In a nutshell, the first half of 2018 has seen a robust growth in commercial aircraft environment robust, with backlog underpins ramp-up plans. Amongst which, the report reflects the A350 XWB performance and delivery phasing, with revenues hitting € 25 billion.
“The first half financials reflect the back-loaded deliveries due to A320neo engine shortages, while on the positive side there was a strong improvement on the A350 programme,” said Airbus Chief Executive Officer Tom Enders. “A320neo aircraft deliveries picked up during the second quarter but challenges remain to meet our full year targets. Market demand remains strong for the expanded Airbus portfolio that now includes the A220 at the smaller end.
The recent Farnborough Airshow underlined this, with new business for over 400 single-aisle and wide-body aircraft announced. Our operational focus in commercial aircraft remains squarely on securing the production ramp-up. On our largest military programme, the A400M, we are making progress operationally, on improving capabilities as well as in negotiations with governments for the necessary contract amendment.”
Net commercial aircraft orders increased to 206 with gross orders of 261 aircraft including 50 A350 XWBs and 14 A330s. The order backlog by units totalled 7,168 commercial aircraft. During July’s Farnborough Airshow, Airbus announced orders and commitments for a total of 431 aircraft although these are not yet reflected in the order book. Net helicopter orders totalled 143 units. Airbus Defence and Space saw good order momentum, particularly in Space Systems, while there are encouraging prospects for European military cooperation programmes in Military Aircraft and Unmanned Aerial Systems.
Consolidated revenues were stable at € 25.0 billion, reflecting the commercial aircraft delivery mix and perimeter changes as well as the weakening of the US dollar. Deliveries totalled 303 commercial aircraft, comprising 239 A320 Family, 18 A330s, 40 A350 XWBs and six A380s. Airbus Helicopters delivered 141 units with revenues mainly reflecting the perimeter change from the sale of Vector Aerospace in late 2017. Revenues at Airbus Defence and Space reflected the stable core business and solid programme execution as well as the perimeter change mainly related to the divestment of Defence Electronics in February 2017 and Airbus DS Communications, Inc. in March 2018.
Consolidated EBIT Adjusted – 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, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – totalled
€ 1,162 million.
Airbus’ EBIT Adjusted of € 867 million, reflected mainly the strong improvement on the A350 programme and the A320neo ramp-up and transition.
A total of 110 A320neo aircraft were delivered with more NEO (new engine option) versions delivered than CEO (current engine option) versions in the second quarter. The ramp-up is ongoing. Engine manufacturers are working to meet their commitments and resources and capabilities have been mobilised internally. A recovery plan is in place and the number of stored aircraft has started to decline from the end of May peak but risks remain to meet the 800 aircraft delivery target, which is challenging.
On the A350 programme, the first A350-1000s were delivered to Qatar Airways and Cathay Pacific in the half-year. Good progress was made on the recurring cost curve compared to a year earlier as the programme ramps up to the targeted monthly production rate of 10 aircraft by year-end. The A350’s industrial system is now reaching a mature level with the focus remaining on recurring cost convergence. Route proving flights have now been completed on the A330neo with more than 1,000 flight hours accumulated by the test aircraft fleet. The first delivery is expected end summer. In July, the BelugaXL transport aircraft completed its maiden flight.
Airbus Helicopters’ EBIT Adjusted increased to € 135 million, reflecting solid underlying programme execution which compensated the lower deliveries.
Airbus Defence and Space’s EBIT Adjusted was € 309 million, reflecting the stable core business and solid programme execution. On a comparable basis the Division’s EBIT Adjusted was broadly stable.
On the A400M programme, a total of eight aircraft were delivered compared to eight in the first half of 2017. A provision update of € 98 million during the first half of 2018 mainly reflected price escalation. Progress was made toward achieving military capabilities. Airbus continues to work with the Launch Customer Nations to finalise a contract amendment by year-end.
Consolidated net income of € 496 million and earnings per share of € 0.64 included a negative impact from the foreign exchange revaluation of financial instruments partly offset by the positive revaluation of certain equity instruments. The finance result was € -303 million. Net income also reflects a higher effective tax rate from the reassessment of tax assets and liabilities.
Consolidated free cash flow before M&A and customer financing amounted to € -3,968 million, reflecting the continued ramp-up while deliveries reflect the engine situation. Consolidated free cash flow of € -3,797 million included around € 0.3 billion of net proceeds from divestments at Airbus Defence and Space. Cash flow for aircraft financing was limited in the first half of 2018.
As the basis for its 2018 guidance, the Company expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions.
