Airbus ‘Targets the Sweet Spot,’ Says CEO at the Annual Earnings Call

On February 15 Airbus SE, commercial aircraft, defense and space, and helicopter manufacturing company, presented full-year 2023 results. The Group CEO Guillaume Faury, together with Group CFO, Thomas Toepfer, delivered a presentation that consisted primarily of good news for the last year. The plan for 2024 is built on, according to the CEO, assessing and targeting “the sweet spot” which is the balance between demand and the ability to deliver, while maintaining the highest safety standard.

Strong Performance

The company reached the goals set for the reported period. Driven by a record-breaking number of deliveries, revenue reached 65.4 billion EUR ($70.5 billion). This resulted in Adjusted EBIT of 4.6 billion EUR ($5 billion) and free cash flow of 4.4 billion EUR ($4.7 billion).

The consolidated annual order intake is valued at 186.5 billion EUR ($201 billion) which stands at almost three times the company’s reported revenue. This represents the state of the aircraft manufacturing market right now, as airlines are not able to source enough new aircraft.

Commercial aircraft manufacturing continues to bring around 70% of the company’s revenues. It is also the most profitable of its segments as measured by the EBIT adjusted margin of 10.1% in FY 2023.

The biggest challenge for Airbus in the coming future is ramping up production. The current limitation is not cash for investment but rather supply chain issues as well as a lack of developed manufacturing facilities and skilled labor.

Airbus segment revenue figures (Source: Airbus Financial Reporting)

Special Dividend to be Paid Out

Speaking of cash, the company holds a net cash position of 10.7 billion EUR ($11.5 billion). This contributes to the overall very healthy liquidity of the company, with credit facilities signed in 2022 still open and not in use. Given this comfortable setting, the company announced its proposal for a dividend payout.

Remaining within the committed payout ratio of 30-40%, the company proposed a dividend of 1.80 EUR ($1.90) per share, which is at the same level as the previous year. On top of that, the company’s management proposes to pay out a special dividend of 1.00 EUR ($1.10) per share as compensation for the years 2019 and 2020, when the company withheld the dividend payment.

This is a symptomatic gesture though, as with the current constraints, deploying more capital would not automatically yield positive results. The management, driven by its mission to maximize shareholder value, decided that a partial cash payout of the company’s earnings would be the best way forward.

A Virgin Atlantic Airbus A350-1000 on the production line. (Photo: Airbus)

Guidance for 2024

The company mentioned the current industry challenges but said it plans to handle them accordingly. Any future outlook was given without taking into account any possible increase in worldwide GDP or air traffic and assuming the supply chain challenges would remain the same.

The manufacturer aims to deliver around 800 commercial aircraft. That should bring 6.5 to 7.0 billion EUR ($7.0 billion to $7.5 billion) of Adjusted EBIT for the year as well as 4.0 billion EUR ($4.4 billion) of free cash flow.

The key priorities of the company remain the same. The manufacturer is committed to its main goal to ramp up production with 2026 targets in place. This growth is intended to be achieved in a profitable manner, with a strong commercial positioning across businesses, leveraging digitalization and the development of sustainable aerospace. Additionally, the company aims to successfully manage the transformation of the Airbus Defense and Space division.

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Filip Kopeć

A passionate aviation enthusiast that started off his career as an aerospace engineer, but found his true calling on the commercial side of the airline business. Now as a finance guy among avgeeks and an avgeek among finance guys, he has experience working in the Revenue Divisions of three airlines. In his spare time he enjoys traveling, but admittedly sometimes is more about the journey than the destination.

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