Airbus profit more than doubles, trims FY outlook

LONDON–European plane maker Airbus SE (AIR.FR) on Thursday said second-quarter profit more than doubled even as it trimmed the full-year outlook for operating earnings after taking control of a new airliner program from Canada’s Bombardier Inc.

Airbus said its closely watched adjusted earnings before interest and taxes rose by 101% to 1.2 billion euros ($1.4 billion), in part reflecting improved profitability on its A350 long-range jet liner.

Net profit, which reflects accounting adjustments to financial instruments Airbus uses to insulate itself from currency volatility, fell 69% to EUR213 million, also reflecting a higher tax rate.

Sales rose 8% to EUR14.9 billion, even though Airbus delivered only 303 planes, three fewer than in the prior year, despite plans to produce more planes this year than last.

Airbus on July 1 took control of a joint venture making the A220, formerly called the CSeries, from Bombardier. Lacking the market clout of larger plane makers, the Canadian company was forced to sell after initial slow sales and other financial difficulties over the plane’s development costs.

Airbus said the full-year outlook for adjusted EBIT this year has fallen by EUR200 million because of the integration of the new program. Delivery of early planes, like the A220, are often unprofitable since it can cost manufacturers more to produce the aircraft than they are sold for.

The company now projects adjusted EBIT for the year of EUR5 billion. The A220 addition also will represent a EUR300 million cash-flow headwind this year, the Toulouse, France-based company said. At least some of the cash impact will be covered by Bombardier.

Airbus said it had suffered about EUR4 billion in cash outflow in the first six months against a target of delivering around EUR2.95 billion in free cash flow by year end. Most of that is expected in the final weeks of the year as Airbus recovers from delayed plane handovers.

Airbus has enjoyed strong demand for some of its planes, including booking 431 new jetliner deals at the Farnborough International Air Show last week. The company said it is considering boosting production of some of its most popular models to cope with demand. That decision is not expected until next year.

Airbus is finding it a challenge to build all the planes airlines already have ordered, however. Some suppliers, particularly engine makers, have struggled to keep pace, forcing Airbus to delay some deliveries.

Still, Airbus stuck to its guidance of delivering around 800 of its core jetliner programs, and said it also expected to hand over 18 A220s by year end.

Write to Robert Wall at [email protected]

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