare earths and magnets over the next decade. P

What’s Happening?

Last week, Airbus SE publicly rebuked (opens in a new tab) Pratt & Whitney (RTX), stating engine deliveries were insufficient to support its A320neo (opens in a new tab) production ramp and warning it would “enforce our contractual rights.” The European airframer trimmed its A320neo-family production goal to 70–75 aircraft per month by end-2027 (75/month thereafter) and guided to roughly 870 commercial deliveries in 2026, versus 793 in 2025. Shares fell approximately 6% on the news.

Pratt & Whitney powers roughly 40% of the A320neo fleet. That is not marginal exposure. It is a structural dependence.

This is a public dispute between a European OEM and one of the crown jewels of American aerospace manufacturing. And it is unfolding at a moment when global supply chains remain tight, and geopolitical risk remains elevated.

The Real Constraint: Shop Capacity, Not Just Output

The bottleneck is not simple factory throughput. It is a capacity triage.

Pratt’s Geared Turbofan (opens in a new tab) (GTF) family faces inspection requirements tied to a previously disclosed “rare condition in the powder metal” used in certain components (opens in a new tab). Regulators, including the Federal Aviation Administration and the European Union Aviation Safety Agency, mandated inspections requiring engine removals and shop visits.

RTX has indicated approximately 600–700 engines would be pulled between 2023 and 2026.

Every engine in the shop is an engine not delivered.

The conflict is straightforward: limited overhaul capacity must support in-service fleets while Airbus simultaneously seeks to accelerate new production. That tension is the core operational constraint.

This is likely temporary. But it is meaningful.

The Rare Earth Reality: Electrification Is the Next Bottleneck

The GTF issue is metallurgical, not magnetic. But aviation’s next productivity lever is electrification — and electrification is magnet-intensive.

Modern narrowbody aircraft increasingly rely on high-performance electrical machines: starter-generators, environmental control pumps, flight-control actuators, fuel systems, and advanced sensor architectures. These subsystems favor rare-earth permanent magnets for power density, efficiency, and high-temperature stability.

NASA research has long highlighted samarium-cobalt (SmCo) magnets for aircraft electrical machines due to their high coercivity and resistance to demagnetization in elevated thermal environments. In high-heat aerospace applications, SmCo and high-dysprosium NdFeB magnets are often preferred.

Importantly, magnet-grade rare earths — neodymium, praseodymium, dysprosium, terbium, samarium — represent the majority of rare earth market value despite being a minority of volume. Europe’s European Raw Materials Alliance explicitly identifies aerospace and defense as priority magnet consumers.

The implication is not that rare earths caused this engine crisis. It is that aircraft production intensity and electrification depth increase strategic exposure to magnet supply chains.

The Geopolitical Overlay: America Understands the Risk

The U.S. Department of Defense has tightened sourcing rules for samarium-cobalt and NdFeB magnets, with expanded restrictions effective January 1, 2027. The U.S. Government Accountability Office has noted that China remains the only country with large-scale, vertically integrated processing capability across every stage of the NdFeB permanent magnet supply chain.

Goldman Sachs and other market analysts have similarly highlighted China’s dominance across mining, separation, and magnet manufacturing.

This matters because aerospace electrification raises magnet intensity per aircraft, while defense procurement rules narrow sourcing flexibility. As supply chains tighten, upstream magnet-grade materials move closer to aviation’s operational risk surface.

That is not theoretical. It is structural.

The American Industrial Imperative

Pratt & Whitney, again part of the RTX family, remains a pillar of U.S. aerospace capability. The GTF architecture delivers measurable fuel efficiency gains and will remain a competitive platform. The inspection cycle will resolve. Shop capacity will expand. American engineering depth is not in question.

But this episode exposes a broader reality: Aerospace resilience is no longer just about turbines and titanium. It is about magnets, rare earth oxides, separation capacity, and domestic supply chains.

If the United States intends to maintain aviation leadership, it must secure magnet-grade rare earth supply — from mining to separation to sintered magnet production — at an industrial scale.

Airbus may be frustrated. Investors may be cautious.

But the strategic lesson is larger: Industrial sovereignty in advanced aerospace now runs through the magnet. And as Rare Earth Exchanges™ has chronicled, this necessitates a level of industrial policy heretofore not contemplated in heavily market-based societies such as America. At least during the phase of supply chain rebuilding which will last for at least the next decade.   President Trump’s administration has stepped in and done more for this project than any previous administration. And as well, however, the mission is by no mean complete, meaning more integrated comprehensive policy will be necessary.