Airbus is threatening to sue some of its airline customers who are refusing to honor their contracts with undelivered aircraft according to Reuters.
Many airlines have been requesting to delay deliveries due to the sudden drop in passengers due to the COVID-19 crisis.
Airbus delivered 24 aircraft in May.
Airbus SE reported consolidated financial results for its First Quarter (Q1) ended March 31, 2020.
โWe saw a solid start to the year both commercially and industrially but we are quickly seeing the impact of the COVID-19 pandemic coming through in the numbers,โ said Airbus Chief Executive Officer Guillaume Faury. โWe are now in the midst of the gravest crisis the aerospace industry has ever known. Weโre implementing a number of measures to ensure the future of Airbus. We kicked off early by bolstering available liquidity to support financial flexibility. Weโre adapting commercial aircraft production rates in line with customer demand and concentrating on cash containment and our longer-term cost structure to ensure we can return to normal operations once the situation improves. At all times, the health and safety of Airbusโ employees is our top priority. Now we need to work as an industry to restore passenger confidence in air travel as we learn to coexist with this pandemic. Weโre focused on the resilience of our company to ensure business continuity.โ
Net commercial aircraft orders totalled 290 (Q1 2019: -58 aircraft) with the order backlog comprising 7,650 commercial aircraft as of 31 March 2020. Airbus Helicopters booked 54 net orders (Q1 2019: 66 units), including 21 H145s, 15 UH-72 Lakotas for the US Army and 2 Super Pumas. Airbus Defence and Spaceโs order intake of โฌ 1.7 billion included military aircraft-related services, new contract wins in telecommunications and in connected intelligence. Also included is the Phase 1A demonstrator contract for Europeโs Future Combat Air Systems programme.
Consolidated revenues decreased to โฌ 10.6 billion (Q1 2019: โฌ 12.5 billion), reflecting the difficult market environment impacting the commercial aircraft business with 40 less deliveries than a year earlier, partly offset by a better mix and more favourable foreign exchange environment. A total of 122 commercial aircraft were delivered (Q1 2019: 162 aircraft), comprising 8 A220s, 96 A320 Family, 4 A330s and 14 A350s. Airbus Helicopters delivered 47 rotorcraft (Q1 2019: 46 units) with its 19% increase in revenues reflecting the favourable delivery mix and growth in services. Revenues at Airbus Defence and Space were stableย ย ย year-on-year. One A400M transport aircraft was delivered in the quarter.
Consolidated EBIT Adjusted โ 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 โ declined toย โฌ 281 million (Q1 2019: โฌ 549 million), mainly driven by Airbus.
Airbusโ EBIT Adjusted of โฌ 191 million (Q1 2019: โฌ 463 million(1)) mainly reflected the lower commercial aircraft deliveries and associated costs, partly offset by positive foreign exchange effects.
Airbus delivered further industrial progress in the first quarter, however around 60 aircraft could not be delivered due to the COVID-19 pandemic. As announced in early April, due to the COVID-19 situation average monthly aircraft production rates are being adjusted to 40 for the A320 Family, 2 for the A330 and 6 for the A350. This represents a reduction of roughly one third compared to pre-crisis average production rates. On the A220, the Final Assembly Line in Mirabel, Canada, is expected to progressively return to a monthly rate of 4 aircraft.
Airbus Helicoptersโ EBIT Adjusted increased to โฌ 53 million (Q1 2019: โฌ 15 million), reflecting the favourable delivery mix and growth in its services business.
EBIT Adjusted at Airbus Defence and Space decreased to โฌ 15 million (Q1 2019: โฌ 101 million), reflecting the lower business performance, including in Space Systems. Due to the severity of the coronavirus pandemic, the incremental impact on the business is being assessed and the restructuring plan at Defence and Space will be adjusted accordingly.
Consolidated self-financed R&D expenses totalled โฌ 663 million (Q1 2019: โฌ 654 million).
Consolidated EBIT (reported) was โฌ 79 million (Q1 2019: โฌ 181 million), including Adjustments totalling a net โฌ -202 million. These Adjustments comprised:
The consolidated reported loss per share of โฌ -0.61 (Q1 2019 earnings per share: โฌ 0.05) includes the financial result of โฌ -477 million (Q1 2019: โฌ -43 million). The financial result includes a net โฌ -245 million related to Dassault Aviation financial instruments and โฌ -136 million from the full impairment of a loan to OneWeb, which filed for Chapter 11 bankruptcy proceedings in late March. The consolidated net loss(2) was โฌ -481 million (Q1 2019 net income: โฌ 40 million).
