Airbus Stems Cash Losses, Warns of Delayed Recovery
October 29 2020 - 7:40AM
Dow Jones News
By Benjamin Katz
Airbus SE stemmed an outflow of cash in the third quarter as it
learned to navigate an industry reeling from the pandemic, but also
said the aviation market's recovery would start later than
initially forecast.
The world's largest plane maker posted a positive free cash flow
of EUR600 million, equivalent to $705 million, as it started
delivering more planes. Amid a sudden drop in traveler demand,
airlines have moved to delay, defer or cancel orders for new jets.
Airbus and rival Boeing Co. have reduced production levels to
adjust.
However, Airbus was making more planes than it could deliver,
hitting cash flow, as airlines typically pay most of the cost of a
new jet upon delivery. Airbus still has finished planes awaiting
delivery, but the company was able to reduce the number by around
10 aircraft to 135.
Airbus burned through EUR4.4 billion in each of the first two
quarters of the year. It set a break-even target for free cash flow
for the full year, its first guidance since the start of the
pandemic.
The European plane maker posted Thursday a net loss of EUR767
million for the third quarter, compared with a profit of EUR989
million a year earlier. Revenue fell 27% to EUR11.2 billion.
Shares were down just over 1% in early European trading.
Airbus' earnings and production outlook came after Boeing said
Wednesday that it would cut another 7,000 jobs from its workforce.
It also came a day after France and Germany, Airbus's home markets,
announced tightening lockdowns amid soaring Covid-19 cases in both
countries.
Airbus Chief Executive Guillaume Faury said the latest guidance
took into account the new lockdowns. The company was taken off
guard by the initial lockdowns in Europe, he said, but was ready
for the new ones.
Airbus said it was pushing back by three months its ambitions to
ramp up deliveries of its bestselling narrow-body amid a
deterioration in global air traffic. It is now aiming to lift
A320neo production to 47 a month in the third quarter of next year,
after slashing production by a third, to just 40 a month, in April.
It still forecasts demand will return to pre-pandemic levels
between 2023 and 2025, but thinks the initial recovery will start
later than previously expected.
Airbus's plan to ramp up production of its single aisle plane
puts pressure on Boeing, whose rival 737 MAX remains grounded after
two fatal crashes last year. The U.S. manufacturer is expected to
get signoff to restart deliveries of that aircraft at the end of
this year.
Airbus declined to give a target for full-year deliveries, but
analysts are expecting around 500 planes, down from 863 in 2019.
Boeing is expected to hand over just 170 jets.
Write to Benjamin Katz at ben.katz@wsj.com
(END) Dow Jones Newswires
October 29, 2020 07:25 ET (11:25 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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