Airbus Set to Pass Boeing in Jetliner Production, Amid 737 MAX Grounding--Update
April 30 2019 - 4:32AM
Dow Jones News
By Robert Wall
Airbus SE posted strong adjusted earnings growth Tuesday but
played down the prospect of immediate market-share gains from rival
Boeing Co.'s 737 MAX woes that have put the European aerospace
giant on pace to regain the title of world's biggest plane
maker.
Airbus earnings were boosted by higher plane deliveries in the
quarter compared with the same period the year before and new Chief
Executive Guillaume Faury said the company would this year assess
whether it could hike output further.
Airbus is already increasing output of its popular A320
single-aisle plane, which competes with Boeing's MAX. The Toulouse,
France-based company around midyear plans to start building 60 of
the A320 airliners a month, up from around 52 last year. It
previously said output would rise to 63 of the airliners a month in
2021.
Any further increase wouldn't take effect until after 2021, Mr.
Faury said Tuesday.
Boeing this month announced it would temporarily cut production
of the 737 MAX that competes with the A320, to 42 planes a month
from 52. Boeing took the action after the March 10 fatal crash of a
MAX, the second in less than five months, drove regulators
world-wide to ground the fleet. Boeing is working on a fix to the
MAX to address safety issues that crash investigators have
implicated in both accidents.
But Boeing's move to build fewer MAX planes isn't changing
Airbus's production plans, Mr. Faury told reporters Tuesday. Airbus
has said producing more A320s is mainly limited by the ability of
suppliers to ramp up output. Some suppliers are shared between
Airbus and Boeing. But Mr. Faury said the overlap is small, adding
"we don't see a relaxation and ease in the supply chain" following
Boeing's MAX output adjustment.
Mr. Faury, who took the top Airbus job this month after running
its commercial plane operations, wouldn't address if MAX customers
are knocking on Airbus's door to buy A320s instead. "We are limited
by production for the next years," Mr. Faury said. Demand for the
A320 was strong before the MAX crisis, he said, and that
continues.
Airbus confirmed plans to deliver at least 880 commercial jets
this year. Boeing, which had targeted as many as 905 hangovers,
last week suspended that guidance because of a freeze in 737 MAX
deliveries and the cut in output. The 737 is Boeing's largest
volume production program.
Airbus became the biggest airliner maker, measured by annual
plane drivers, for the first time in 2003 after Boeing sharply cut
output in response to an economic downturn that hit airlines in
some markets hard. The European plane maker ceded the title back in
2012 when Boeing was increasing deliveries of its 787 Dreamliner
planes.
Increased production helped lift Airbus first-quarter adjusted
earnings before interest and taxes, stripping out one-time items,
to EUR549 million ($614 million) compared with EUR14 million the
previous year. Airbus delivered 162 airliners in the first quarter
compared with 121 in the year-prior period, driving a 24% increase
in sales to EUR12.55 billion.
However, net profit fell 86% to EUR40 million, linked to several
program charges and a EUR190 million earnings hit from the German
government's suspension of defense export licenses to Saudi Arabia
over the Middle East country's military activity in Yemen. Airbus
is unable to execute a border security contract for Saudi Arabia as
agreed because of the arms ban, Chief Financial Officer Dominik
Asam said.
Higher inventory levels to pave the way for increasing
production contributed to EUR4.34 billion in free cash outflow
before mergers, acquisitions and customer financing in the first
quarter. Airbus, which typically generates most of its free cash
flow in the last weeks of the year, stuck to guidance of generating
around EUR4 billion in free crash before mergers, acquisitions or
customer financing.
Airbus said demand for new planes remained robust despite weak
order bookings in the first three months of the year. The company
secured only 62 new orders in the period and suffered 120
cancellations, partly associated with the A380 superjumbo the
company this year said it would stop building in 2021.
Airbus took a one-time charge of EUR61 million linked its
decision taken in February to shutter the A380 superjumbo program.
The last of the double-deckers is due to be delivered in 2021.
Airbus, in March, said it had begun talks with unions about the
impact of up to 3,500 jobs linked to the A380, mostly in France and
Germany.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
April 30, 2019 04:17 ET (08:17 GMT)
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