Airbus hopes to be able to deliver ‘around 720’ commercial aircraft this year, the same number that it originally targeted for 2022 but failed to reach. Production of the narrowbodies is gradually ramping up during the year, but the supply chain remains fragile. This leaves a question mark if 720 is feasible after all. Airbus targets around 720 deliveries but ramp-up slips to the right.
Supply chain was what dominated Airbus in 2022, with engine makers but also suppliers for interiors and electronic components or detail parts struggling to deliver on time. The problems forced Airbus to revise its delivery forecast twice, from 720 in February last year to 700 in July and to below 700 in December. In the end, the airframer delivered 661 aircraft.
“The supply chain did not recover as anticipated. The Company had to adjust its operations accordingly, which led to lower commercial aircraft deliveries than originally planned. We are adapting our production to match supply,” CEO Guillaume Faury said, who added that he was not happy with 2022 deliveries. “It means it will take us two years to do what we had planned in one. Production will be backloaded again. Risks of further disruptions remain, but our guidance for 2023 is based on facts and todays’ situation. The problems should ease progressively this year, we believe this is the trajectory.”
Faury added that the target of 720 deliveries means Airbus would deliver around sixty aircraft more than in 2022, which was already up fifty aircraft over 2021. Higher rates require Airbus to compensate and adapt internally for shortfalls that come from the supply chain and find solutions. “As we move forward in 2023 we are focused on our industrial activities and the longer-term transformation of the Company. The solid 2022 financial performance and our confidence in the future lead us to propose a higher dividend payment this year.”
Rate 75 slips by one year
Most at stake at the narrowbodies. The A220 is building from the current six towards fourteen per month by the middle of the decade. The A320neo was at around 45 per month last year and should get to around 50 this year. Airbus has been targeting a rate of 65 A320neo’s per month for some time, initially for 2023, then for mid-2024. It will now slip to “the end of 2024,” it said today. A new, highly automated final assembly line for the A321neo is being prepared in the former A380 FAL in Toulouse, but this line is still very much in the start-up phase. It will take until the end of this year when the first aircraft will roll out here. The assembly line in Tianjin has also been converted to include the A321, while Mobile will open a second line in 2024 or early 2025.
Yet, a further ramp-up to rate 75 per month has now moved from “the middle of the decade” by a year to 2026. Entry into service of the A321XLR is expected in Q2 2024.
Rates for the A350 should go up to nine per month in late 2025, thanks in part to the recent LoI with Air India for forty aircraft. Note that this rendering was done in 2022. (Airbus)
Rates for widebody aircraft will also go up. The A330 will go from three per month now to four in 2024. The A350 has just been ramped up from five to six per month, but Airbus has prudently agreed with suppliers to go to nine aircraft by the end of 2025. This is just below the rate ten of before the pandemic. The rate increase comes on the back of good commercial success for the A350, which won orders for forty aircraft from Air India earlier this week – although officially still a Letter of Intent. A total of 23 A350s for Qatar Airways have been reinstated after the airline and Airbus reached an amicable agreement on their long feud over the paint quality issue. Faury was not willing to go into details on what lessons Airbus has learned. “I exchanged my lessons learned with Al Akbar.”
2022 results
Airbus Group reported a €4.247 billion net profit, only slightly up over €4.213 billion in 2021. EBIT Adjusted was €5.627, up from €4.865 billion. It includes a €477 million charge on the A400M multirole transporter and €82 million in costs related to the restructuring of aerostructures, partly offset by €236 million in pre-delivery payment mismatch/exchange rate evaluations and the A380 program. Reported EBIT €5.325 billion, down from €5.342 billion. Revenues increased to €58.8 billion from €52.1 billion in 2021. Free cash flow before M&A and customer financing was €4.680 billion, up from €3.515 billion.
Airbus Commercial reported an Adjusted EBIT of €4.6 billion versus €3.570 billion in the previous year. Reported EBIT was €4.8 billion, up from €4.175 billion. Revenues reached €41.428 billion versus €36.164 billion. The airframer received orders for 820 aircraft, up from 507 in 2021. This represents a value of €59.7 billion. In Q4, revenues were €14.8 billion, up from €11.5 billion. Adjusted EBIT was €1.725 billion versus €831 million, Reported EBIT was €1.559 billion versus €1.286 billion.
Defense and Space performed worse (Adjusted EBIT €384 million versus €696 million), with Space hit by the unavailability of the launcher facilities in Russia and delays/technical issues of other launcher programs. Helicopters performed better (Adjusted EBIT €639 million versus €535 million).
For FY23, Airbus expects an Adjusted EBIT of €6.0 billion and free cash flow before M&A and customer financing at €3.0 billion, but this is conditional on no headwinds. For Chief Financial Officer Dominik Asam, this was the last presentation as he will leave Airbus in March. Airbus appointed Thomas Toepfer as his successor. Toepfer joins the aerospace company in September from Covestro AG, a German supplier of polymers. By tradition, the position of the CFO at Airbus is held by a German. Airbus Group ended 2022 with a workforce of 134.267, up from 126.495 in 2021. It recently announced plans to recruit another 13.000 staff this year.
