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2020-04-29

First-quarter Airbus profit plunges as the coronavirus crisis begins to bite

Image:-Airbus

Airbus (AIR.PA) posted a 49% slump in the core profit for the first quarter on Wednesday and called for an industry-wide campaign to restore confidence in flying after the coronavirus pandemic triggered "the worst crisis ever known to the aerospace industry."

Europe's largest aerospace group also highlighted plans to save cash after spilling EUR 8 billion in the first quarter, including a record €3.6 billion fine to settle investigations into corruption in Britain, France and the United States.

"We are now reviewing all types of costs," CEO Guillaume Faury told analysts.

Since the start of Europe-wide lockdowns in mid-March, Airbus has been unable to deliver more than a handful of aircraft and Faury said that he expected similar difficulties in the second quarter before a clearer picture emerges around June.

Chief Financial Officer Dominik Asam told a telephone news conference that he had expected some recovery in the third quarter before returning in the fourth "basically to a neutral situation where we no longer use cash."

On Tuesday, Airbus expanded furlough schemes by sending 3,200 workers home to Britain after putting 3,000 workers into government-backed partial unemployment schemes in France, and Faury said thousands of German staff could be affected as well.

He did not say whether Airbus would carry out forced redundancies but, last week, he told staff to prepare for "more far-reaching measures" to balance the cost of the group to the reduced outlook for aviation in coming years.

"We are doing all we can to be in the best shape to compete later again," Faury said on Wednesday.

Airbus said first-quarter adjusted operating profit fell 49 percent to €281 million ($304.7 million) as revenue dropped 15 percent to €10,631 billion, mainly due to clouds that had already gathered over demand for jetliners before the coronavirus outbreak.

The pandemic, which has crippled passenger travel and catapulted major economies into recession, has left planemakers, airlines and suppliers reeling.

Airbus suspended its outlook and dividend last month, and negotiated new lines of credit.

It said on Wednesday it did not see an immediate need for further support from the government.

This month, Airbus cut jet production from previously announced rates by between one third and 42 per cent depending on the model. Having reviewed the situation in June, it could cut production again if a new surplus builds up, Asam said.

Industry sources say that at the moment, Airbus produces few aircraft as it adapts to social distancing rules.

Airbus will reduce capital expenditure by around EUR 700 million in 2020 to around EUR 1.9 billion, and defer or suspend "not critical" activities, Faury said.

He stressed however that Airbus is still developing its fast-selling A321XLR.

Reuters reported on Tuesday that planemakers are slowing down drastically on other new cash saving projects.

Airbus remains committed to a new generation of green aircraft in the longer term, and will intensify a focus on onboard passenger health and safety, Faury said.

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