Airbus Logs Nine Monthly Jet Orders in Sign of Market Gloom
Airbus Logs Nine Jet Orders in April in Sign of Market Gloom
(Bloomberg) -- Airbus SE secured just nine net orders in April and delivered 14 jetliners after airlines desperate for cash put off accepting new planes and clamped down on spending to deal with a crisis that could last several years.
The European planemaker said Thursday that its order tally for the year through April stood at 299 after cancellations. Airbus faces a radically different outlook than a few months ago, having slashed its output targets for this year by about a third to cope with a fall in demand caused by the coronavirus.
“I didn’t expect many orders and don’t think Airbus will be anywhere near stated delivery goals during the second quarter,” said George Ferguson, a Bloomberg Intelligence analyst. “I would expect them to slow production so as not to build too much inventory.”
The coronavirus epidemic has caused unprecedented dislocation in the global aviation market, with planes grounded across the globe and airlines seeking to cancel or postpone handovers while seeking bailouts to survive. Engine maker Rolls-Royce Holdings Plc earlier Thursday lowered its delivery target for wide-body planes by 44% for the year.
Airbus faces a delicate balancing act to offer airlines the order flexibility they need while protecting its own revenue. Chief Executive Officer Guillaume Faury said last week that Airbus is taking a proactive approach, speaking to customers constantly and monitoring their financial health closely. He said the company may have to revise its output targets again, depending on how the market evolves.
Deferring Handovers
In this environment, the positive order count in April is a relief. Through March, archrival Boeing Co. had lost more than 300 orders this year. Still, the figures at Airbus show a greater impact from lockdowns and travel stoppages than was felt in March, when the Toulouse, France-based manufacturer managed to secure 21 net orders.
Boeing is likely to continue to see more cancellations than its European counterpart but deferrals will pose more of an issue for Airbus, according to Ferguson. “The risk is as they build aircraft and no one takes them, inventory rises and consumes cash, so they have to right-size builds and deliveries quickly,” he said.
Airbus has said it expects to see more postponements in the second quarter, with even the strongest airlines battling cash-flow issues. Air France-KLM said Thursday that while the company’s commitments with Airbus still stand, it is “definitely not” talking about additional orders. British Airways owner IAG SA said it will defer deliveries of 68 Airbus and Boeing aircraft.
Airbus has furloughed staff at sites in the U.K. and France as it seeks to align supply with falling demand for its planes. It spent a record 8 billion euros ($8.7 billion) in the first quarter as it started to struggle to deliver aircraft to customers, and the drop in deliveries is likely to eat further into reserves this quarter.
©2020 Bloomberg L.P.