Airbus reported its full-year results (FY) 2020 on the 18 February 2021, 09.15 am, (Paris Time).
- Net commercial aircraft orders totaled 268 (2019: 768 aircraft)
- Airbus suffered a full-year net loss of 1.13 billion euros ($1.36 billion).
- Airbus turned a profit in its fourth quarter showing signs of a reversal
- Order backlog comprising 7,184 commercial aircraft (as of 31 December 2020)
- Airbus Helicopters booked 268 net orders (2019: 310 units)
Airbus SE turned a profit in its fourth quarter showing signs of a reversal of the downtrend that has hit the aviation industry due to the global Coronavirus pandemic and Airbus issued a guidance for 2021.
Airbus suffered a full-year net loss of 1.13 billion euros ($1.36 billion).
Adjusted earnings before interest and taxes fell 75% in 2020 to EUR1.71 billion.
Revenues fell 29% to EUR49.91 billion.
Net commercial aircraft orders totaled 268 during the year (2019: 768 aircraft)
566 commercial aircraft deliveries to 87 customers in 2020 (34 percent fewer than in 2019)
7,184 commercial aircraft in-backlog
Gross margin decreased by € -4,843 million to € 5,662 million compared to € 10,505 million in 2019. It mainly reflects lower deliveries and lower cost efficiency at Airbus.
The gross margin rate decreased from 14.9% to 11.3%.
Net-cash position stands at € 4.312 billion
COVID-19 hit the commercial aircraft maker as global aviation took a nosedive end of the first quarter as expected due to the global coronavirus pandemic.
Airbus managed to deliver 5566 aircraft: 38 A220 family, 446 A320 family (431 neo), 19 A330 family (13 neo), 59 A350 family (14 A350-1000), and 4 A380’s.
In overcoming international travel restrictions, Airbus developed an innovative e-delivery solution which represented more than 25% of the 2020 deliveries, allowing customers to receive their aircraft while minimizing the need for the Airbus teams to travel.
Deliveries of the A380 will cease in 2022 as a consequence of a decision 31 December 2018, the Company’s largest A380 operator reviewed its aircraft fleet strategy going forward and concluded it was forced to restructure and reduce its A380 order by 39 aircraft.
Consolidated order intake by value decreased to € 33.3 billion (2019: € 81.2 billion) with the consolidated order book valued at € 373 billion on 31 December 2020 (year-end 2019: € 471 billion).
The decrease in the value of the commercial aircraft backlog reflects the higher number of deliveries compared to order intake, the weakening of the US dollar and an assessment of the backlog’s recoverability, the company stated.
The company, based in Toulouse, France, company issued guidance for 2021 assuming no further disruptions to the world economy and air traffic because of the coronavirus pandemic. On that basis, the company targets at least the same number of aircraft deliveries in 2021 than in 2020 and an adjusted EBIT of EUR2 billion or more. Airbus also targets at least breakeven free cash flow before M&A and customer financing at the end of the year.
Jet handovers are forecast to stay at 2020’s depressed levels this year, even as Airbus plans to ramp up production in the second half.
Airbus said last month that output of its top-selling A320-series narrow-body will rise gradually to 45 per month through the fourth quarter. It had previously targeted a faster jump, to 47 monthly by July from the current rate of 40 planes.
On 23 March 2020, the Company has announced measures to bolster its liquidity and balance sheet in response to the COVID-19 pandemic, including a new € 15 billion credit facility partially termed out by bond and USPP issuance’s, the withdrawal of 2019 dividend proposal with cash value of € 1.4 billion
On 21 October 2020, the Company signed a new € 6 billion Revolving Syndicated Credit Facility also partially terming out the € 15 billion credit facility by € 3 billion in order to refinance its existing € 3 billion Revolving Syndicated Facility
As of 31 December 2020, the Company has a net cash position of € 4.3 billion with a total liquidity of € 33.6 billion, before deducting short term financing liabilities.
Airbus management considers the Company has sufficient resources to continue operating for at least 12 months and that there are no material uncertainties about the Company’s ability to continue as a going concern
The Company’s main investments have been impacted by the high volatility in financial markets in 2020 with the variation recorded either through financial result or OCI.
