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  HOME | Business & Economy (Click here for more)

Airbus Posts $1.48 Billion Annual Loss after Bribery Settlement Hit

TOULOUSE, France – European planemaker Airbus announced on Thursday a loss of 1.36 billion euros ($1.48 billion) in 2019 – sliding from profits worth 3 billion euros in the previous year – despite selling a record number of commercial aircraft.

The loss was mainly attributed to repeated problems with its military transport plane A400M and penalties worth 3.6 billion euros the manufacturer was forced to pay to avoid lawsuits.

According to its financial results, the new allocation for the military plane – which is assembled in Spain’s Seville – is worth 1.2 billion euros that takes the total funds spent on the program over the years to around 10 billion euros.

Airbus said the fresh allocation for the military plane was required because of the “increasingly challenging” outlook for exports, partly due to the extended German ban on selling to Saudi Arabia, which has forced the company to reassess its future export estimates.

In 2009, 14 units of the A400M were delivered as per schedule, but the company did not offer an estimated figure for deliveries in 2020, despite talking of progress and “rebaselining of the program” in the statement.

The company said it restructuring its defense and space program – in which net operating profit dropped 40 percent to 565 million euros from 935 million a year earlier.

The commercial plane business of Airbus registered a 32 percent increase in its net operating profit, which climbed to 6.35 billion euros, while the helicopter segment profit grew 11 percent to 422 million euros.

The total Ebit (earnings before interest and taxes) jumped 19 percent to 6.94 billion euros.

However, this profit was negated by a series of adjustments, including the allocation for A400 M, and penalties worth 3.59 billion euros which the company had to pay in France, the United Kingdom, and the United States to avoid trials for allegedly using intermediaries who had paid or promised commissions for getting contracts in the past.

The total adjustments worth 5.6 billion euros were the main reason behind the annual loss posted by the company, although this did not prevent the board from suggesting the payment of a dividend worth 1.8 euros per share to the annual general meeting, nine percent higher than the previous year, when it had reported a profit of 3.05 billion euros.

This generosity is explained by the free cash flow of 3.5 billion euros, 21 percent higher than 2019, mainly based on its good performance in commercial aircraft deliveries, at a time when its US rival Boeing is witnessing its worst slump in history.

Airbus delivered a record 863 planes in 2019 – up from 800 in 2018 – the driving force behind the total revenues growing 11 percent to 70.47 billion euros, as the commercial plane segment revenues jumped 14 percent to 54.77 billion euros.

During the year, the company received orders worth 81.2 billion euros, a sharp increase from 55.5 billion a year earlier.

Based on this, and assuming no major disruptions to the growth forecasts for the air traffic sector, the company is targeting the delivery of around 880 commercial planes during 2020.

This is expected to allow an EBIT adjusted of 7.5 billion euros and free cash flow of around 4 billion euros.

 

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