Airbus Bolstered by Strong Commercial Backlog

 - February 22, 2017, 10:52 AM

Despite a record year last year for its commercial aircraft deliveries and a record order backlog at the end of the year, Airbus’s 2016 financial results, announced on Wednesday, were blighted by more losses from the troubled A400M military airlifter program. This resulted in a further €1.2 billion ($1.3 billion) write-down, but overall results saw revenues increase 3 percent, to €67 billion ($70.8 billion), helped in part by the stronger U.S. dollar.

On the commercial aircraft side of the Airbus business, CEO Tom Enders reported that “[2016] wasn’t an easy year but we delivered on our commitments, with 688 commercial aircraft delivered and a book-to-bill ratio of more than one.” The European airframer took orders for 731 aircraft last year, compared to 1,080 in 2015.

We have a record order backlog of almost 6,900 aircraft, which is the basis for our ramp-up,” Enders declared. Airliner deliveries were up 8 percent on 2015 and the manufacturer hopes to deliver “more than 700” in 2017.

Airbus COO Fabrice Bregier said that A320-family narrowbody production is moving from the legacy Ceo models to the new-generation Neo family, with 68 of the latter delivered last year (to 17 customers). This will triple in 2017, the company reported, in support of orders that now total more than 5,000 for the Neo, from “more than 90 customers.”

However, Bregier acknowledged that the introduction of the Neo family’s new powerplant has not gone entirely smoothly. He said that the manufacturer is still “facing maturity issues” with the Pratt & Whitney PW1100G engines. Customers also have the option of CFM International’s Leap turbofans. Overall 548 A320-family aircraft were delivered in 2016 and the company hopes to move to 60 units per month by mid-2019.

Reflecting on the service entry for the new A350 widebody Bregier said, “It’s a new aircraft so we knew 2016 would be challenging as we had to go from 10 to 50 a year. We delivered 49 so it’s what we wanted to achieve, effectively. Our goal is 10 aircraft a month by the end of 2018.”

In late November, Airbus achieved the first flight of the A350-1000. The company says this version is on track to achieve type certification in 2017, with delivery to launch customer Qatar Airways scheduled for the second half of the year.

Orders for 41 more A350s were received in 2016, taking the total order book to 756. In December, Airbus delivered 15 A350s.

Airbus notched orders for 83 A330s in 2016 and is moving towards first flight of the new A330neo by mid-2017. Bregier said that deliveries will begin in 2018 and at that point Airbus will increase production of the type to six or seven per month.

With the A380 the company is implementing “fixed cost reduction exercise” to “derisk” the program and bring down the break-even target, said Airbus CFO Harald Wilhelm. For 2017, production has been reduced to just 12 units (from 20 last year), but Wilhelm insisted there are prospects for more orders for 2019 and beyond. A total of 317 A380s have been ordered with 207 delivered to date, but there are still only 13 operators.

Enders was quizzed as to what impact the UK’s impending Brexit departure from the European Union might have on Airbus. “It’s unclear what’s going to happen,” he replied. “We have 15,000 people in the UK making commercial wings, A400M wings, and a space business. We’re hoping additional barriers won’t be erected to interfere with operations and the value added.”

Asked whether the “America First” policies of the new U.S. government might have consequences for the European company, Enders pointed out that Airbus now produces narrowbodies at a new factory in Mobile, Alabama, and also has helicopter and space businesses in the U.S.