Airbus cancels A380 programme; reports full year 2018 results

Lauren Eldershaw
By Lauren Eldershaw February 14, 2019 11:24

Airbus cancels A380 programme; reports full year 2018 results

At its annual results press conference, Airbus reported its full year results for 2018, stating that it has delivered on its guidance for all key performance indicators, but confirmed the rumours that it was cancelling its A380 programme.

“Though 2018 had plenty of challenges for us, we delivered on our commitments with record profitability thanks to a strong operational performance, particularly in Q4,” said Airbus Chief Executive Officer Tom Enders. “With an order backlog of around 7,600 aircraft, we intend to ramp-up aircraft production even further. However, due to the lack of airline demand we have to wind down production of the A380. This is largely reflected in the 2018 numbers.”

Net commercial aircraft orders totalled 747 (2017: 1,109 aircraft), including 40 A350 XWBs, 27 A330s and 135 A220s. Showing the underlying health of the market, the order backlog reached an industry record of 7,577 commercial aircraft at year-end, including 480 A220s Consolidated order intakein 2018 totalled € 55.5 billion with the consolidated order book valued at € 460 billion on 31 December 2018 under IFRS 15.

Airbus has booked revenue of €63.7 billion – an increased over 2017 numbers of €59.0 billion, which reflects its record commercial aircraft deliveries. At Airbus, a total of 800 commercial aircraft were delivered in 2018 compared to 718 aircraft in 2017. That number comprised: 20 A220s, 626 A320 Family, 49 A330s, 93 A350s and 12 A380s.

Consolidated EBIT Adjusted totalled €5.834bn compared to €3.19bn in 2017. Airbus’ EBIT Adjusted increased to €4.808bn compared to €2.383bn in 2017, reflecting the higher aircraft deliveries.
Airbus states that the strong year-on-year improvement “is driven by progress on the learning curve and pricing for the A350 as well as the A320neo ramp-up and pricing premium. Currency hedging rates also contributed favourably”.

Airbus confirmed that further upgrades of the Pratt & Whitney GTF engine for the A320neo are due to arrive this year, with the manufacturer promising to continue to monitor in-service engine performance. Airbus says that the A320 programme is “on track to reach the monthly targeted production rate of 60 aircraft by mid-2019 with rate 63 targeted in 2021”.

For the A380, Airbus stated that following a review of its operations and the fact that Emirates is reducing its A380 orderbook by 39 aircraft with 14 A380s remaining in the backlog yet to be delivered, and with the lack of an order backlog, deliveries of the A380 will cease in 2021.

Airbus said that the liabilities connected to these decisions have had a negative impact on EBIT of € -463 million and a positive impact on the other financial result of € 177 million.
Airbus talked up the success of the A350 programme, with deliveries up last year compared to 2017, which included 14 of the larger A350-1000s. The programme reached rate 10 in the fourth quarter of 2018 and Airbus states that the backlog supports this rate going forward, which includes the decision by Etihad to reduce its A350 order by 42 A350-900, leaving 20 A350-1000 for Etihad in the backlog. Airbus is determined to improve the A350 programme’s performance to reach breakeven in 2019 and improve margins beyond this, the manufacturer said.
Airbus has proposed a 2018 dividend of €1.65 per share on 17 April 2019.

Airbus expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions, and is targeting 880 to 890 commercial aircraft deliveries in 2019 with a 15%+ increase in EBIT Adjusted over 2018 results (excluding M&A and customer financing costs of €4bn).

Lauren Eldershaw
By Lauren Eldershaw February 14, 2019 11:24