Consolidated free cash flow before M&A and customer financing amounted to โฌ -8,030 million (Q1 2019: โฌ -4,341 million) and included the payment of โฌ -3.6 billion in penalties related to January 2020โs compliance agreement with the authorities. Despite the lower commercial aircraft deliveries and the significant inventory build-up, free cash flow before M&A and customer financing was at a similar level compared to the first quarter of 2019 when excluding the penalty payment. Consolidated free cash flow was โฌ -8,501 million (Q1 2019: โฌ -4,448 million).ย The consolidated net cash position was โฌ 3.6 billion on 31 March 2020 (year-end 2019: โฌ 12.5 billion) with a gross cash position of โฌ 18.4 billion (year-end 2019: โฌ 22.7 billion).
Given the current COVID-19 environment, various measures were announced in late March 2020 to protect the Companyโs financial liquidity and continue to fund its operations. These included securing a new credit facility amounting to โฌ 15 billion, withdrawing the 2019 dividend proposal and suspending the voluntary top up in pension funding. In addition, a โฌ 2.5 billion bond was issued, partially terming out the โฌ 15 billion credit facility, and settled on 7 April 2020. In coming quarters, the Company will continue to focus on cash preservation and will be reducing cash outflows. Besides reducing expected 2020 capital expenditure by around โฌ 700 million to around โฌ 1.9 billion, the activated measures also include the deferral and suspension of activities which are not critical to business continuity and to meeting customer and compliance commitments.
The 2020 guidance was also withdrawn in March. The impact of COVID-19 on the business continues to be assessed and given the limited visibility, in particular with respect to the delivery situation, no new guidance is issued.
Airbus has made this announcement:
A new aircraft hand-over and โe-Deliveryโ virtual process has recently commenced operation, guaranteeing continuation of Airbusโ delivery stream, while integrating the required health & safety requirements during the ongoing COVID-19 pandemic. The first customer to adopt the remote end-to-end process is Pegasus Airlines, which in the last few days received three brand new โe-deliveredโ A320neo Family aircraft.
More airlines will follow likewise in the coming days and weeks. This new e-Delivery approach comprises three main stages: (a) Technical Acceptance Completion (TAC) tasks delegated to Airbus (or to a local third party appointed by the airline); (b) electronic Transfer-of-Title (electronic ToT); and (c) ferry-flight and subsequent reception of the aircraft at the customerโs base.
For the TAC (which is a prerequisite for ToT) the airline can delegate Airbus to perform, on its behalf, all the necessary actions. These include the โground-checkโ, the acceptance test flight, acceptance manuals and procedures, as well as minor cosmetic rework if needed. Then for the ToT completion, Airbusโ and customersโ teams take benefit from a new secure collaborative platform: โe-SalesContractsโ. This brings them all together โ wherever they happen to be โ into one real-time virtual environment where they can optimise and simplify all the contractual transactions, from the paperless drafting and commercially negotiating the delivery documents up to the remote ToT digital signature. This platform thus obviates the need for any of the customerโs own staff to be physically present at the Airbus Delivery Centre. After the TAC and ToT formalities are complete, the subsequent ferry-flight is also performed in a health-wise safe manner whereby the customerโs own flight crew (or an appointed third party) can pick-up the sanitised aircraft and fly it straight back from the delivery centre to the airlineโs home base.
As well as affording a means of safe business continuity during the current COVID-19 crisis, the e-Delivery process, especially its new collaborative digital aspects โ which confer enhanced workflow efficiencies, flexibility, transparency, plus a more environmentally-friendly and smoother overall customer experience โ could become the blueprint for Airbus and its customers going forward.
Airbus has made this announcement:
After a solid commercial and industrial performance at the beginning of the year, Airbus (stock exchange symbol: AIR) is now revising its production rates downwards to adapt to the new Coronavirus market environment.
In Q1 2020, Airbus booked 290 net commercial aircraft orders and delivered 122 aircraft.
A further 60 aircraft were produced during the quarter, highlighting the solid industrial performance, however they remain undelivered due to the evolving COVID-19 pandemic.
36 aircraft were delivered in March across the different aircraft families, down from 55 in February 2020. This reflects customer requests to defer deliveries, as well as other factors related to the ongoing COVID-19 pandemic.
