Airbus profit plunges in ‘gravest crisis’ for aviation industry

Planemaker Airbus has posted a 49 percent slump in first-quarter adjusted operating profit to 281 million euros ($304.7m) as revenue dropped 15 percent to 10.631 billion euros ($11.56bn) amid the “gravest crisis the aerospace industry has ever known”, said Airbus Chief Executive Guillaume Faury. 

Europe’s largest aerospace group also reported on Wednesday a negative cashflow of 8.03 billion euros ($8.73bn), including a previously published record fine of 3.6 billion euros ($3.91bn) to settle bribery and corruption investigations in the United Kingdom, France and the United States.

Planemakers, airlines and suppliers have been left reeling by the coronavirus pandemic, which has crippled passenger travel and catapulted major economies into recession.

“The crisis is really unprecedented,” Faury said on a call. “It’s hitting all regions of the globe and all industries at the same time so the role of governments is obviously key. One of the major risks for us is suppliers going bust.”

Faury said the measures taken by Airbus so far, which include cutting annual production by slightly over one-third and temporarily laying off more than 6,000 workers, maybe just the start, and it will review the situation in June when there may be more visibility into the direction the crisis is headed.

Airbus suspended its profit outlook, scrapped its dividend and negotiated new commercial credit lines last month as the spread of the coronavirus began to affect airline operations and almost halted the delivery of aircraft.

Several other top aerospace firms are also expected to report weaker results on Wednesday, including US rival Boeing, which is also hit by the continued grounding of its 737 MAX, though the impact of the coronavirus is mostly expected in the second quarter.

Airbus said it would focus squarely on saving cash.

The France-based group will reduce 2020 capital expenditure by approximately 700 million euros ($760.91m) to nearly 1.9 billion euros ($2.07bn) and defer or suspend activities which are “not critical to business continuity” or meeting other commitments.