Airbus group reports Q3 and first nine month 2014 results

Airbus today reported Q3 and first nine months results for 2014. It could be summarized with one sentence, “steady so”.

It is an Airbus group more in control of their destiny and programs then it has ever been, also when it was called EADS. There are still challenges in several programs but these are addressed from a position of strength and against a backdrop of these programs having passed their most risky periods.

First the financial results: revenue for the first 9 months were up 4% to € 40.5 bn, EBIT up with 12% to € 2.5 bn, both compared to first 9 months 2013. Free cash consumption is down to € 2.1 bn from € 4.7 bn last year and shall be break even on a full year basis.

Looking at the Airbus group divisions and their major programs the following can be noted:

Civil airliners
Has already passed the order target for the year with 791 net orders until 1 October, the strong market for airliners continue. Airbus has also reached both European and US certification for A350-900 and delivery of first aircraft is planned for December to Qatar Airways. Airbus points out that the program is still challenging and can cause provisions, we judge the program to be past its most challenging phase however.

Airbus says they are not worried to firm up the 127 A330neo order commitments they have got, these commitments are not counted in the order tally of 791. We hear good things about the program with airlines. The one program which is still challenging when it comes to sales and execution is the A380, no new orders so far, just the cancellation of the Skymark deliveries. Airbus maintains that A380 will stop costing money to produce and deliver come end of 2015. 

The market is weaker then expected, bookings was down to 208 from 276 units a year ago. Backlog has shrinked to 908 helicopters, about 3 years of production. EBIT margin is still acceptable at 5.7% on virtually flat deliveries and revenue.

Defense & Space
Defense is the problem child of the group, the large programs either don’t sell (Typhoon) or are hard to deliver to demanding customers (A400M). Airbus flagged that customers which has taken delivery of A400M are not fully pleased and that a program review will be made in time for full year results that can include further provisions for the program.

The highlight of the division is space which is developing well both for launchers and satellites and this will continue as Airbus sees it. In total revenue was down 2.2% to € 8.2 bn, cost control kept EBIT above 4% at € 370 m.

All in all no spectacular results but also no surprises. When comparing Airbus results with Boeing’s Q3 results one shall observe that Airbus takes the present development and ramp-up intensive period (A350, A320neo, A330neo and still A380) directly to the bottom line where Boeing uses program accounting and spreads development and ramp up costs for 787 (still costing the company to produce), 737 MAX and 777X over a longer period, the so call accounting block.  One shall therefore compare these two on the civil airliner side over a long period of time to understand the real performance difference between them.

7 Comments on “Airbus group reports Q3 and first nine month 2014 results

  1. Hello Björn.
    Did i hear well this morning : Airbus group cfo said to Reuters that A380 alors are filled 2015, 2016 and 2017… Quite surprising.


  2. Airbus has a A380 backlog of 177 aircraft which is almost 6 years production with the current production rate of 30 per year. The present production schedule has rater few slots to fill in production until 2020. The big question is if there will be more deferrals like for Skymark out of that backlog, there is quite a bit of softness in some positions (Virgin Atlantic, Amedeo…)

    • Thanks,
      Indeed the 2015 open slot story was before EK new order…
      For defferals :
      – AF 2 A380 deferral (first time in the web april/october 2013)
      – Air Austral
      – Virgin defers first delivery to 2018 (july 2013)
      – Qantas 8 a380 defered (feb 2014) after 2018…(the first two being delayed firstly in the 2016-2017 timeframe)
      – Skymark
      – Amedeo

      Only BA announced that it will take some earlier delivery positions.

      So I was surprised that the slots where filled for the following 3 years.

      Good surprise so

  3. The Boeing accounting still puzzles me. They are sitting on a huge barrel of dynamite.

  4. A380 decision is really tough,stick with ceo,neo,wait a bit then do a neo or the full 900.Leeham seems to think they will go with the neo quite soon,but what do you think they should do?

  5. I think it took the 747 20 yrs to do a first major re-engine, A320 25 years, 737 18 years, A330 24 years, 777 10 years. The A380 has no competition in its segment, 2021 (16 yrs)?

    • -100 -100SR -100B -200 in the first 10 years after initial EIS.
      JT9D-3A to JT9D-7A or CF6-50 or RB211-524
      Quite a lot of changes in a time were pressure from same size competition was negligible but Boeing appears to have been much nimbler and customer centric.

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