The new average production rates going forward have been set as follows:
This represents a reduction of the pre-coronavirus average rates of roughly one third. With these new rates, Airbus preserves its ability to meet customer demand while protecting its ability to further adapt as the global market evolves.
Airbus is working in coordination with its social partners to define the most appropriate social measures to adapt to this new and evolving situation. Airbus is also addressing a short-term cash containment plan as well as its longer-term cost structure.
โThe impact of this pandemic is unprecedented. At Airbus, protecting our people and supporting the fight against the virus are our chief priorities at this time. We are in constant dialogue with our customers and supply chain partners as we are all going through these difficult times togetherโ, said Airbus Chief Executive Officer Guillaume Faury. โOur airline customers are heavily impacted by the COVID-19 crisis. We are actively adapting our production to their new situation and working on operational and financial mitigation measures to face reality.โ
In its effort to support the fight against the COVID-19, Airbus has carried out extensive work in coordination with social partners to ensure the health and safety of its employees. This has been achieved by implementing new stringent work standards and processes. Airbus is contributing to the development, sourcing and ferrying of medical equipment, including facemasks and ventilators, in support of medical health services.
Airbus has made this announcement:
Airbus continues to purchase and supply millions of face masks from China, the large majority of which will be donated to governments of the Airbus home countries, namely France, Germany, Spain and the UK.
An Airbus flight test crew has just completed its latest mission with an A350-1000 test aircraft. This is the third of such missions between Europe and China. The aircraft returned to France with a cargo of 4 million face masks on Sunday 5 April.
The A350-1000 left Toulouse, France, on Friday 3 April, reaching the Airbus site in Tianjin, China on 4 April and returning to Hamburg the same day.
Since mid-March, the previous two missions were performed by an A330-800 and an A330 Multi-Role Tanker Transport (MRTT). Airbus also deployed an A400M and its Beluga fleet to transport shipments of masks between its European sites, in France, Germany, the UK and Spain.
Airbus will continue to support the fight against the Coronavirus pandemic wherever possible.
“I would like to pay tribute to all the Airbus teams, globally, supporting the fight against COVID-19. They’re living our values in assisting those who are saving lives every dayโ, said Guillaume Faury, Airbus CEO. ”
Airbus is focused on the health and safety of its employees and supporting its customers and the industry eco-system with business continuity. At the same time Airbus is contributing to many vital public and private services and working with partners who rely on aircraft, helicopters, space and security solutions to carry out life-saving missions in support of the global pandemic.
Airbus is deploying its employees, their expertise and know-how and leveraging technology in this fight against the COVID-19 pandemic, for example in designing and manufacturing ventilators and 3D printed visors which are critical resources for hospitals.
The Company is partnering with other organisations in unprecedented ways to achieve this goal as fast as possible.
Airbus has made this announcement:
Airbus SE (stock exchange symbol: AIR) announces measures to bolster its liquidity and balance sheet in response to the COVID-19 pandemic as it continues to assess the ongoing situation and the impact on its business, customers, suppliers and the industry as a whole.
โOur first priority is protecting people while supporting efforts globally to curb the spread of the coronavirus. We are also safeguarding our business to protect the future of Airbus and to ensure we can return to efficient operations once the situation recovers. We have withdrawn our 2020 guidance due to the volatility of the situation. At the same time, we are committed to securing the liquidity of the Company at all times through a prudent balance sheet policy. I am convinced that Airbus and the broader aerospace sector will overcome this critical period,โ said Airbus Chief Executive Officer Guillaume Faury.
Reflecting the Companyโs prudent balance sheet policy and to ensure financial flexibility, Airbusโ management has received approval from the Board of Directors to: secure a new credit facility amounting to โฌ 15 billion in addition to the existing โฌ 3 billion revolving credit facility; withdraw the 2019 dividend proposal of โฌ 1.80 per share with an overall cash value of approximately โฌ 1.4 billion; and suspend the voluntary top up in pension funding. Given the limited visibility due to the evolving COVID-19 situation, the 2020 guidance is withdrawn. Operational scenarios, including measures to minimise cash requirements, have been identified and will be activated depending on the further development of the pandemic.
With these decisions, the Company has significant liquidity available to cope with additional cash requirements related to the coronavirus. Liquidity resources previously standing at approximately โฌ 20 billion, comprising around โฌ 12 billion in financial assets at hand and around โฌ 8 billion in undrawn credit lines, were further bolstered by converting an existing โฌ 5 billion credit line into a new facility amounting to โฌ 15 billion. Available liquidity now amounts to approximately โฌ 30 billion.
