Airbus SE boosted its earnings and cash-flow targets for the second time this year, banking on a recovery in air travel to support its push to boost jetliner output.
Adjusted operating profit for 2021 will reach 4.5 billion euros ($5.2 billion), up from the 4 billion euros previously forecast, Airbus said Thursday as it reported third-quarter results. The European planemaker gave slight ground on the timing of its ongoing ramp-up in narrow-body production, while setting a higher target for mid-2023.
Airbus is seeking to rally suppliers and customers that have been battered by the Covid-19 pandemic to support a significant production increase as air travel starts to bounce back. Aircraft lessors and enginemakers have pushed back against the plans, with Raytheon Technologies Corp. Chief Executive Officer Greg Hayes saying Tuesday that he wasn’t sure the market would support build rates of 75 A320-series jets per month by 2025.
“We are focused on securing the A320 family ramp up and striving to ensure the right industrial and supply chain capabilities are in place,” Airbus Chief Executive Officer Guillaume Faury said in a statement.
The company stood by an earlier goal of delivering 600 jets this year, despite limited supplier issues that have held back production.
“We see all the difficulties associated with going from hibernation for 15 months back to business,” Faury said on a conference call.
Free cash flow before M&A and customer financing is expected to hit 2.5 billion euros this year, versus the earlier outlook for 2 billion euros. The company said the new forecasts assume no further disruptions to the world economy or air traffic.
Better outlook
Airbus had boosted its financial targets in July, though analysts suggested then that they may be too cautious given the Toulouse, France-based manufacturer’s delivery goals for the year. For the first nine months, adjusted earnings before interest and taxes reached 3.4 billion euros, on 35.2 billion euros in revenue. During the third quarter, the company said it released 400 million euros of Covid-related provisions.
Global supply-chain snarls are also an issue, while furlough programs have protected Airbus from labor shortages. Faury said Thursday that the company is managing difficulties with on-time deliveries from certain suppliers, which he blamed for disappointing deliveries during September.
While the company made some adjustments to its production plans, the CEO said there’s been “no change of substance” when it comes to the A320. Faury said he’s still assessing whether to commit to 75 a month by 2025. The demand is there, but the company needs to take the supply chain into account.
Airbus will target a rate of 65 per month on the top-selling narrow-body program by summer 2023, versus a previous plan to reach 64 in the second quarter of that year. A planned ramp-up of the larger A350 will also come slightly later, with build rates now seen going from five a month to six in early 2023 rather than late 2022
The company also set a date to increase production of its A330 widebody with plans to build almost three planes a month at the end of 2022 from two currently. German airline Condor ordered seven of the model in August.
The results add to signs that the European planemaker is moving from managing the coronavirus crisis to focusing on growing its market share.
On Wednesday, United States rival Boeing Co. reported that it burned through less cash than expected in the third quarter. The company’s shares fell as it battles to turn around quality issues that have halted deliveries of the 787 Dreamliner for most of this year.