Airbus 2019: an operationally good year hit by compliance costs

February 13, 2020, © Leeham News in Toulouse: Airbus presented its results for 2019 today in Toulouse. Operationally, the company made a profit of €6.9bn but heavy fines (-€3.6bn) to settle a long-running bribery case and contingencies for A400M development cost coverage brought the net result to a loss of €1.3bn.

The Commercial aircraft division delivered 8% more aircraft 2019 (863 units vs. 800 2018). The mix of aircraft changed towards higher-margin single-aisle types like A321neo and A321LR whereas widebody margins peaked during 2019. The helicopter business is flat in a tough market and the profits of the Defense and Space division declined 40% on flat revenues.

Group-level results

Revenue for 2019 was €70.5bn (€63.7bn 2018), operating profit was €6.9bn (€5.8bn) and net profit was -€1.4bn (€5.8bn) after group write-downs of €5.6bn and financial instruments reevaluations of €2.7bn. Free cash flow for 2019 was €3.5bn (€3.5bn) and the cash position end 2019 was €12.5bn (€13.3bn).

Airbus proposes a dividend for 2019 of €1.80/share (+9% vs. 2018) but no shares buyback program.

Guidance for 2020 is:

  • Airbus targets around 880 commercial aircraft deliveries for 2020.
  • Airbus expects to deliver an EBIT Adjusted of approximately €7.5 bn
  • FCF before M&A and Customer Financing of approximately €4 bn before:
    • €-3.6bn for the penalty payments and a negative mid to high triple-digit million Euro amount for the consumption of compliance-related provisions for tax and legal disputes

Commercial aircraft

The single-aisle family of A320/A321 now represents 75% of the Commercial aircraft division’s deliveries. The A320 family delivers sold margins and the A320neo, A321neo, and A321LR claim premium margins. Unfortunately for Airbus, it can’t expand significantly on this success story as the range is now sold out until 2025.

Airbus has probed its supply chain what it can support in delivery rate going forward and it can expand the present 62/month to 63 in 2021, then to 64 to 65 in 2022 and 65 to 67 in 2023. When A320/321 deliveries can’t satisfy customer demand it will try to point customers to the A220 line where there are still delivery slots available.

The above is also the reason why Airbus can’t gain from the Boeing 737 MAX crisis; it can’t make up for any MAX customer delivery shortfalls. “We have to make sure we can serve our own customers, this is tough enough,” says Airbus CEO Guillaume Faury.

The A321neo now represents 50% of Airbus deliveries going forward and the many ACF variants delivered to new customers (meaning many new “heads of version” for the new ACF three-door pair variant) meant Airbus presently has a six-month delay in deliveries of A320 aircraft.

These problems shall now be under control after a good second half 2019 for the A321 ACF variant and Airbus expects to be back on its customer delivery schedule within 18 months.

The A220 is gaining traction inside Airbus, as this is a single-aisle line that is not sold out. After buying out Bombardier effective today and controlling a 75% stake in the program with the Government of Quebec as a 25% partner, the focus is now on the delivery ramp and cost down. The program will exit its cash eating initial learning curve by 2025 when deliveries shall be 150 to 160 aircraft per year.

Airbus started making a profit on A350s delivered since the end of 2019 and the program is now running without supplier problems. Widebody demand, in general, has softened and Airbus has decided to keep A350 deliveries at the present rate of 9 to 10 a month for the next years.

It will reduce A330 deliveries from 53 in 2019 to a planned 40 for 2020. In reality, this is a modest reduction in delivery rate as some of the 2019 aircraft were readied in 2018 but lacked engines pushed them to 2019 delivery.

Airbus thinks a delivery rate ~110 A350 (113 in 2019) and ~40 A330neo is the right level for years to come in a widebody market that has weakened.

The A380 is now at its end of production with the last wing set delivered from Broughton. The load on the result will be less than $200m (-€202m in 2019) in 2020 and will decline for subsequent years.


The helicopter market is still soft. With a focus on services, the revenue (€6bn) and profit level (€0.4bn) have been flat between 2018 and 2019.

