Airbus sounded a warning note about the pace of the aviation recovery as chief executive Guillaume Faury said the short-term environment appeared to be deteriorating with new Covid variants and multiple national lockdowns.
The Airbus boss said he expects deliveries this year to match the levels of 2020, while aircraft demand would still be constrained in 2022, adding that the “tipping point” for recovery was far from clear.
Despite the global vaccine campaigns, the global situation “is not developing as we expected”.
In the longer-term, however, there was some hope that the outlook could be “slightly better” than expected as a result of the vaccine campaigns, he said.
Nevertheless, Airbus was not expecting to return to 2019 production rates, even in its popular A320 single aisle family, despite committing to a ramp up of output later this year.
“It is very likely that 2022 will still be constrained by demand,” he said. “It will be much stronger than 2021 but probably not yet at [previous] production capacity.”
His comments came as Airbus reported an operating loss of €510m for 2020, hit by €1.2bn in restructuring charges and against 2019’s €1.3bn profit, while revenues fell 29 per cent to €49.9bn.
The commercial aircraft division delivered a 37 per cent drop in revenues to €34.3bn, and an operating loss of €1.3bn against a profit of €1.8bn in 2019.
For the current year Airbus said it hoped to “at least” match the 566 deliveries achieved in 2020, while also predicting adjusted operated profits of €2bn — up from the adjusted figure of €1.7bn last time and against market consensus of about €3bn.
Airbus said it expected free cash flow this year to break even before deals and customer financing.
The group’s guidance for 2021 sparked a puzzled reaction from analysts, given that the forecasts on deliveries and earnings did not even match the pace being achieved at the end of 2020.
“It is hard to reconcile the guidance with what we saw in the third quarter and what we think unfolded in the fourth,” said Sandy Morris, aerospace analyst at Jefferies investment bank. “We believed a sound base had emerged upon which to model forecasts. The guidance implies otherwise.”
“Flat aircraft deliveries guidance looks conservative,” said Charles Armitage, analyst at Citi. “Consensus deliveries [for 2021] are in the 620-630 range . . . We estimate [the] 64 aircraft difference is worth about €1bn in Ebit [earnings before interest and taxes], which explains most of the [guided] profit shortfall and much of the free cash flow shortfall.”
The group’s shares fell 3 per cent to €90.92 by lunchtime on Thursday in Europe on revised expectations.
While the short-term remained highly volatile, Faury stressed Airbus was equally focusing on the future and had decided to keep the aerostructures businesses Stelia and Premium Aerotec, which have been up for sale for several years.
The decision signals a potential upheaval in Airbus manufacturing processes and its supply chain.
In the past these businesses, which produce structural components of the airframe, were considered non core due to their low margins and the highly competitive nature of a sector that was simply building conventional aircraft.
But Faury said new technologies to decarbonise aviation, such as hydrogen and electric power, had changed the calculation.
“We have to place this in the perspective of the new wave of disruption coming in aviation. New ways of propulsion will significantly impact the aerostructure,” he said. “The connection between the design [of the aircraft] and the industrial system . . . has to remain in Airbus.”
The group also said its restructuring plan was on track with roughly 7,500 jobs still to be cut this year. Net commercial aircraft orders totalled 268 against 2019’s 768, and the order backlog stood at 7,184 jets. Airbus reported net cash of €4.3bn.
The consolidated cash out flow in 2020 was €6.9bn, against an inflow of €3.5bn in 2019 after including compliance-related penalties of €3.6bn. In the fourth quarter the group generated €4.9bn in free cash flow.