Airbus makes millions of losses – but continues to forego state aid

Airbus makes millions of losses - but continues to forego state aid

© Reuters
The Frenchman wants to steer Airbus through the crisis under his own steam despite high losses.

The aircraft manufacturer is suffering from the corona crisis. Employees are on short-time work, suppliers fear for their existence. But the group continues to reject state aid.

The European aircraft manufacturer Airbus suffered a loss of 481 million euros in the first quarter. The cash flow was negative and reached a cash outflow of eight billion euros. “International air traffic has collapsed, and the full impact of the crisis is not yet fully apparent in the results of the first quarter,” said airbus-CEO Guillaume Faury in a conference call with journalists on Wednesday morning.

Many airlines are currently trying to delay the planned deliveries of aircraft. “We talk about every single aircraft with every single customer,” explained Faury. There were no canceled orders in connection with the Covid 19 pandemic. The number of cancellations was 66 machines, which is less than last year. Airbus received 290 net orders for civil aircraft in the first three months. 122 machines were delivered, 40 fewer than in the previous year.

The deliveries in the coming months are currently not foreseeable, explained Faury. Most of the discussions with the customers were still ongoing. In many cases, the airlines could not yet commit themselves because they were fighting for survival or negotiated financial aid with governments. “We cannot say where we will end up in 2020,” said the CEO. Airbus is currently looking at all costs to be able to adjust. “The classic division into fixed and variable costs no longer applies,” says Faury.

The defense division is doing well, orders have increased by 1.7 billion euros. The loss includes a write-down of € 136 million on a loan to satellite partner OneWeb, which filed for bankruptcy protection at the end of March because it was unable to obtain additional funding from its main investor, SoftBank.

Airbus is currently sticking to the 30 percent reduction in civil aircraft production announced three weeks ago. Only in June the company will probably have clarity about further necessary steps beyond the short-time work currently started, said Faury.

In the UK, around 3,200 people are currently affected by short-time work, in France there are 3,000 employees. In Germany there are also said to be several thousand, but the talks are still ongoing. In France, the number will increase significantly, the order of 7,000 is in the room, said the CEO.

No government aid needed

In a letter to the workforce at the end of last week, the Airbus boss had warned that the existence of the company is at stake. In June, after discussions with the employees, the company will communicate about the medium-term cost reduction. A reduction in jobs is obviously not excluded.

The outflow of funds of eight billion euros includes, according to Airbus CFO Dominik Assam, the penalty of 3.6 billion euros for the closed corruption procedure. 4.4 billion euros is the magnitude of the negative cash flow, which is common in the first quarter. “We will see further deterioration in June, but want to be neutral again in December,” said Assam. If Airbus does everything it has planned, it will do without direct government aid. But that does not apply to the entire industry.

The protection of liquidity is currently an absolute priority, explained Faury. Investments in reducing CO2 emissions are no less important, but not as urgent at the moment. That is why Airbus temporarily stopped certain projects such as the development of the E-Fan X electric drive with Rolls Royce. After the corona crisis, the aim is to step up the fight against climate change again.

Airbus also wants to try to support the troubled suppliers. “But we cannot finance the entire ecosystem, it can only be done very selectively,” said Faury. Airbus is still at the very beginning of the process. Suppliers who are already suffering from the 737 Max crisis at Boeing are high on the list of priorities.

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