Airbus flying high

EADS has announced better than expected results for the full year 2011. Despite reduced defence spending, EADS in 2011 continued to grow and to improve its financial performance. The reported EBIT amounted to €1.7 billion. Cash-flow generation remained strong and led to a Net Cash position of € 11.7 billion.

“The order intake in commercial aircraft has elevated our order book to record levels and I am pleased that the civilian helicopter market has also significantly gained momentum. Our strong cash generation protects the company and allowed us to secure important acquisitions, mainly in the field of services. The stage is set for EADS to turn the corner towards increased profitability”, said Louis Gallois, CEO of EADS. “Certainly, 2012 will have challenges in store for us. We continue to devote the highest management attention to our key programmes, especially the A350.

The overall 2011 revenue contribution from the first consolidation of the major acquisitions was around €300 million, while physical deliveries remained high with 534 aircraft.

Foreign exchange impacts stood at around € 1.8 billion (FY 2010: € 1.3 billion) for EADS and at around €0.5 billion for Airbus (FY 2010: around € 0.3 billion). Compared to 2010, this represents a significant rise, despite an increase in Research & Development expenses and dollar headwind. It benefited from good performance in Airbus legacy programmes thanks to volume, mix and price improvements. At Airbus Commercial, a higher number of deliveries and better pricing more than compensated hedge rate deterioration and higher R&D. The total one-time effects at Airbus were roughly neutral. The negative impact from the A350 XWB provision was more than offset by the effects from the A340 completion and by a positive foreign exchange impact on pre-delivery payments mismatch and balance sheet revaluation.

There was a negative revaluation of EADS’ foreign exchange options for around €90 million.

In 2012, Airbus should deliver around 570 commercial aircraft. Gross orders should be above the number of deliveries.

Production rate increases on the Single Aisle and Long Range family are well underway. Due to the positive order momentum, Airbus has decided to ramp up production of the A330 to rate eleven in Q2 2014 provided the Emission Trading Scheme issue does not harm aircraft orders.

Management is devoting maximum attention to solving the A380 wing rib feet issues. The cost to fix this issue will be borne by Airbus and an estimate has been provided for within the warranty provisioning for the aircraft delivered. The A350 XWB programme is advancing. Major sections of the A350 XWB arrived at the Final Assembly Line (FAL) in Toulouse at the end of 2011. In February 2012, the A350 XWB Trent engine successfully performed its first flight on an A380 “Flying Test Bed”. Entry-into-Service is scheduled for H1 2014. The programme is very challenging: the schedule is tightening as Airbus progresses towards its next milestones, particularly Entry-into-FAL. Airbus advanced its services strategy in 2011 by acquiring logistics specialist Satair and US-based Metron Aviation, a provider of advanced Air Traffic Management solutions.

The Airbus Commercial backlog amounted to € 475.5 billion (year-end 2010: € 378.9 billion), which comprises 4,437 units representing an industry record (year-end 2010:3,552 aircraft). It benefited from a positive revaluation impact of around € 15 billion due to the strengthening value of the US dollar against the euro at the end of 2011 versus 2010.