The impact in financial result amounts include € -226 million for the investment in Dassault Aviation.
Acquisitions: Bombardier transfers its remaining shares in Airbus Canada Limited
On 12 February 2020, Bombardier transferred its remaining shares in Airbus Canada Limited Partnership (“ACLP”) to Airbus and Investissement Québec (“IQ”). As per the agreement, Airbus acquired an additional 29.64% of the issued shares in ACLP. This agreement brings the shareholdings in ACLP for Airbus and IQ to 75% and 25%, respectively.
Airbus paid to Bombardier a consideration of US$ 591 million of which US$ 531 million was received at closing and US$ 60 million to be paid over the 2020-22 period under certain conditions. The agreement also provides for the cancellation of Bombardier warrants owned by Airbus, as well as releasing Bombardier of its future funding capital requirement to ACLP, previously performed through the non-voting participation Class B common units in ACLP.
The call rights of Airbus in respect of all IQ’s interests in ACLP at fair market value have been extended by an additional three years to January 2026.
The effect of this equity transaction on the equity attributable to the owners of ACLP amounts to € -53 million.
As part of this transaction, Airbus, via its wholly owned subsidiary Stelia Aerospace, has also acquired the A220 and A330 work package production capabilities from Bombardier in Saint Laurent, Québec. Under this non-material transaction, the fair value of the net assets acquired amount to US$ -4 million.
Disposals: Sale of PFW Aerospace GmbH finalized
On 23 December 2019, the Company finalized the sale of PFW Aerospace GmbH to Hutchinson Holding GmbH. Since 2011, Airbus held 74.9 % in PFW Aerospace GmbH, a key supplier in the aerospace industry, while Safeguard held the remaining 25.1%. Airbus received a consideration of € 103 million and recognized a gain of € 57 million, reported in other income. Assets and liabilities of the disposed company were previously classified as held for sale.
On 30 July 2019, the Company sold its shares in Alestis Aerospace S.L. to Aciturri Aeronáutica S.L., a company headquartered in Miranda de Ebro, Spain. The Company recognized a gain for an amount of € 45 million in Airbus. Assets and liabilities of the disposed company were previously classified as held for sale.
Risks and Issues
● Risks remain on the development of technical capabilities and associated costs, on aircraft operational reliability in particular with regard to power plant, on cost reductions and on securing export orders in time as per the revised baseline;
● Product performance risks, as well as program development and management risks;
● Customer, supplier and subcontractor performance or contract negotiations, including financing issues;
● Competition and consolidation in the aerospace industry.
The company’s downbeat outlook for this year surprised analysts who had expected Airbus to target higher aircraft deliveries after successfully balancing demand with output in the final months of 2020. The assessment reflects uncertainty over when a travel rebound will come, Chief Executive Officer Guillaume Faury said on a conference call.
“We can see progress on vaccination campaigns, but new variants of the virus are spreading, and at the same time we see reinforced lockdowns,” Faury said. “The pace of recovery will not only depend on the evolution of the pandemic and rate and effectiveness of vaccines, but also the reaction of governments.”
The CEO said on the conference call that the company currently has fewer than than 100 undelivered aircraft, including a “small number” of white-tails, or jets without a customer. He reiterated his expectation that the commercial-aircaft market won’t return to pre-Covid levels until sometime between 2023 and 2025.
However, guidance on deliveries reflects the very uncertain environment and the difficult start to the year. The company could beat these forecasts if the outlook improves.
Airbus has slowed a plan it issued January to increase output as customers have pared back flight schedules and delayed aircraft deliveries further.
Once there is more certainty on Covid-19 vaccine rollout and how the world will reopen to global travel then Airbus’ customers will be able to assess demand and rollout plans which will inform Airbus output rates – particularly if further new orders are received earlier than later this year.
The current order backlog for commercial jets is believed to be split at almost 30% in the Asia-Pacific region, another 30% is for European customers and 21% destined for North America.
A recording of the earnings call with Chief Executive Officer Guillaume Faury and Chief Financial Officer Dominik Asam is available via the Airbus website: Airbus Financial Results and Annual Report
The analyst call presentation can also be found on the website: Airbus FY 2020 Results Call
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