A380 Deliveries To Cease In 2021

Airbus SE reported strong Full-Year (FY) 2018 consolidated financial results and delivered on its guidance for all key performance indicators.

“Though 2018 had plenty of challenges for us, we delivered on our commitments with record profitability thanks to a strong operational performance, particularly in Q4,” said Airbus Chief Executive Officer Tom Enders. “With an order backlog of around 7,600 aircraft, we intend to ramp-up aircraft production even further. However, due to the lack of airline demand we have to wind down production of the A380. This is largely reflected in the 2018 numbers. On A400M, we succeeded in re-baselining the program with our government customers and their domestic approval processes should conclude in the coming months. All in all, we have achieved significant de-risking of the A400M in 2018. The strength of last year’s achievements is reflected in our record dividend proposal. In sum, Airbus stands on a solid growth trajectory and our helicopter, defence and space businesses are also in good shape as the new management team under my successor Guillaume Faury gets ready to take over.”

As of 1 July 2018, the A220 aircraft program has been consolidated into Airbus.

Net commercial aircraft orders totalled 747 (2017: 1,109 aircraft), including 40 A350 XWBs, 27 A330s and 135 A220s. Showing the underlying health of the market, the order backlog reached an industry record of 7,577 commercial aircraft at year-end, including 480 A220s.(4)  Net helicopter orders increased to 381 units (2017: 335 units) with a book-to-bill ratio above 1 in terms of both value and units. Order intake included 15 H160 and 29 NH90 helicopters. Airbus Defence and Space’s 2018 order intake of around € 8.4 billion included the Eurofighter for Qatar, four A330 MRTT tanker aircraft and two new generation telecommunication satellites.

Consolidated order intake(4) in 2018 totalled € 55.5 billion ($63 billion) with the consolidated order book(4) valued at € 460 billion ($530 billion) on 31 December 2018 under IFRS 15.

On the A220 program, the focus remains on commercial momentum, the production ramp-up and cost reduction. A320neo Family deliveries increased to 386 aircraft (2017: 181 aircraft) and represented over 60% of overall A320 Family deliveries during 2018. The first  long-range A321LR was delivered in the fourth quarter. Deliveries of the Airbus Cabin Flex version of the A321 are expected to increase in 2019 although the ramp-up will remain challenging. Further upgrades of the Pratt & Whitney GTF engine for the A320neo are due to arrive in 2019. Airbus continues to monitor in-service engine performance. Overall, the A320 program is on track to reach the monthly targeted production rate of 60 aircraft by mid-2019 with rate 63 targeted in 2021. On the A330neo program, the first A330-900s were delivered and the smaller A330-800 conducted its maiden flight in the final quarter of 2018. In 2019, A330neo deliveries are due to ramp-up. Airbus is working closely with its A330neo engine partner to deliver on customer commitments.

Following a review of its operations, Emirates is reducing its A380 orderbook by 39 aircraft with 14 A380s remaining in the backlog yet to be delivered to Emirates. As a consequence of this decision and given the lack of order backlog with other airlines, deliveries of the A380 will cease in 2021. The recognition of the onerous contract provision as well as other specific provisions and the remeasurement of the liabilities have led to a negative impact on EBIT of € -463 (-$523) million and a positive impact on the other financial result of $200 million.

A350 deliveries increased compared to 2017 and included 14 of the larger A350-1000s. The program reached rate 10 in the fourth quarter of 2018. The backlog supports this rate going forward, including the latest commercial discussions with Etihad to reduce its A350 order by 42 A350-900, leaving 20 A350-1000 for Etihad in the backlog. Airbus will continue to improve the A350 program’s performance to reach breakeven in 2019 and improve margins beyond this.

Airbus Helicopters’ EBIT Adjusted increased to € 380 million ($429 million) reflecting higher Super Puma Family deliveries, a favorable mix and solid underlying program execution.

Airbus Defence and Space’s EBIT Adjusted totalled € 935 million ($1.05 billion), mainly reflecting solid program execution.  

On the A400M program, 17 aircraft were delivered during the year. Airbus continued with development activities toward achieving the revised capability roadmap.

As the basis for its 2019 guidance, the Company expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions. The 2019 earnings and Free Cash Flow guidance is before M&A.

Airbus targets 880 to 890 commercial aircraft deliveries in 2019. On that basis: Airbus expects to deliver an increase in EBIT Adjusted of approximately +15% compared to 2018 and FCF before M&A and Customer Financing of approximately € 4 billion ($4.52 billion).

(Source: Airbus news release)

FMI: www.airbus.com