By maintaining production, managing its resilient backlog, supporting its customers and securing financial flexibility for its operations, Airbus intends to secure business continuity for itself even in a protracted crisis. Safe and efficient air travel is a key backbone of global economic development and cultural exchange. Airbus therefore highly welcomes governmental efforts around the globe to stabilise this industry by supporting the financial health of its airline customers and its suppliers. Airbus continues to monitor the overall health of the industry.
Airbus has convened its 2020 Annual General Meeting in Amsterdam on 16 April. Due to the global outbreak of COVID-19, Airbus discourages physical attendance and strongly encourages shareholders to vote by proxy in line with public health and safety measures.
Airbus issued this statement:
Airbus deeply regrets USTRโs decision to increase tariffs on aircraft imported from the EU as well as the decision to maintain tariffs on goods from other sectors.
USTRโs decision to impose tariffs further escalates trade tensions between the US and the EU, thereby creating more instability for US airlines that are already suffering from a shortage of aircraft.
USTRโs decision ignores the many submissions made by US airlines, highlighting the fact that they โ and the US flying public โ will ultimately have to pay these tariffs.
Airbus will continue its discussions with its US customers and work with them to mitigate effects of tariffs insofar as possible.
Airbus has and will continue to push for a negotiated settlement to this 15-year-long dispute. USTRโs further escalation complicates efforts to find a negotiated outcome to this dispute. This is regrettable.
Airbus hopes that USTRโs position will change, especially when the WTO will authorize the EU to impose tariffs on Boeing aircraft, including the 737Max, 787 and 777 aircraft in the May/June timeframe.
The Airbus A330-800 has received joint Type Certification from the European Aviation Safety Agency (EASA) and the Federal Aviation Administration (FAA). The aircraftโs certification flight-test campaign was successfully performed by aircraft MSN1888, which completed the programme in 370 flight test hours and 132 flights since its first flight in November 2018.
The A330-800, part of a true new-generation A330neo family, is the most efficient longest range entry-level widebody and incorporates new Rolls-Royce Trent 7000 engines, a new 3D-optimised wing and new Sharklets using lighter composite materials. Together, these advances bring a significant reduction in fuel consumption of 25 per cent compared with older generation competitor aircraft of similar size.
Certified initially with a maximum take-off weight (MTOW) of 242 tons for a range capability of up to 7,500 nautical miles, the A330-800 will typically seat 220 to 260 passengers in three classes, or up to 406 travellers in a single-class high-density configuration. To date the A330neo Family has won 337 firm orders from 22 operators.
In the A330-800, passengers can expect the highest levels of comfort, with the aircraft featuring the award-winning Airspace by Airbus cabin with larger overhead storage, advanced cabin mood lighting and the latest in-flight entertainment and connectivity. Operationally, the A330neo shares a common pilot type-rating with the larger A350 XWB, which facilitates minimum flight training cost and maximum pilot productivity. Maintenance personnel will also benefit from the aircraftโs new Skywise data connectivity features which will help them to predict potential issues before they arise, thus ensuring maximum productivity of the aircraft in revenue service.
The A330 is the most popular widebody family ever, operating over one million flights every year. It has received over 1,800 orders from 120 customers with 1,400 A330s currently in operation today. The A330neo is the latest addition to the leading Airbus widebody Family, which also includes the A350 XWB, featuring unmatched space and comfort combined with unprecedented efficiency levels and unrivaled range capability.
Above Copyright Photo: Airbus A330-841N F-WWTO (msn 1888) TLS (Paul Bannwarth). Image: 949077.
Airbus SE, the Government of Quรฉbec andย Bombardier Inc. have agreed upon a new ownership structure for the A220 program, whereby Bombardier transferred its remaining shares in Airbus Canada Limited Partnership (Airbus Canada) to Airbus and the Government of Quรฉbec. The transaction is effective immediately.
This agreement brings the shareholdings in Airbus Canada, responsible for the A220, to 75 percent for Airbus and 25 percent for the Government of Quรฉbec respectively. The Governmentโs stake is redeemable by Airbus in 2026 – three years later than before. As part of this transaction, Airbus, via its wholly owned subsidiary Stelia Aerospace, has also acquired the A220 and A330 work package production capabilities from Bombardier in Saint-Laurent, Quรฉbec.
