Airbus operating profit halved in second quarter

Airbus' adjusted operating profit fell to €814 million in the second quarter of the year, more than halved from last year's €1.8bn. Its revenues were roughly flat in the quarter, totalling €16bn compared to last year's second quarter revenues of €15.9bn. Its net income for the quarter was down from €1.1bn in last year's second quarter, down to €230 million. For its commercial aircraft arm, revenues were at €12bn, down marginally from €12.2bn a year prior. Adjusted operating profit for the business was down from €1.7bn last year to €1.4bn. Airbus had warned last month it would take charge of around €900 million in the second quarter in its space business. This was confirmed in the report to be a charge of €989 million on forward losses in the business. The company said it increased competition and disruptive new players as well as ""unbalanced risk and rewards"" in contracts the business signed between 2018 and 2021 had impacted the performance of its space business. Airbus CEO Guillaume Faury said the newly appointed head of space systems Alain Faure is a ""proven leader"" and ""knows the space business"" too. In the first half of the year, Airbus delivered a total of 323 commercial aircraft. It also booked 327 gross orders for its commercial aircraft in the first half of the year and recorded 17 cancellations. 197 of the gross orders were for the A320 family aircraft. Faury said: ""We are focused on deliveries and preparing the next steps of the ramp-up, while addressing specific supply chain challenges and protecting the sourcing of key work packages."" He added that delivery delays of equipment such as engines and seats has caused Airbus to have ""far less ability to react"" as such equipment arrives in the final stages of development. He commented that it was impacted short-term with ""little notice and anticipation more recently"". ""We experienced a high level of missing parts, mainly on engines, on cabin and equipment and on Spirit AeroSystems work packages,"" said Faury in the call. The company has signed binding term sheet for potential acquisition of major Airbus related activities from Spirit, following Boeing's recent reacquisition of the supplier. Faury continued: ""On engines, the 2024 and 2025 volumes are aligned with our suppliers. To assess the performance issue of engine manufacturers, we have joint improvement plans going down to the elementary part bottleneck and encompassing both the line fit and the airlines in service demand with a high level of transparency. ""It doesn't mean that we always get what we want on time, but at least we have this high level of transparency and cooperation with our engine manufacturers."" The company has also implemented joint improvements plans with Safran and Honeywell to ensure better performance from its suppliers. Airbus reported a free cash flow before customer finance of €-0.5bn. Its total gross cash as of June 30, 2024, was €21.9bn and had €8bn held in its credit facility. Furthermore, its net cash was €7.9bn at the end of the second quarter, along with a total gross debt of €13.9bn. The company also noted in its report that it was under investigation by the British tax authority HM Revenue & Customs (HMRC) for ""possible violations of the United Kingdom's export control rules"". The company said it is ""fully cooperating"" with the investigation and does it expect any resolution from the matter to have ""a material financial impact"". In its outlook for the full year, Airbus estimates around 770 commercial aircraft deliveries and an adjusted operating profit of around €5.5bn. It also anticipates a free cash flow before customer financing of around €3.5bn. As of 12:26 CEST on July 31, 2024, its stock was up 3.67%.