Airbus posts higher profit, removes near-term output goal

Europe's Airbus on Wednesday posted higher-than-expected underlying operating profit for the second quarter and reaffirmed financial goals for the year, while removing an interim industrial target on the route to record jet output. The world's largest planemaker said adjusted earnings before interest and tax rose 34% to 1.845 billion euros ($2.04 billion)as revenues grew 24% to 15.9 billion euros, buoyed by higher jet deliveries.


Analysts had forecast quarterly operating profit of 1.725 billion euros on revenues of 15.867 billion, according to a company-compiled consensus. Airbus said it was "progressing well" towards a widely watched production goal for its best-selling A320neo-family jets of 75 jets a month in 2026, which it reaffirmed. But it withdrew any public mention of a previously stated interim goal of 65 a month by end-2024.


Tactical adjustments will be made as required to meet the ultimate 75-per-month rate, "which is now the key reference point for the company and the supply chain," Airbus said. Chief Executive Guillaume Faury denied the decision to retire the interim target from the company's official releases signaled any lack of confidence in its production plans. He said the 65-a-month target - slightly above what Airbus was producing before the pandemic - had been an important milestone in post-COVID recovery that was no longer relevant.


However, some suppliers were surprised by the decision to remove the target. Airbus told them during the Paris Airshow last month that it saw "no change" to its goals, they said. One senior supplier said the decision would not help Airbus' credibility as it encourages suppliers to hire and invest. Industry sources say Airbus is producing about 47 narrow-body A320neo-family jets a month, below an internal planning rate of 55 a month that it had aimed for by mid-2023. Airbus reaffirmed production plans for other models.


Faury also said he understood the "critical situation" some customer airlines faced after RTX unit Pratt & Whitney ordered surprise inspections on Tuesday on 1,200 A320neo engines, including some during the upcoming peak summer period. Faury said he did not expect Airbus output to be affected in 2023 but did not rule out "indirect consequences" beyond then as Pratt is distracted by the latest in a series of setbacks. "I don't expect a significant impact but it is something we would need to look at very carefully. We are not yet at the point of commenting on 2024 and 2025 production, but it is something we will obviously factor in our plans." He said the Pratt problem had "nothing to do" with the decision to stop giving an interim production goal. Faury said Airbus brought its A321XLR jet as close as possible to promised performance after an agreement with regulators over the design of a heavy extra fuel tank. Reuters reported last week that the range of the aircraft could drop by 200 miles due to the latest design safeguards. In other activities, Faury announced talks with unions on internal moves to improve competitivity in the group's barely profitable defence and space business but ruled out M&A. France's FO union said the outlines of the "ATOM" project remained unclear at this stage but warned against job cuts. Airbus reaffirmed 2023 financial targets including 720 jet deliveries, 6.0 billion euros of adjusted operating profit and free cash flow before M&A and customer financing of 3.0 billion. Shares in Boeing rose earlier after it announced an increase in jet production and posted stronger-than-expected quarterly cash flow.

($1 = 0.9034 euros)

Endless Possibilities

Source: Reuters

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