Airbus has posted a first-quarter 2020 loss of €481 million ($522m) today, due to the aviation crisis destroying air travel demand and negating the need for new aircraft. The situation is so unparalleled that Airbus was unable to give a financial outlook in its statement to shareholders. It did, however, outline several steps that it was taking to mitigate the impact.
What are the details?
Airbus today issued its first-quarter results to media, reporting an overall loss of €481 million ($522 million). The company did have some positive news, such as 290 new aircraft orders. While this was 58 less than last year, it’s a solid result given the current situation.
Additionally, the firm delivered a total of 122 commercial aircraft in the quarter (40 less than last year). Airbus built and delivered eight A220s, 96 A320 family aircraft, four A330s, and 14 A350s. However, Airbus also reported that 60 aircraft built were not able to be delivered to airlines.
“We saw a solid start to the year both commercially and industrially, but we are quickly seeing the impact of the COVID-19 pandemic coming through in the numbers,” said Airbus Chief Executive Officer Guillaume Faury said in the press release.
“We are now in the midst of the gravest crisis the aerospace industry has ever known.”
Why is Airbus so affected?
Airbus is in the business of building commercial passenger and freight aircraft (among other aviation offerings like helicopters). Hence, when the coronavirus struck, it not only hit the company hard (forcing them to close factories and end production) but its customers as well.
How does Airbus plan to turn things around?
Airbus has said that it doesn’t know for sure when market conditions will improve, but it is putting in place several motions to try and revitalize the company.
“We’re implementing a number of measures to ensure the future of Airbus. We kicked off early by bolstering available liquidity to support financial flexibility. We’re adapting commercial aircraft production rates in line with customer demand and concentrating on cash containment and our longer-term cost structure to ensure we can return to normal operations once the situation improves.”
Some of these plans include:
- Reducing production rates of aircraft to ensure that fewer are sitting around and not delivered (they don’t want planes in the car park like the Boeing 737 MAX). This will also ensure that aircraft can be delivered to those who want them.
- Delaying of the construction of a new A321 factory in France (proposed to be used for the new A321XLR).
- Airbus has also not ruled out further job cuts.
Airbus also rolled out a company-wide coronavirus management plan that incorporated social distancing and allowing as many employees as possible to work from home.
“At all times, the health and safety of Airbus’ employees is our top priority. Now we need to work as an industry to restore passenger confidence in air travel as we learn to coexist with this pandemic. We’re focused on the resilience of our company to ensure business continuity.”
From here, Airbus has withdrawn its projections for the rest of the year and is planning its operations as if the aviation crisis is ongoing for the rest of 2020.
What do you think of this news? Is Airbus able to recover? Let us know in the comments.