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.
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.
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).