Airbus adds 20 A350 orders, reports Q1 offered no surprises

Airbus adds 20 A350 orders, reports Q1 offered no surprises

China Southern Airlines orders 20 Airbus A350 XWBs, first quarter financials offer no big surprises.

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Industry/Regulations

Cleveland, Ohio – The day before reporting first quarter (Q1) 2017 results, Airbus officials released the news that China Southern Airlines had signed a purchase agreement for 20 Airbus A350-900s, becoming the latest customer for the widebody aircraft.

China Southern Airlines now operates one of the largest Airbus fleet in the world with more than 300 Airbus aircraft in service in the A320 and A330 families and five A380s.

With this latest order, Airbus has recorded a total of 841 firm orders for the A350 XWB from 45 customers worldwide.

In Amsterdam on April 27, 2017, Airbus CEO Tom Enders reported first quarter 2017 results and confirmed guidance for the full year.

“Our first quarter performance doesn’t offer any big surprises: we are on track for our full year EBIT and free cash flow objectives and we took a nice uptick in cash proceeds from the sale of Defence Electronics,” Enders said.

Airbus completed divestment of its Germany-based Defence Electronics unit to global investment firm KKR in February for approximately $1.2 billion. (All figures based on 1 euro = $1.09.) The defense electronics activity – a global provider of sensors, integrated systems, and services for defense and security applications – will be renamed Hensoldt.

Airbus’ new order activity was low in Q1, as predicted, but Enders stressed the strong order book for more than 6,700 commercial aircraft supports the company’s ongoing production ramp-up.

Order intake totaled $4.2 billion (compared to $7.9 billion in Q1 2016), with the order book valued at $1.125 trillion as of March 31, 2017 (at year-end 2016, it was $1.158 billion). Net commercial aircraft orders amounted to six aircraft (compared to 10 aircraft in Q1 2016), with the backlog comprising 6,744 aircraft as of March 31, 2017.

Net helicopter orders rose to 60 (versus 51 net orders in Q1 2016), including 10 Super Puma family helicopters and 14 H145s.

Revenues increased 7% to $14.2 billion (Q1 2016: $13.3 billion). Commercial Aircraft’s revenues rose 13%, with deliveries of 136 aircraft (Q1 2016: 125 aircraft) including a higher proportion of A350 XWBs. Helicopters’ revenues increased by 11% with deliveries of 78 units (Q1 2016: 56 units). Lower revenues at Defence and Space were mainly driven by the portfolio reshaping, but were reported as stable on a comparable basis.

EBIT [earnings before interest and taxes] Adjusted totaled $262 million (Q1 2016: $544 million). Commercial Aircraft’s EBIT Adjusted was $307 million (Q1 2016: $444 million), mainly reflecting the aircraft delivery mix, transition pricing, and some higher ramp-up costs.

Thirteen A350 XWB were delivered in Q1 2017. The program is on track to reach the monthly production target of 10 aircraft by the end of 2018, Enders said.

A total of 26 A320neo aircraft were delivered to 14 customers. The first delivery of an A321neo occurred in April. Flight testing of the A319neo is now underway.

More details are on defense, space, helicopters, research and development expenses, net income and free cash flow are available at the Airbus Group website.

Consistent with its 2017 guidance, Airbus expects to deliver more than 700 commercial aircraft this year.