Although Airbus remained in a loss of 767 million euros in the third quarter, the company managed to achieve a positive free cash flow of 600 million euros in the three months to September after a deeply negative two quarters “due to a higher number of aircraft deliveries compared to the previous quarter”.
In the quarter, Airbus handed over 145 aircraft to customers, almost half of the 341 machines delivered since the beginning of the year, and collected the associated surcharges, which are around half the purchase price of the aircraft.
The company expects free cash flows to remain in the black in the last three months of 2020. This is the first time since April that Airbus has provided any outlook for its operations.
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On the contrary, rival Boeing still failed to stop the “burning of cash”. In the third quarter, the company reported negative free cash flows of $ 5.1 billion. Still, it’s less than $ 5.6 billion in the previous quarter and less than analysts expected. In the quarter, however, Boeing lost less than Airbus, $ 449 million.
According to Jakub Habarta, an air transport expert at Deloitte, the results of the two companies cannot be directly compared. “Airbus’s quarterly result is burdened by extraordinary items, such as € 1.3 billion for restructuring or € 358 million for the downturn in the A380 program,” he said. Boeing was also plunged into crisis last year due to problems with the 737 MAX aircraft, so it has reflected some of these costs in its operations earlier, he adds.
The virus inhibits acceptance
The coronavirus epidemic has forced Airbus to develop new take-over procedures so that airline employees who inspect machines during handovers are not endangered. In the first months after the massive outbreak, the airlines refused to take over the aircraft, not only because they were not used for them, but also for fear of the health of their employees, who would have to travel to France.
Now, Airbus has accelerated the pace of handing over aircraft to customers, thanks to the fact that it has reached agreements on the storage of aircraft with many of them who do not need the ordered stands now.
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“We have made progress in adapting our business to the new covid market environment. Despite a slower-than-expected recovery in air transport demand, we were able to adjust our production and deliveries accordingly in the third quarter, ”said Airbus chief Guillaume Faury.
Transfers of new aircraft, however, according to agency sources Reuters they can slow down again. Some airlines are now again reluctant to send their employees to France, which at the end of last week announced stricter measures against the spread of COVID-19.
Orders at risk
As Habart points out, Airbus is not only concerned about the handover of finished aircraft, but also the growth rate of the number of new orders. “In nine months, there were 300 more out of a total of 7441 pending. However, given current developments, there are concerns about how much of these orders may be canceled – either when airlines are ‘threatened’ with acceptance or because a number of carriers go bankrupt, ”he explains.
US Boeing has 5,146 pending orders. Since the beginning of the year, the company has handed over only 98 aircraft to customers. It is costing billions of dollars to develop a revised version of the 737 MAX, which is expected to get green from the authorities in the coming weeks and return to service. Boeing now has 450 of these machines in stock, but it can only be handed over to customers after it has made the prescribed modifications.
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Aircraft operators, who have had a global flight ban since two tragic accidents since last March, have already paid the cash compensation and other compensation worth $ 3.1 billion, and it is estimated that it will cost him another $ 6 billion in compensation.
Boeing continues to anticipate that interest in air transport, which is the source of demand for aircraft, will return to pre-crisis levels in three years. Airbus’ forecast is highly uncertain, with renewals expected to take place between 2023 and 2025.
