Airbus pledged it would stem a heavy cash outflow in the next six months despite a rising number of undelivered aircraft, as it swung into the red in the first half of a year that has ravaged the aviation industry.
The group made the pledge despite signalling an expected charge of between €1.2bn and €1.6bn to pay for the biggest job reduction plan in its history to cope with the collapse in global aviation. Some 15,000 jobs will be cut from the commercial aircraft division.
Airbus said on Thursday it had been unable to deliver some 145 passenger jets as a result of the coronavirus pandemic, while total deliveries in the first six months were roughly 50 per cent down on last year. Deprived of the usual payments from customers on delivery, Airbus reported a €12.4bn outflow of cash in the first half, before any deals of customer financing, up from a deficit of €4bn last time.
Roughly €4.4bn of the outflow was in the second quarter, on a par with the first quarter if the fine to settle a global bribery investigation is excluded. Consolidated net debt stood at €586m at the end of the first half, against year end net cash of €12.5bn.
The group reported a first-half net loss of €1.9bn against net income of €1.2bn in the same period last year.
Guillaume Faury, chief executive, said the group’s ambition was “not to consume cash” in the second half.
Already cash conservation measures were beginning to take effect, he said. The group had slashed aircraft production rates in April by between a third and 40 per cent. On Thursday it further reduced the rate of its A350 wide-body from six a month to five, reflecting industry expectations for a protracted downturn in long-haul travel.
“We face a difficult situation with uncertainty ahead, but with the decisions we have taken, we believe we are adequately positioned to navigate these challenging times in our industry,” added Mr Faury.
His comments come a day after rival Boeing also announced heavy losses, as well as a second round of production cuts and plans for further job losses. As well as the impact of the aviation downturn, the US aircraft maker is suffering from the 16-month grounding of the 737 Max after two fatal accidents.
Airbus reported a 39 per cent drop in consolidated revenues to €18.9bn, driven by the difficult market environment.
The company’s defence business also suffered from the disruption caused by the pandemic, with earnings before interest and tax down from €233m to €186m.