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.