Airbus returns to black but sees turbulence ahead

Airbus flew back into profit in the first three months of the current year as cost-cutting and restructuring measures began to pay off, but it warned that the crisis caused by the coronavirus pandemic was not yet over.

The European aircraft manufacturer said in a statement that it booked bottom-line net profit of 362 million euros ($440 million) during the January to March period, compared with a loss of 481 million euros a year earlier.

First-quarter consolidated revenues were stable at 10.5 billion euros.

Chief executive Guillaume Faury hailed the rollout of vaccines against COVID-19 and pointed to “encouraging signs” of rising air traffic in the United States and China.

But “the first quarter shows that the crisis is not yet over for our industry, and that the market remains uncertain,” Faury said, not least given a lack of coordination on European travel restrictions and the ongoing surge in virus deaths and cases in India. “We still face uncertainties which result in a lack of predictability,” Faury warned in a conference call, meaning “we consider that the path to recovery will not necessarily be linear.”

Yet he said there were a number of positive developments.

“The good Q1 results mainly reflect our commercial aircraft delivery performance, cost and cash containment, progress with the restructuring plan as well as positive contributions from our helicopter and defence and space activities.”

Airbus said it had delivered a total of 125 commercial aircraft in the three-month period, up from 122 a year earlier, including nine A220s, 105 A320 family, one A330 and 10 A350s.

Looking ahead, the company said it was sticking to its previous forecasts for stable aircraft deliveries of 566 for 2021 as a whole -- the same number as in 2020 -- and underlying operating profit of two billion euros.

The state of deliveries is a crucial indicator as clients only hand over the bulk of payments on actual receipt of jets.

It has also become an indicator of the end of the crisis in the sector. Airbus and its rival Boeing built up backlog of undelivered planes as airlines which had to ground most of their aircraft pushed back deliveries.

Despite warning of turbulent times ahead, Airbus is at least currently enjoying a smoother 2021 than Boeing, which in Q1 lost money for a sixth consecutive quarter as production issues hit the US aerospace giant’s revenues to hand it a $537 million first quarter loss, compared to a $641 million loss for the same period in 2020.

Airbus said revenues from its defence and space divisions were stable based on the same quarter of 2020 and showed a tripling of adjusted operating profits on its commercial aircraft activities to 533 million euros from 191 million 12 months ago, which it said mainly reflected its focus on cost and a positive impact from currency hedging. The group has also begun to see savings start to filter through from a plan to shed 15,000 jobs announced last year as part of a deep restructuring though without compulsory redundancies in its core sites in France, Germany or Spain.

However, “the full effect of these savings is yet to come,” said financial director Dominik Asam.

A sign of the extent to which the sector is still nursing the effects wrought by the pandemic is the fact Airbus posted only 39 gross orders in the first quarter, down from 356 for the same period last year. It also reported 100 cancellations from carriers hit by the Covid whirlwind.

In March, some 10,0000 planes remained parked worldwide compared to some 22,000 in the air, according to specialist monitor Cirium.

Faury noted overcapacity remains an issue and that airline trade association Iata had forecast cost effectiveness would remain negative for 2021. Iata expects cumulative airline losses to come in at $47.7 billion this year up from an earlier forecast of 38 billion.

Airbus shares were up 2.1 percent in afternoon trading in Paris, for a year gain of some 13 percent.

Meanwhile, the US air safety regulators are auditing Boeing’s procedures for making “minor” design changes to planes in the wake of the latest problem with its troubled 737 MAX, regulators said on Thursday.

The Federal Aviation Administration’s review aims to help Boeing identify “areas where it can improve its processes,” an agency spokeswoman said.

“These initiatives are part of our commitment to continually evaluating and improving our oversight of all aspects of aviation safety, recognizing that catching errors at the earliest possible point enhances what is already the world’s safest form of transportation.”