Airbus adjusts its course and revises its delivery forecasts downwards
[Article mis à jour le 27/07/2022 à 21:00, avec les déclarations de Guillaume Faury et les résultats semestriels]
The overhaul is small but significant at a time when Airbus has made ramping up its top priority. The European manufacturer has just reduced its delivery forecast for the year on the occasion of the publication of the half-year results on July 27th. While the company was targeting 720 aircraft by then, it is lowering its target to 700. The impact will continue to be felt next year when the ramp-up trajectory for the A320 NEO Family is adjusted. However, the goal of reaching 75 copies per month in 2025 remains unchanged.
The news had been brewing for some time. Despite an acceleration in June with the resulting number of 58 deliveries, including 53 single-aisles, Airbus did not reach the level of 2021 with 77 aircraft. And with fewer than 50 aircraft in April, as in May, it had already fallen behind the previous months. In fact, only 295 aircraft were delivered at the end of June 2022, compared to 297 the year before. For the full year, Airbus should still do better than last year when it delivered 611 aircraft.
However, the manufacturer has been on a big upswing since last year. Starting from 40 A320 NEO Family aircraft per month, a consequence of the sudden drop in production in response to the Covid-19 pandemic in 2020, it reached the rate of 45 in late 2021. For 2022 it should be 50 aircraft per month, Months of the year and eventually return to pre-crisis levels with 65 monthly devices by summer 2023.
65 devices per month in 2024
With the revision carried out by Airbus, this target is now only expected in early 2024. A six-month delay, then, which Guillaume Faury, Airbus Executive Chairman, attributes to the “ongoing disruptions” that have rattled the global supply chain since the health crisis.
“We have updated our 2022 commercial aircraft delivery target to reflect the current challenges we are seeing in the supply chain,” he said. And while noting some improvements, he adds that with “the ongoing war in Ukraine and related international sanctions, we continue to operate in a time of uncertainty and volatility.”
The ramp-up of the A320 NEO Family remains “top priority” despite a complex and challenging environment. “Our Airbus team is fully collaborating with our suppliers and our partners, and if necessary we will continue to adjust and transform our supply chains as the situation evolves,” warned the director. Nevertheless, he believes that the risks have largely been eliminated with the new ramp-up plan in agreement with his suppliers “especially, but not only with the engine manufacturers”. There have been many talks in recent weeks, including in Farnborough.
“We think our plan is reasonably solid. The environment is difficult and using the usual crystal ball is quite complicated. It doesn’t seem to work anymore either. Jokes aside, we believe this reflects what we can do based on our current understanding of this environment: the state of the industry, the state of global logistics and the labor market, the ability of each supplier, especially the most critical ones, to ramp up.. .”, Guillaume Faury, Executive Chairman of Airbus.
And Guillaume Faury confirmed that the goal of producing 75 devices per month in 2025 still stands. This represents an unprecedented acceleration for the aviation industry. If achieved, Airbus would deliver 900 A320 NEO Family aircraft each year, not counting long-haul aircraft and the A220 Family. But even there, the supply chain must be able to follow the manufacturer’s ambitions, as some equipment manufacturers, such as motor manufacturer Safran, have expressed reservations in this regard.
Impact on Results
Despite the downward revision of deliveries, Guillaume Faury maintains its financial targets with an adjusted operating profit of 5.5 billion euros and a free cash flow of 3.5 billion euros before M&A and customer financing.
But that difficulty in keeping up the pace is felt in the results. Half-year revenue increased by 1% compared to 2019 to 24.8 billion euros, but this was solely due to the good performance of the defense activities (+26%) of Airbus Defense & Space and Airbus Helicopters. Sales of commercial aircraft alone even fell by 2% to 17.5 billion euros.
At EUR 2.6 billion, the operating result is also 5% lower than in the previous year. In the present case, however, this is due to a loss of profitability in the Defense & Space division, which was affected by the Ariane 6 delays. However, it had improved its turnover thanks in part to military aircraft activities and the signing of the Eurodrone contract in February. Consolidated net income fell by 15% to 1.9 billion euros.
The good news comes from orders. With 259 net despite 147 cancellations, Airbus has made a big leap and increased its balance sheet sevenfold compared to the first half of 2021. Again, that doesn’t include the sale of 292 A320 NEOs to four Chinese companies announced in early July and pending closure, or the (more modest) deals signed at last week’s Farnborough show.
Airbus Defense & Space also jumped in this area with €6.5 billion in new orders (+86%), while Airbus Helicopters made more modest progress with 163 net orders (+33%).