This new agreement underlines the commitment of Airbus and the Government of Quรฉbec to the A220 programme during this phase of continuous ramp-up and increasing customer demand. Since Airbus took majority ownership of the A220 programme on July 1, 2018, total cumulative net orders for the aircraft have increased by 64 percent to 658 units at the end of January 2020.
With this transaction, Bombardier will receive a consideration of $591M from Airbus, net of adjustments, of which $531M was received at closing and $60M to be paid over the 2020-21 period. The agreement also provides for the cancellation of Bombardier warrants owned by Airbus, as well as releasing Bombardier of its future funding capital requirement to Airbus Canada.
โThis transaction supports our efforts to address our capital structure and completes our strategic exit from commercial aerospace,โ said Alain Bellemare, President and CEO Bombardier, Inc.ย โWe are incredibly proud of the many achievements and tremendous impact Bombardier had on the commercial aviation industry.ย We are equally proud of the responsible way in which we have exited commercial aerospace, preserving jobs and reinforcing the aerospace cluster in Quรฉbec and Canada.ย We are confident that the A220 program will enjoy a long and successful run under Airbusโ and the Government of Quรฉbecโs stewardship.โ
The single aisle market is a key growth driver, representing 70 percent of the expected global future demand for aircraft. Ranging from 100 to 150 seats, the A220 is highly complementary to Airbusโ existing single aisle aircraft portfolio, which focuses on the higher end of the single-aisle business (150-240 seats).
As part of the agreement, Airbus has acquired the Airbus A220 and A330 work package production capability from Bombardier in Saint-Laurent, Quรฉbec. These production activities will be operated in the Saint Laurent site by Stelia Aรฉronautique Saint Laurent Inc., a newly created subsidiary of Stelia Aerospace, which is a 100 percent Airbus subsidiary.
Stelia Aรฉronautique Saint-Laurent will continue the production of the A220 cockpit and aft fuselage production, as well as A330 workpackages, for a transition period of approximately three years at the Saint-Laurent facility. A220 workpackages will then be transferred to the Stelia Aerospace site in Mirabel to optimize the logistical flow to the A220 Final Assembly Line also located in Mirabel. Airbus plans to offer all current Bombardier employees working on the A220 and A330 work packages at Saint-Laurent opportunities around the A220 programmeโs ramp-up, ensuring know-how retention as well as business continuity and growth in Quรฉbec.
At the end of January 2020, 107 A220 aircraft were flying with seven customers on four continents. In 2019 alone, Airbus delivered 48 A220s, with the further ramp-up to be continued.
Airbus has made this announcement:
Following its strategy to keep its overall production system at the leading edge of technology and to increase industrial capacity and flexibility, Airbus has decided to create new A321 production capabilities at its site in Toulouse.
By mid-2022 the current A380 Lagardรจre facility in Toulouse will accommodate a digitally-enabled A321 line as a step to modernise the A320 production system in Toulouse. The new facilities will provide more flexibility for A321 production, while keeping the overall single-aisle industrial capacity in Toulouse flat.
โWe are enjoying an unprecedented high demand for our winning A320neo Family and especially its A321 Long Range (LR) and Xtra Long Range (XLR) derivatives,โ said Michael Schoellhorn, Airbus Chief Operating Officer. โIn order to optimise the industrial flow, we have decided to increase our global A321 production capacity and flexibility as well as to establish a next generation Final Assembly Line in Toulouse.โ
Currently, the only European Final Assembly Line to assemble A321s is at Airbusโ Hamburg site. In addition, the A321 is also being assembled and delivered from Mobile, Alabama, USA.
Toulouse was selected for several reasons such as: overall competitiveness, time to market, investment cost, available floor space and resources. The decision has been communicated to Airbusโ social partners.
The A320neo Family is the worldโs best-selling single aisle with over 7,100 aircraft sold to over 110 customers. Within this family, the A321XLR is the latest evolutionary step which responds to market needs for even more range and payload, creating more value for the airlines. From 2023, it will deliver an unprecedented Xtra Long Range of up to 4,700nm and a 30% lower fuel burn per seat compared with previous generation competitor aircraft. For passengers, the A321XLRโs new Airspace cabin will provide the best travel experience, while offering seats in all classes with the same high-comfort as on a long-haul wide-body, with the low costs of a single-aisle aircraft.
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