Airbus burned through $14 billion in first-half of 2020
European jetmaker has taken in only 25 orders since end January
Airbus will further cut down production of its A350 to stanch the cash burn it is experiencing right now.
Paris: Airbus pared back wide-body jet production again after burning through 12.4 billion euros ($14 billion) in the first-half, retrenching further to safeguard cash while waiting out a collapse in demand for new aircraft.
The world’s biggest planemaker will now aim to produce five A350 aircraft a month rather than the six it targeted in April. The company booked 900 million euros of COVID-19-related charges against earnings.
Airbus delivered 74 planes in the second quarter, when global fleets were largely grounded, less than one-third of the year-ago tally. With travel set to remain below last year’s levels until 2024, the company nonetheless said it aimed to stanch cash outflows in the second-half of the year.
“The impact of the pandemic on our financials is now very visible,” CEO Guillaume Faury said. “We have calibrated the business to face the new market environment on an industrial basis and the supply chain is now working in line with the new plan.”
Flying into a loss
Airbus, which has logged just 25 orders since the end of January, posted an adjusted loss of 1.31 billion euros for the first-half before interest and tax, including the charge, compared with a 2.19 billion euro profit a year earlier.
Revenue plunged almost 40 per cent, with the decline exacerbated by a three-week shutdown of assembly-lines as the company took steps to guard against the virus and assessed the situation.
The update comes after rival Boeing Co. announced a raft of new measures Wednesday to preserve cash and adapt to the shrunken market. The US company delayed the debut of its new 777X model, cut build rates for existing planes, said it will can the 747 jumbo, and mooted the shutdown of one of two plants that build the 787 Dreamliner. Job cuts may also be stepped up.
Zilch demand
Airbus’s ratcheting down of wide-body rates reflects scarce demand for the large aircraft that are used in long-haul services. The European planemaker left its other production rates unchanged, after slashing output to 40 planes a month for its popular A320 family in April. At the time, A350 output was trimmed by about 40 per cent to 6 per month, while the slower-selling A330 was cut back to two a month.
The company is embarking on the biggest restructuring in its history with plans to cut 15,000 jobs in the commercial aerospace division. Faury has meanwhile extended credit lines and clamped down on expenses to give access to 30 billion euros to manage the pandemic.