Bloomberg
Airbus Cautious on 2021 After Cementing Cash Flow Turnaround
(Bloomberg) — Airbus SE generated 4.9 billion euros ($5.9 billion) in cash during the fourth quarter, while issuing cautious guidance on the pace of its recovery from aviation’s worst-ever crisis.The European planemaker rode a December flurry of jet deliveries to beat its target to break even for a second straight quarter, based on adjusted free cash flow. Yet jet handovers are forecast to stay at 2020’s depressed levels this year, even as Airbus plans to ramp up production in the second half.The company’s downbeat outlook for this year surprised analysts who had expected Airbus to target higher aircraft deliveries after successfully balancing demand with output in the final months of 2020. The assessment reflects uncertainty over when the “tipping point” for a travel rebound will come, Chief Executive Officer Guillaume Faury said on a conference call.“We can see progress on vaccination campaigns but new variants of the virus are spreading, and at the same time we see reinforced lockdowns,” Faury said. “The pace of recovery will not only depend on the evolution of the pandemic and rate and effectiveness of vaccines, but also the reaction of governments.”The uncertain outlook confirms Airbus has yet to break free from the Covid-19 crisis that’s pummeled manufacturers and airlines alike for the past year. Air travel remains challenging, with countries tightening borders despite vaccine rollouts. Since January, when the planemaker slowed a plan to increase output, customers have pared back flight schedules and dragged out aircraft deliveries further.Delivery PlanAirbus shares fell as much as 4.6%, and were down 3.4% to 90.67 euros as of 12:24 p.m. in Paris.The Toulouse, France-based company reported earnings before interest and taxes of 1.83 billion euros for the fourth quarter, a 35% drop, as revenue slid 19% to 19.8 billion euros.Airbus expects jet handovers this year to at least match the 566 delivered in 2020, Faury said. The goal for adjusted free cash flow — which excludes the impact of M&A and customer financing — is breakeven, while EBIT is forecast at 2 billion euros, according to a statement Thursday.Airbus said last month that output of its top-selling A320-series narrow-body will rise gradually to 45 per month through the fourth quarter. It had previously targeted a faster jump, to 47 monthly by July from the current rate of 40 planes.Travel SetbackFaury told Bloomberg Television that the guidance on deliveries reflects the very uncertain environment and the difficult start to the year. The company could beat these forecasts if the outlook improves, he said.While case counts are coming down, new virus strains have created uncertainty about the timing of a global travel recovery. Passenger traffic may improve by only 13% in 2021 in a worst-case scenario, the International Air Transport Association said this month. That compares with an official…
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