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Airbus profits rise, will boost aircraft production - CEO Enders


Airbus profits rise, will boost aircraft production - CEO Enders


Airbus says it is going to build more planes to meet record demand for fuel-efficient airliners.

It also unveiled higher profit for last year, but its forecasts for this year were cautious with revenue predicted to be flat and operating profit growth “moderate”.

“We’re not planning new adventures in 2014, the focus is on execution, execution, execution,” Chief Executive Tom Enders told reporters at a news conference.

Higher costs for its newest widebody jet, the A350, pulled down earnings by 434 million euros.

Airbus Group, which has changed its name from EADS as part of a restructuring, reported turnover of 59.2 billion euros in 2013, up five percent from 2012.

Net profit was 1.46 billion, a 22 percent rise from the previous year’s 1.2 billion.

Europe’s largest aerospace group beat arch-rival Boeing last year for orders – with 1,619 – but was second in terms of jets delivered, and said deliveries this year will be in line with 2013.

The restructuring of its defence and space activities meant a further financial hit of 292 million euros last year.

And with its traditional defence customers in Europe reducing spending, Airbus said it is looking more at export opportunities.

Euronews spoke with Airbus Group’s boss Tom Enders from Toulouse.

Business reporter Giacomo Segantini: “There’s a stark contrast between demand in Europe and other markets. As the pace of growth accelerates in regions like the Middle East, do you expect Airbus Group to become more global also in terms of production?”

“Tom Enders, Airbus Group CEO: “Absolutely. The Airbus Group is already pretty international if you compare us with what we were, say, five or 10 years ago, you would see a striking contrast and you would see that we’ve done a lot of work to become more international. Like building a final assembly line in China, which is operating with great efficiency today, building a final assembly line in one of the largest aviation markets, the United States, in Mobile, Alabama”.

euronews: “Brilliant results from commercial aircraft on the one hand, deep restructuring in your defence and space units on the other. Is the course set at least for the next few years? Are you en route towards your final destination of raising profit margin to 10 percent by 2015?”

Enders: “Well I can confirm that we are well underway, we’re making progress year after year, and the targets for 2013 – if we include, by the way, the A350 programme the 10 percent target translates to seven to eight percent target, but that is something we have explained to investors already last year – we’re making good progress towards this target, and talking about restructuring in space and defense, well this is exactly why we want to drive more profitability, more competitiveness out of that business going forward. And if I look at the progress that business has made during the last 12 months I’m very encouraged to believe we can reach our targets”.

euronews: “Some say the real challenge in the next few years will be keeping up the pace of production and deliveries. Is that it? Or are you more worried about customers suddenly cancelling their orders?”

Enders: “On that front we are fairly relaxed, we have more than 500 large aircraft on backlog, as you mentioned we had during last year an additional 1,500 aircraft, while our production numbers are in the 600s. But we try to deliver our aircraft first [as quickly as possible] to the customers, and this is why we recently decided to increase again the production of our – if I may say so – “bread & butter” business, the A320 family business, to 46 aircrafts [a month] from currently 42, from 2016 onwards. And we are studying even further rate increases for the year to follow.”

euronews: “One last question: after the losses imposed by your latest overhaul, some people fear the lack of new aircraft development programmes could have an impact on jobs, especially on engineering sub-contractors. Is that the case? Are you slowing down the pace of renewal to give the company more time to absorb costs?”

Enders: “Obviously if you develop an all-new aircraft that may cost you 10, 12, 15 billion euros or more if you screw it up. If [instead] you re-engineer an aircraft, as we did with the A320, that comes at a fraction of the cost, but what is more important is the incremental development. That doesn’t mean we will stop entirely new development. And we will prepare ourselves in terms of R&D (research and development) also for the future. But we’ve never given a guarantee to either our engineering force, nor to subcontractors, that for ever and ever we would grow the engineering troops here. This can mean ups and downs, there will be swings, but in general expect us to be as creative and as innovative as we’ve been in the past. Perhaps a little bit different when we did it in the decades past.”

Production hike to include the United States

As Tom Enders explained in that interview, Airbus is to raise output of its A320 family of small jets to 46 aircraft a month by the second quarter of 2016 from 42 now. Boeing’s rival jet – the 737 – aims to hit 47 a month by 2017.

The increase means Airbus will be producing an A320 family jet, worth around $100 million (72.9 million euros) at list prices, every seven working hours.

The ramp-up to 46 appeared at least partly to reflect already announced additions to capacity as a new assembly plant in the U.S. state of Alabama prepares to come on stream.

Airbus has said it plans to start delivering jets from Mobile, Alabama from 2016, rising eventually to four a month. Those plans had not previously been included in Airbus’s main production target.

Enders comments appeared to confirm that Airbus would not cut output in Europe to make way for the new US plant.

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