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Airbus Profits Fall During Transitional Year

Earnings at Airbus have taken an expected hit as the company transitions from development of new aircraft programs to full-scale production.

Earnings at Airbus have taken an expected hit as the company transitions from development of new aircraft programs to full-scale production.

Pre-tax income (including one-off items) for the group’s commercial aircraft division was down by more than half for the first nine months of the year, compared with the same period in 2015, while profit in the most recent quarter fell 26 per cent to €354m ($386m).

“As expected the nine-month performance reflects the heavily back-loaded aircraft delivery schedule, ongoing production ramp-up and transition to new versions of our A320 and A330 aircraft,” said Tom Enders, Airbus group CEO.

Although the company has delivered more aircraft this year, earnings have suffered due to a combination of ramp-up costs and lower prices on the A320ceo and A330ceo platforms, or what Airbus terms “transition pricing”.

For their successors, Airbus said that “teething problems” related to the A320neo’s PW1100G engine are now “largely over”, but conceded that manufacturer Pratt & Whitney faces challenges to meet production targets. 

Questioned further by analysts, Airbus CFO Harald Wilhelm said 20 A320neos are still awaiting engines, and that some deliveries of the aircraft could slip into 2017.

On the A350 production line Airbus is still trying to lower its recurring costs.

These production challenges were, however somewhat offset by reduced research and development expenses, which fell 15 per cent in the first nine months of the year.

Airbus’ backlog, meanwhile, remains above 6,700 aircraft. That’s a healthy figure, although demand has fallen significantly in 2016 after several years of big orders from airlines and lessors. There have been just 380 net orders for Airbus commercial aircraft, compared with 815 in the first nine months of 2015.

To find out more about Pratt & Whitney’s challenges producing a new engine for Airbus’ most important product – the A320neo – pick up a copy of The Engine Yearbook 2017, out next month. 

TAGS: Airframes
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