A320 demand pushes Airbus profit up

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br AIRBUS-RESULTS Reuters Airbus chief executive Tom Enders, left, and chief financial officer Harald Wilhem present the plane maker's annual results in Toulouse yesterday. Europe's largest aerospace group lifted profit by 21 percent and announced a hike in production of its A320 series and fresh charges for its A350 model. Photo: Reuters

Toulouse - Airbus’s profit rose 21 percent last year, the plane maker said yesterday, and it predicted further growth this year as it lifts production of the best-selling A320 single-aisle jet.

Earnings before interest, tax and one-time items rose to e3.6 billion (R53bn), exceeding a company target of e3.5bn.

The group said it would lift A320 output to 46 a month in 2016 from 42. Airbus delivered a record 626 planes last year and is targeting a similar number this year as airlines seek more fuel-efficient models.

Boeing will lift output of the 737, its rival to the A320, to 47 a month by mid-2017 to meet demand in a segment that forms the backbone of global fleets.

“Order intake was strong for our Airbus commercial aircraft and provides a solid platform for the future growth of the group,” chief executive Tom Enders said. “Strong demand allows us now to increase the single-aisle production rate.”

The shares rose as much as 3.6 percent and traded 1.7 percent higher at e54.01 at 9.36am in Paris. The stock has declined 3.2 percent this year, valuing the company at e42.3bn. Boeing is down 7 percent.

“Management has considerable credibility, and 2013 was a year of delivery for Airbus,” James Buckley, a portfolio manager at Baring Asset Management, said. “The order pipeline is strong, and they have positive order flow.”

Group sales gained 5 percent to e59.3bn in 2013, and Enders said reaching cash-flow break-even remained a target after a shortfall last year, when “execution issues” led to an outflow before customer financing of e515 million. It aimed to reach positive cash flow after 2015.

The order intake more than doubled to e218.7bn.

The aircraft operation contributes two-thirds of revenue at Airbus, which adopted the unit’s name in a switch from European Aeronautic, Defence & Space last month after it became clear that sluggish military sales would leave jetliners as the main driver for the foreseeable future.

Over the past seven years, Airbus has steadily lifted output rates for the A320 series, accelerating from 32 a month in the first quarter of 2007 to the current level in October 2012.

Airbus is preparing production of the updated A320neo, with two choices of more fuel-efficient engines. The first of these new planes are set to enter service late in 2015.

Net income rose 22 percent last year after one-time charges and Airbus plans a dividend of 75 euro cents a share, up from 60c. In the fourth quarter, e434m in charges were incurred from the new A350 wide-body plane and another e292m for restructuring, mainly in space and military activities. For the year, charges reached e913m.

The company said in December that it would cut about 6 000 jobs in defence and space in France, Germany, Spain and the UK, including about 250 in corporate posts, mainly in Paris.

Airbus said the A350 programme remained challenging, and cost assumptions could lead to an increasingly higher impact on provisions. The firm, which said it would deliver the first of the planes this year to Qatar Airways, has booked 814 orders from 39 customers for the twin-engine, long-range model.

Its financial hedging portfolio at year end was worth $75.9bn (R817bn), down from $83.6bn a year earlier. Chief financial officer Harald Wilhelm said Airbus was fully covered. In 2013, it added hedges worth $15.8bn at an average rate of $1.33 a euro, compared with $23.5bn at a rate of $1.37 a euro maturing in 2013. – Bloomberg


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