Airbus 1H2020; “We have reached the right production level for the pandemic”

By Bjorn Fehrm

July 30, 2020, © Leeham News: Airbus presented its results for the first half of 2020 today. Airbus CEO, Guillaume Faury said on the analyst call “We made a large adjustment to lower production rates end April. We are there now and it seems the right level. Except for a small adjustment for A350, from six to five per month, we are happy, we have found the right level for the crisis”.

The group revenue settled at €18.9bn for the first half of 2020 compared with €30.9 a year ago, with deliveries at 196 commercial aircraft (389 1H2019). EBIT adjusted for the first half is €-0.9bn, the size of the COVID-19 extra costs charge.

Airbus has sized the industrial system, now it’s about tuning the cost side

The key theme during today’s media and analyst calls was; Airbus has downsized production to the level it needs for the COVID pandemic. Now it’s about delivering 145 undelivered aircraft and reducing costs during the second half of 2020 to the new level of production.

In this cost down, Airbus is targeting black numbers for Free Cash Flow before the end of 2020 when excluding M&A and customer financing.

Net commercial aircraft orders were 298 (88 1H2019) with eight orders in 2Q2020, with a total backlog of 7584 airliners.

Revenue for 1H2020 was €18.9bn (€30.9bn 1H2019), operating EBIT was €-0.9bn (€2.5bn), and net profit was -€1.6bn (€2.1bn). It contains adjustments of € 0.3bn for A380 costs and €0.3bn compliance and other costs.

Free cash flow before M&A and customer financing was -€12.5bn (-€4.4bn), which includes compliance settlement payments of €3.6bn in 1Q2020. The 2Q2020 cash outflow was €-4.4bn. Airbus has the target to get this to zero before the end of 2020.

Airbus had 67 order cancellations during 1H2020, with only one in the second quarter.


The present delivery rate for A320 is maintained at 40 per month and the A220 will increase its rate back to four at Mirabel. Mobile ramp of A220 is as planned pre-COVID. The A350 production reduces to five from six per month with A330neo staying at two per month.

The reduction of 15,000 jobs until 2021 is a work in progress. Discussions are underway with Airbus trade unions.

The Airbus suppliers have adapted to the new production level, and it seems acceptable to them said Faury. Those that struggled to keep up before have now eliminated their delays. Airbus is monitoring the financial health of its supplier base vigorously and will step in if need be.

Airbus is adjusting deliveries to a joint satisfactory time for its customers and Airbus. In case of an agreed delay, it argues and gets additional payments from the customer, representing the additional work completed by Airbus.

The last A380 delivery of nine remaining aircraft (one ANA, eight Emirates) leaves Airbus 2021.

Helicopters and Defense and Space stayed flat during the second quarter, thanks to an increased services business. The A400M, which had three deliveries during the second quarter, passed an important automatic low-level flight and simultaneous paratrooper dispatch capability milestone.

Guidance, cash, and debt

Airbus gives no 2020 guidance due to the difficulty in judging how the pandemic will develop.

Airbus has €17.5bn (€22.7bn) in cash end 1H2020 with a net debt position of €-0.6bn (€12.5bn).

7 Comments on “Airbus 1H2020; “We have reached the right production level for the pandemic”

  1. A380 must be so good that airlines still want it. Is Emirates really this crazy?

    Delivering of 40 A320 per month is not bad. I thought they would need to park more which would be really bad.
    Are they only producing CabinFlex now or still the old variant?

    Sad that the A321XLR and A320plus are not mentioned.

    • For the A380, what gets built and what gets delivered can be two different sides of the coin.

      It gets back into the parts for them (all in place or built) what has been paid to Airbus (large percentage now) and if there is any need for them by Emirate and ANA.

      Boeing has sold the cargo 747-8F and the market is there, they can’t make any more due to loss of a major fuselage section supplier. As the 747 is ending as well, it must mean there is no money to be made or a loss to get the former Vaught built sections build by Boeing or someone else.

  2. While I think the A220 rate is needed (a lot of backlog) the A320 series has a lot of built and not delivered.

    I expect further rate drops. We are seeing a surge all over as people relax the standards that got Covd under some degree of control (or the US that never did)

  3. We should point out that the $3.6B “compliance settlement” was a civil penalty to avoid criminal conviction, as part of Deferred Prosecution Agreements with several countries. Airbus admitted guilt in those cases. The penalty was deemed a better redemptive solution for the EU economy, than the alternative conviction which would have been devastating.

    • Those billions migh soon be back in Airbus coffins as research support for a Hydrogen powered A320 successor..

      • If that happens, that will extend the EU WTO conflict with the US, and would lend support to the US position of subsidized activity between the EU and Airbus.

        On the other hand, if support is given to both Boeing and Airbus, by funding an organization that both Boeing and Airbus belong to and benefit from, that would diffuse the criticism. So that may be the preferred method.

  4. The NB backlogs of Airbus and Boeing are approaching a 2:1 level, with the benefit of the doubt on mainly Boeing MAX orders. The WB balance is moving too.

    I can see a broad response involving the supply chain, states, government, big airlines, NASA, president, silently “parking” WTO for a while.

    Name it “defending”, “responding”, ” leveling playing field”, anything cool.

    I think it might even be best for the global industry longer term, at least 2 strong players in every segment.

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