Buoyant results for Airbus suggest quicker recovery than forecast
Airbus has cut production and jobs to get through the downturn, reducing output by about a third in April and shrinking the workforce by 11%
Toulouse — Airbus was able to stem the outflow of cash in the third quarter, fuelling the planemaker’s confidence that it can emerge from the Covid-19 pandemic well placed for a swift recovery.
The European company is on track to meet a target of “at least” break-even adjusted free cash flow in the fourth quarter, Airbus said in a statement Thursday. The group generated €600m cash in the three months through September, having burnt through €4.4bn in the second quarter.
The update adds to mounting evidence that Airbus has fended off the most dire impact of the unprecedented aviation crisis, even as virus cases surge in the US and Europe. CEO Guillaume Faury has so far balanced the necessary staff and output cuts with aggressive efforts to preserve the planemaker’s order book and supplier base, and is working on plans to increase production of its most popular narrowbody jets from next year.
Airbus is “sitting more comfortably,” Jefferies analyst Sandy Morris said in a note to clients. “After a gruesome second quarter, to reach this point so soon is remarkable.”
The forecast indicates a more optimistic approach than arch rival Boeing, which said on Wednesday it would cut 7,000 more jobs to adapt to the jet market’s “new reality”. Even so, Airbus said its fourth-quarter forecast hinges on “no further disruptions to the world economy,” air traffic, and internal operations.
Airbus delivered 145 planes in the third quarter, as travel demand remained subdued, compared with just 28 jetliners for Boeing. The company surprised the market with a more ambitious target for output of its most popular programme last week, telling suppliers to be ready to support a monthly rate of 47 A320neo-family planes in the second half of 2021.
The planemaker, which announced plans to cut 15,000 jobs in July, posted a restructuring charge of €1.2bn, mainly due to the cost of voluntary and compulsory cuts. Third-quarter adjusted earnings before interest and taxes fell 49% to €820m, beating the average analyst estimate.
Airbus has cut production and jobs to get through the downturn, reducing output by about a third in April and shrinking the workforce by 11% in the northern hemisphere summer.
While the company made progress in stemming the cash drain in the third quarter, it burnt through €11.8bn in the first nine months of 2020. Revenue fell 27% to €11.2bn, driven by lower deliveries in the aerospace business and reduced sales in the Defence and Space segment.
Matching aircraft production with deliveries will be key to halting the outflow of money from the business and could get more challenging as countries including Germany and France introduce new lockdowns.
At the end of September, the number of commercial aircraft that could not be delivered due to the pandemic had reduced to about 135, compared with 145 at the end of July.
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