Airbus hits downdraught with passenger jet profits nosediving by a quarter

The France-based aircraft manufacturer has seen overall third-quarter earnings fall by a fifth, worse than forecast, with jetliner unit leading way despite higher revenues.

A visitor looks at an Airbus A380 model during Japan Aerospace 2016 air show in Tokyo, Japan. The plane maker has reported a slump in profits. Kim Kyung-Hoon / Reuters

Airbus Group has posted lower than expected third-quarter profits led by a faltering performance in its core commercial jet division and continued weakness in the commercial helicopter market, but broadly maintained its 2016 outlook.

Europe’s largest aerospace group, which makes Airbus jets and a leading share of commercial helicopters, said quarterly operating profit before one-off items fell 21 per cent to €731 million (Dh2.92 billion). Revenues fell 1 per cent to €13.95bn.

Analysts had on average forecast quarterly core operating earnings down 19.3 per cent at €743m on revenues up 1.9 per cent, according to a Reuters survey.

Airbus Helicopters plans to cut 582 jobs in France over the next two years via voluntary redundancies in response to weakness in the commercial helicopter market, the company said on Wednesday.

Airbus has been hit by a slowdown in demand from customers in the oil and gas industry in particular, and by the consequences of an accident involving one of its Super Puma helicopters in Norway in April.

The jobs will go at two sites in France, Airbus Helicopters said.

The Airbus commercial jets unit saw a 26 per cent slump in third-quarter profits despite 4 per cent higher revenues, with the plane maker noting difficulties in the supply chain for its A350 and A320neo jets. Helicopter profits fell 29 per cent.

Airbus said its results were dampened by the transition to new models and revamped versions of existing ones. It has struggled to switch over to a new model of A320 as quickly as planned due to delayed deliveries of engines from Pratt & Whitney, which this week reaffirmed plans to deliver 150 of its new Geared Turbofan engines this year.

Airbus said it had received “firm commitments” from engine makers that they would meet the A320neo schedule.

Deliveries of A350 long-haul jets have also been held up by bottlenecks in the supply of cabin equipment.

However, its backlog for the superjumbo A380 double-decker remains healthy, with some 319 firm orders as of September 30, according to the France-based plane maker. Airbus said it was “working towards” meeting its previously stated target of more than 50 A350 deliveries in 2016, having delivered 26 aircraft in the first nine months.

The parent group reaffirmed annual targets including stable operating earnings and free cashflow before M&A activity and more than 650 total jet deliveries, compared with 462 deliveries in the first nine months.

However, it abandoned a previous target of regaining access to European export credit financing this quarter, suggesting it may come under pressure to offer extra customer financing. It said its cashflow target excluded any impact from this.

The financing, which affects 6 per cent of deliveries, was withdrawn in April in a row over transparency on the use of middlemen which triggered a UK corruption probe. The delay confirms a Reuters report last month that the financing was unlikely to resume this year.

Airbus Group shares fell 2.6 per cent on Tuesday, having fallen over 13 per cent so far this year.

Rival Boeing is expected to announce higher quarterly earnings on lower revenues later on Wednesday.

* Reuters

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