While the airline industry remains stricken by the pandemic, Airbus reported a solid performance in the first half, that enabled the airline to significantly raise its delivery and profit targets for 2021.
The European aircraft maker posted a net profit of 2.2 billion euros ($2.6 billion) on Thursday. The strong performance was largely due to high aircraft deliveries.
Between January and June, the European aircraft manufacturer delivered 297 aircraft, up from 196 last year. The majority of an aircraft’s cost is borne by the company when it takes delivery.
Airbus overall revenues jumped 30% to 24.6 billion euros as a result of this strong delivery performance. Commercial aircraft sales rose by 42%, Airbus Helicopters sales rose by 11%, and defense and space sales remained stable.
Airbus shares rose 4% at the opening of the Paris stock exchange on these results.
Although Boeing has also returned to profit after six quarters of losses, the American manufacturer posted a net profit of only $6 million and delivered 156 aircraft in the first half.
On a conference call, Airbus executive chairman Guillaume Faury said that “the Covid-19 pandemic is far from over” but “that the market environment is improving and that air travel is improving.”
The International Air Transport Association (Iata) reported that global air traffic in June remained 60% below that of the same month in 2019, but domestic routes dropped only 22%.
Since the beginning of the crisis, the European aircraft manufacturer has shown prudence while remaining proactive.
Guillaume Faury says the recovery will be difficult, but Airbus is raising its targets for 2021.
The company now expects to deliver 600 aircraft this year, whereas it once expected a figure equivalent to that of 2020 (566), considered conservative by most analysts.
Increasing production pace.
Moreover, it expects a free cash flow of 2 billion euros and an operating profit of 4 billion euros, both double its previous target. The latter was 2.7 billion euros for the first six months of the year.
Counting on a strong recovery in demand once the crisis is over, the aircraft manufacturer is preparing for a significant increase in production.
As of this quarter, Airbus will increase production of its A320 Family single-aisle jets to 45 per month from 40. This company has told its suppliers that it plans to increase production to 64 aircraft per month by mid-2023, more than it has ever produced, and to 75 aircraft per month by 2025.
According to the European aircraft manufacturer, 127 cancellations occurred in the first half of the year, reflecting the airline industry’s continued struggles.
There is no concern from the CEO, who is “happy to have a positive net order balance in the first half of the year” and to note a “certain recovery” in orders.
On Wednesday, German airline Condor announced it had ordered 16 A330 neo wide-body aircraft.
With an order book of 6,925 aircraft, including 5,666 from the A320 family, Airbus has plenty of production capacity for years to come.
The company intends to remedy a weakness in relation to its American rival: its board of directors has approved the launch of a cargo version of the Wide-Body A350, intended to compete with the Boeing 767 and 777 cargo planes.
Currently, only the air cargo sector has exceeded its 2019 level.
According to Faury, when it enters service in 2025, the A350 freighter will be the only dedicated cargo aircraft to comply with new environmental standards implemented by the International Civil Aviation Organization (ICAO) three years later.