Airbus warns crisis ‘not yet over’ despite profit bounce

Airbus warned that the crisis facing its industry was “not yet over” amid continuing outbreaks of coronavirus, as the European aerospace and defence champion reported higher than expected first-quarter profits.

Guillaume Faury, chief executive, said on Thursday the recovery for the global aviation industry “will not necessarily be linear, at least in the short-term”, adding that national travel restrictions would also slow down a recovery. 

“The lack of co-ordination of the measures taken, primarily in Europe . . . is leading to a travel situation that is far worse in Europe than in other comparable markets,” said Faury. 

International air travel ground to a halt after the onset of the coronavirus pandemic, forcing airlines to push back deliveries of aircraft and cancel orders to survive.

Analysts have said they expect 2021 to be a year of recovery as more people are vaccinated around the world, but the emergence of new hotspots of infection, notably in India, has added to uncertainty. 

While Airbus had not yet seen a direct impact of the worsening situation in India, one of the group’s biggest markets, Faury said it was “an area of great concern”. 

His comments came as the company reported adjusted operating profits for the first quarter had risen 147 per cent to €694m, driven by a strong performance from its commercial aircraft division. Group revenues were broadly stable year-on-year at €10.5bn. 

Free cash flow swung from an outflow last year of €8bn (which included €3.36bn of financial penalties in relation to corruption charges) to an inflow of €1.2bn. 

Airbus said it had delivered 125 commercial aircraft over the three-month period, including 105 of its popular single-aisle A320 family. 

The results were ahead of analyst expectations, reflecting higher than expected aircraft deliveries but also helped by the results of an ongoing restructuring programme.

Airbus shares were up 2.2 per cent to €101 in morning trading. 

Faury said Airbus still planned to increase production of its single-aisle jets to 43 a month in the third quarter and 45 in the fourth, up from a current rate of 40 a month. That figure is down from 60 before the pandemic. 

Despite the relatively strong first quarter, Airbus stuck to its February forecast that it hoped to “at least” match the 566 deliveries of 2020 in the current year. The company also reiterated that it expected free cash flow this year to break even before deals and customer financing. 

Airbus this month launched a wholesale restructuring of its manufacturing operations, with the reorganisation of activities in Germany and France which produce structural components for the airframe.

The move came after Faury said in February the group had decided to keep the aerostructures businesses Stelia and Premium Aerotec, which had been up for sale for several years. These businesses had previously been considered non-core because of their low margins but Faury said on Thursday that new forms of propulsion to decarbonise aviation had changed the calculation.

“This transformation will prepare us for the next generation of aircraft, which are likely to have different architectures compared to today’s model.”