• Revenue: EUR44.5 billion, up 5% year-on-year.
• EBIT Adjusted: EUR2.8 billion, down from EUR3.6 billion in the previous year.
• Free Cash Flow Before Customer Financing: Negative EUR4.8 billion.
• Net Cash Position: EUR7.2 billion at the end of September.
• Commercial Aircraft Deliveries: 497 aircraft delivered year-to-date.
• Gross Orders: 667 aircraft, with a backlog of 8,749 aircraft.
• Helicopter Deliveries: 190 helicopters delivered.
• Defense and Space Order Intake: EUR11 billion, with EUR4.5 billion in Q3.
• R&D Expenses: EUR2.4 billion, up from EUR2.2 billion in the previous year.

• Warning! GuruFocus has detected 3 Warning Signs with EADSF.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Airbus SE (EADSF) reported a 5% increase in nine-month 2024 revenues, reaching EUR44.5 billion, driven by higher commercial aircraft deliveries and increased volume in the air power business.
• The company delivered 497 commercial aircraft in the first nine months of 2024, showing progress in its production ramp-up despite challenges.
• Airbus Helicopters showed solid performance with a favorable mix in programs and services, contributing to a stable EBIT adjusted despite fewer deliveries.
• The order intake for Airbus SE (EADSF) remains strong, with 667 gross orders for commercial aircraft and 308 net orders for helicopters, indicating robust demand.
• Airbus SE (EADSF) maintained its 2024 guidance, targeting around 770 commercial aircraft deliveries, an EBIT adjusted of EUR5.5 billion, and a free cash flow before customer financing of EUR3.5 billion.

Negative Points

• The EBIT adjusted for nine months 2024 decreased to EUR2.8 billion from EUR3.6 billion in the same period of 2023, impacted by charges in the space business and increased R&D expenses.
• Free cash flow before customer financing was negative EUR4.8 billion, primarily due to inventory buildup to support Q4 deliveries and ramp-up activities.
• The space business faced significant challenges, with EUR989 million in charges recorded in the first half of 2024, and one major program still under technical review.
• Supply chain issues, particularly with narrowbody engine suppliers, continue to pose challenges, affecting the delivery schedule and ramp-up trajectory.
• The defense and space division is undergoing a workforce adaptation plan, which includes a reduction of up to 2,500 positions by mid-2026, reflecting ongoing restructuring efforts.

Q & A Highlights

Q: What is the range included in the term "around 770" for delivery guidance, and what gives you confidence in reaching this level? A: The term "around 770" implies a range of plus or minus 20 aircraft. Last year, we delivered 735 against a guidance of around 720, which falls within this range. We are confident in reaching this level despite challenges, as we are not building gliders.

Q: Can you provide an update on the A320 production rate and any changes in the timeline? A: We aim to reach a production rate of 75 A320 aircraft per month by 2027. Christian Scherer's mention of 2027-2028 likely refers to achieving a full year at that rate in 2028. We are currently focused on overcoming pragmatic issues to meet our 2024 delivery targets.

Q: How is the audit of the space division progressing, and what are the findings so far? A: We are making good progress in assessing the space division, focusing on a major program. The assessment involves a comprehensive review of the program's components, supplier assessments, and profitability. We expect to complete this assessment by year-end.

Q: What impact does the lead initiative have on Airbus's commercial performance, and how does it affect compensation with suppliers and customers? A: The lead initiative is not a restructuring program but a refocusing effort to prioritize ramp-up and supply chain focus. It is expected to have a positive effect of a couple of hundred million euros, counterbalancing negatives like high staffing levels and inflation. We are strict about seeking compensation from suppliers when agreements are not honored, but our primary goal is to receive deliveries.

Q: How is Airbus addressing the challenges in the space sector, and what are the potential solutions? A: We are addressing challenges by redefining our market approach, resizing the space business, and considering consolidation opportunities in Europe. We are also focusing on cost reduction and improving program profitability. The European landscape offers potential for consolidation to enhance competitiveness.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.