Airbus rebounds to record profits as it strikes upbeat note on recovery


Airbus made record profits last year and restored its dividend, as the European aerospace group struck an optimistic note about prospects for a sustained rebound in the aviation industry.

The Toulouse-based company also raised its delivery forecast for the coming year, saying it was expected to dispatch 720 commercial aircraft, up from the 611 it handed over to customers in 2021.

Airbus’s bullish outlook came as Air France-KLM reported improved revenues and a lower-than-expected loss for 2021, with fourth-quarter operating income above pre-pandemic levels as long-haul flights pick up again.

The airline also said it was considering options for a capital raising of up to € 4bn, including a rights issue and quasi equity debt issues, that would help repay state aid.

The bosses of Europe’s other major airlines have expressed cautious optimism that the worst of the pandemic disruption is over, and expect to significantly ramp up flight schedules for the summer season.

Sean Doyle, British Airways chief executive, said last month there was “room for optimism that we are on the way out” of the crisis, and airlines reported rising ticket sales as travel curbs were eased across parts of Europe.

Still, short-term uncertainty over pricing and yields remains, and Ryanair has said “significant price stimulation” will be needed for air travel to recover before the peak summer season kicks in.

Despite the manufacturer’s strong rebound, Airbus chief executive Guillaume Faury cautioned that the “pandemic is not yet behind us”.

Company executives were still seeing tensions on “supply, logistics and labor”, Faury said on a news call, although he reiterated he expected the market to fully recover between 2023 and 2025.

The company reported a record net profit of € 4.2bn, driven by a rise in sales of commercial aircraft and higher earnings in its defense and helicopter divisions. The result was boosted by a series of adjustments, including halting its A380 superjumbo program and a reversal of Covid-19 charges.

As a result, Airbus said it would propose a dividend of € 1.50 a share, its first payout to shareholders in two years. The last annual dividend of € 1.65 was in 2019.

The group’s adjusted operating profit, a figure tracked by analysts, soared to € 4.86bn from € 1.7bn a year earlier. Revenues rose 4 per cent to € 52.1bn, mainly reflecting a higher number of commercial aircraft deliveries.

“2021 was a year of transition, where our attention shifted from navigating the pandemic towards recovery and growth,” Faury said.

“Record net income and our efforts to strengthen the net cash position underpin our proposal to reintroduce dividend payments going forward.”

The company said it was targeting adjusted operating profit of € 5.5bn and free cash flow of € 3.5bn before mergers and acquisitions for this year, about equal to 2021.

Airbus also stuck to its targets to increase production of its single-aisle A320 family to 65 jets a month by the summer of 2023.

The aircraft maker faces a difficult balancing act trying to rally suppliers that have been battered by the pandemic to increase production, while meeting recovering demand from customers.

A shortage of workers and materials such as computer chips have fueled concerns over whether the supply chain is able to meet some of Airbus’s more aggressive plans for narrow-body production beyond 2023. The company previously said it was looking at scenarios of 70 jets a month by the first quarter of 2024 and 75 a month by 2025.

Faury said the company was expected to take a decision on rates beyond 2023 by the middle of this year.

He also addressed a bitter legal dispute in London’s High Court with Qatar Airways, one of its largest customers, over surface degradation to its A350 aircraft.

Airbus, said Faury, did “not feel good about it” and would continue to try to “resolve the situation in an amicable way”. Nevertheless, he defended the company’s recent decision to unilaterally cancel a $ 6bn contract with Qatar Airways for A321neo aircraft, noting that “we need to take steps to protect ourselves”.



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