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An Airbus A330neo demonstrator aircraft. (Photo: AirlineGeeks | William Derrickson)

Airbus Flies Back to Profits But Sees Turbulence Ahead

Airbus flew back into profit from January to March of the current year, as cost-cutting and restructuring measures began to take their intended effect, but the company has warned that the crisis caused by the Covid-19 pandemic is far from over.

The European aircraft manufacturing giant said in a statement that it booked bottom-line net profit of US$440 million during the January to March period, compared with a loss of US$581 million from the previous year. First-quarter accumulated revenues were stable at US$12.6 billion.

Chief Executive Guilaume Faury praised the roll-out of vaccination programs against Covid-19 and pointed to “encouraging signs” of rising air traffic volumes in China and the United States.

However, “the first quarter shows that the crisis is not yet over for our industry, and that the market remains uncertain,” Faury said, not least given a lack of cooperation and coordination on European travel restrictions and the ongoing, yet unfortunate, surge in virus cases and deaths in India and Brazil.

“We still face uncertainties which results in a lack of predictability,” Faury warned, meaning that Airbus consider will “consider that the path to recovery will not necessarily be linear.”

Positivity Amidst the Pandemic

Despite the uncertainties, Faury said that there were still some positive developments.

Airbus said that it had successfully delivered a total of 125 commercial aircraft in the three-month First Quarter, an increase of three from the 122 delivered during the same period the previous year. These deliveries include nine A220s, 105 from the A320 family, one A330 and 10 A350s.

Moving forward, the company said it was sticking to its previous forecasts for stable aircraft deliveries of 566 of 2021 as a whole – the same number as in 2020 – and underlying operating profit of US$2.4 billion.

“The good Q1 results mainly reflect our commercial aircraft delivery performance, cost and cash containment, progress with the restructuring plan as well as positive contributions from our helicopter and defense and space activities,” Faury said.

The state of deliveries is a significant indicator as airline clients only cash in the bulk of payments on actual receipts of aircrafts.

It has also become an indicator of the end of the crisis in the industry. Airbus and fellow rival manufacturer Boeing accumulated a backlog of undelivered aircrafts as airlines had to push back deliveries due to regulated groundings.

Despite warnings of rocky times ahead, Airbus is still enjoying a smoother year so far as compared to Boeing, which lost money in the first quarter for a sixth consecutive quarter as production issues continue to hit the U.S aircraft manufacturing giant.

Measures Taking Effect

Airbus said that revenues from its defense and space divisions were stable based on the same quarter of 2020, and showed a tripling effect of adjusted operating profits on its commercial aircraft activities to US$644 million from US$231 million twelve months ago, which it said mainly reflected its focus on cost and a positive impact from currency hedging.

The group has also begun to see savings start to filter through a plan to shed 15,000 jobs announced last year as part of a deep restructuring, though without compulsory redundancies in its core sites in France, Germany or Spain.

However, “the full effect of these saving is yet to come,” said financial director Dominik Asam.

An important indicator to show if the industry is still nursing the effects brought by the pandemic is the fact that the European aircraft manufacturer recorded fewer than forty gross orders in the first quarter, which was down from 356 for the same period last year. It also recorded approximately one hundred cancellations from airlines hit by the pandemic.

In March, almost 10,000 aircraft remained parked and stored globally as compared to the estimated 22,000 in the air, according to specialist monitor Circium.

Faury made a note that overcapacity still remains a problem and that airline trade association IATA had forecast cost effectiveness would remain negative for 2021.

Author

  • Fascinated by aircraft from a very young age, Charlotte’s dream was to work alongside the big birds one day. Pursuing her dream, she went on to achieve her diploma in Aviation Management and is currently working on her degree in Aviation Business in Administration with a minor in Air Traffic Management. When she’s not busy with school assignments, you can find her aircraft spotting for long hours at the airport. In Charlotte’s heart, the Queen of the Skies will always be her favorite aircraft.

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