in Business & Finance

Airbus reports strong full-year 2018 results

Posted 18 February 2019 · Add Comment

Airbus SE has reported a strong Full-Year 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 programme 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 programme 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 with the consolidated order book(4) valued at € 460 billion on 31 December 2018 under IFRS 15. 

Consolidated revenues increased to € 63.7 billion (2017: € 59.0 billion(1)), mainly reflecting the record commercial aircraft deliveries. At Airbus, a total of 800 commercial aircraft were delivered (2017: 718 aircraft), comprising 20 A220s, 626 A320 Family, 49 A330s, 93 A350s and 12 A380s. Airbus Helicopters delivered 356 units (2017: 409 units) with revenues stable year-on-year on a comparable basis despite the lower deliveries. Higher revenues at Airbus Defence and Space were supported by its Space Systems and Military Aircraft activities.

Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructurings or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – totalled

€ 5,834 million (2017: € 3,190 million(1)), reflecting the strong operational performance and programme execution across the Company.

Airbus’ EBIT Adjusted increased to € 4,808 million (2017: € 2,383 million(1)) reflecting the higher aircraft deliveries. The strong improvement compared to 2017 is driven by progress on the learning curve and pricing for the A350 as well as the A320neo ramp-up and pricing premium. Currency hedging rates also contributed favourably.

On the A220 programme, 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 programme 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 programme, 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 million and a positive impact on the other financial result of € 177 million.

A350 deliveries increased compared to 2017 and included 14 of the larger A350-1000s. The programme 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 programme’s performance to reach breakeven in 2019 and improve margins beyond this.

Airbus Helicopters’ EBIT Adjusted increased to € 380 million (2017: € 247 million(1)), reflecting higher Super Puma Family deliveries, a favourable mix and solid underlying programme execution.

Airbus Defence and Space’s EBIT Adjusted totalled € 935 million (2017: € 815 million(1)), mainly reflecting solid programme execution. 

On the A400M programme, 17 aircraft were delivered during the year (2017: 19 aircraft). Airbus continued with development activities toward achieving the revised capability roadmap. Retrofit activities are progressing in line with the customer agreed plan. The customer Nations are now set to pursue their domestic approval processes. An update of the contract estimate at completion triggered a net additional charge of € -436 million on the programme. This mainly reflects the outcome of the negotiations and updated estimates on the export scenario, escalation and some cost increases. Risks remain on the development of technical capabilities and the associated costs, on securing sufficient export orders in time, on aircraft operational reliability in particular with regards to engines, and on cost reductions as per the revised baseline.

Outlook

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.

 

   

 

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