Defense and Space

This is now the problem child of Airbus. The satellite business has projects which are not closing and the military projects have not picked up. Revenue was flat (€10.9bn) with profits declining 40% (0.6bn).

The cost coverage for the A400M development that was expected from export orders during the time frame of the present multinational OCCAR program was put to zero in a review of the program. This resulted in an additional write-down of €1.2bn for an already troubled program. Losses going forward are estimated to stay at the €0.5bn level for 2020 to 2022 whereafter they shall gradually disappear.

14 Comments on “Airbus 2019: an operationally good year hit by compliance costs

  1. Puh, effectively this means that the A320 has financed the entire company in 2019.
    330, 350, A400M, Helicopter and Space are around Zero, one small loss (A380) and 2 big write-offs.

    • 330 is very profitable thank you!
      and no deferred costs.
      and 350 will make big€ in coming years
      again no deferred costs
      helicopter has been profitable for years a little weaker but not bad..

      • Doesn’t Airbus no longer use program accounting for it’s aircraft like Boeing still does …which means the numbers are more real and not smoothed to ‘appear more profitable’ earlier

        • GAAP and associated program accounting was never available for Airbus. ( Good Thing (TM) )
          GAAP as such is already bent into giving better numbers than IFRS and other more held back reporting rule sets.
          i.e. Airbus numbers have always been more conservative and clearer than Boeing numbers.
          Though on a regular basis Boeing GAAP+PA numbers were used to determine performance superiority over Airbus. 🙂

  2. This was interesting regarding the A400M
    “also in light of the repeatedly extended German export ban to Saudi Arabia. As a result, the Company has reassessed its export assumptions on future export deliveries for the launch contract phase and recognised a charge of € 1.2 billion in the fourth quarter of 2019.”
    Essentially German export bans have led to $1 bill write down.
    Who will ever want to get Germany as a military aircrft partner again . It get worse as the Eurofighter exports are subject to another German ban.
    Dassault must be asking how did we ever end up with this country as a possible
    future fighter partner? UK will be glad they dumped them . As for military transports Saudis will probably buy C390 via Boeing who have a JV with Embraer

  3. The penalties Airbus pays to the France and UK gouverments could quickly be transfored to research Money for an A320neo successor to compete against the Boeing Sugar-Volt “the 7SV7” and Money to RR/Safran for the new engines it will need.

    • Repurposing the Airbus penalty funds, as a subsidy back to Airbus, would be a violation of numerous laws, not to mention ethics. There would be a huge and deserved backlash. It would be equivalent to the original crimes of Airbus, that generated the penalties.

  4. A330 production rate: A330 order figures in 2019 looks good. 40 planned deliveries in 2020 seem to me very low. How do you explain such différence? :
    Trent 7000 production issues might be an explanation or ” quality of some customer like Air Asia looks questionnable ?
    Premium Aerotec : €100m write down : is there a link with ACF A321neo production issues?

  5. Competition for military airlifters from Embraer, and Airbus itself (C295 which Canada is purchasing to replace its old C130s), plus new C130s (the J model which Canada now has for heavier lifting along with C17s).

  6. The higher tariffs on AirBus mean US Airlines will be paying 15% more for the A321XLR until it is build in Mobil. This gives foreign airlines a cost advantage in long thin markets to and from the US. United must be displeased.

    • Apparently they spent their lobbying money aka party donations in all the wrong places. So sad, really!

    • Why was Trump relucant not to increase to 25%.
      Airbus is in such a position that it don’t hurt them.

      EU and Airbus could say, “hey, we made a mistake and we decrease Airbus discounts to US customers (airlines and leasing companies) by 25% of the list price”.

      Let US fly their own Boeing products.
      Weeks later US customers move headquaters overseas.

  7. Funny how posts this got. could it be that it was bad news for Airbus?
    It’s quite humorous how even this story was turned into just another Boeing bash (Boeing weak and evil, Airbus strong and pure)! The comments here used to lean Airbus but were mostly interesting but now it’s turned into anti American and Boeing screed. It has caused most independent posters away which is of course exactly what you want; an echo chamber where you are never challenged.
    A shame.

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