Airbus reports Q1, early COVID-19 impact
Airbus SE on April 29 reported its consolidated financial results for its first quarter of 2020, ended March 31, 2020. Revenues for the first quarter decreased to €10.6 billion, relative to €12.5 billion generated in the year-ago quarter. Airbus noted the decline reflect the difficult market environment impacting the commercial aircraft business, as the company had 40 less deliveries within this segment relative to a year earlier.
A total of 122 commercial aircraft were delivered (Q1 2019: 162 aircraft), comprising eight A220s, 96 A320 Family, four A330s and 14 A350s. Airbus explains its lower EBIT Adjusted of €191 million (relative to €463 million in Q1 2019) mainly reflects lower commercial aircraft deliveries and associated costs, partly offset by positive foreign exchange effects. Around 60 aircraft could not be delivered in Q1 2020 due to the COVID-19 pandemic, according to Airbus.
Airbus Helicopters delivered 47 rotorcraft, up by one unit relative to the first quarter of 2019. The helicopter division also saw a 19 per cent increase in revenues, reflecting what Airbus describes as a favourable delivery mix and growth in services. Airbus Helicopters’ EBIT Adjusted increased to €53 million (Q1 2019: €15 million), reflecting what the company describes as a favourable delivery mix and growth in its services business.
“We 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,” said Airbus CEO Guillaume Faury. “We are now in the midst of the gravest crisis the aerospace industry has ever known. We’re implementing a number of measures to ensure the future of Airbus.”
Faury continues to explain Airbus took early steps to bolster its liquidity position and that commercial aircraft production rates are be lowered in line with customer demand. “At all times, the health and safety of Airbus’ employees is our top priority,” said Faury. “Now we need to work as an industry to restore passenger confidence in air travel as we learn to coexist with this pandemic. We’re focused on the resilience of our company to ensure business continuity.”
As previously announced in early April, and referencing the COVID-19 business environment, average monthly aircraft production rates are being adjusted to 40 for the A320 Family, two for the A330 and six 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, Quebec, is expected to progressively return to a monthly rate of for aircraft.
Net commercial aircraft orders in the first quarter of 2020 totalled 290 (Q1 2019: -58 aircraft) with the order backlog comprising 7,650 commercial aircraft as of March 31, 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 Space’s order intake of €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 Europe’s Future Combat Air Systems program.
Airbus notes revenues in its Defence and Space segment remained stable year-on-year. This segment included the delivery of one A400M transport aircraft in the quarter. However, EBIT Adjusted at Airbus Defence and Space decreased to €15 million (Q1 2019: €101 million), reflecting what the company describes as a lower business performance, including in Space Systems. Due to the severity of the coronavirus pandemic, Airbus states the incremental impact on the business is being assessed and the restructuring plan at Defence and Space will be adjusted accordingly.
Airbus reported consolidated free cash flow, before M&A and customer financing, at negative €8.0 billion (Q1 2019: negative €4.3 billion) and included the payment of €3.6 billion in penalties related to January 2020’s compliance agreement with the authorities.