After Boeing experienced frequent quality crises and slowed down production capacity, its competitor Airbus further increased the production capacity of multiple commercial aircraft.
On April 25th local time, aircraft manufacturer giant Airbus France (hereinafter referred to as "Airbus") released its Q1 2024 results. In the first quarter, it achieved a revenue of 12.83 billion euros, a year-on-year increase of 9%; Adjusted pre tax profit was 577 million euros, a year-on-year decrease of 25%, lower than market expectations; The net profit was 595 million euros, a year-on-year increase of 28%; Earnings per share was 0.76 euros, a year-on-year increase of 29%.
Airbus Q1 2024 performance
In its financial report, Airbus reiterated its performance guidelines released in February this year, aiming to deliver approximately 800 commercial aircraft by 2024; The adjusted pre tax profit ranges from 6.5 billion euros to 7 billion euros; The free cash flow before customer financing is approximately 4 billion euros.
Looking at the sub sectors, in the first quarter, the commercial aircraft business with the largest proportion of Airbus achieved revenue of 9.167 billion euros, a year-on-year increase of 13%, mainly reflecting an increase in delivery quantity; Adjusted pre tax profit was 507 million euros, a year-on-year decrease of 13%.
Airbus Q1 segment revenue
Airbus Q1 segment profitability
It is worth noting that, driven by the strong development momentum of wide body aircraft, Airbus announced that the production of A350 will increase to 12 aircraft per month in 2028, while the previous plan was to restore to 10 aircraft per month in 2026. The wide body A330 is planned to continue producing 4 units per month this year.
In addition to wide body aircraft, the production capacity of Airbus small narrow body aircraft A220 will continue to increase, with a goal of producing 14 aircraft per month by 2026. We plan to make progress towards the goal of producing 75 aircraft per month by 2026 in the best-selling narrow body A320 series. In addition, the A321XLR is expected to be put into use in the third quarter of 2024.
Airbus CEO Guillaume Farry pointed out in his financial report that at the beginning of 2024, the order volume of various business departments of Airbus was very strong. Thanks to investment in the production system, and with the support of core pillars such as Airbus safety, quality, integrity, and compliance, the capacity improvement plan is still ongoing.
On the other hand, its competitor Boeing has been deeply embroiled in a safety accident crisis since the beginning of this year, which has dragged down its performance in the first quarter and significantly slowed down the production of best-selling aircraft models. According to Boeing's quarterly report released on April 24th, the production speed of the Boeing 737, which was compared to the Airbus 320, dropped to below 38 aircraft per month in the first quarter of this year. Boeing CEO also reiterated during the earnings conference call that the production of 737 will remain at this level for at least the first half of this year. Boeing had previously planned to increase production to 42 aircraft per month in February this year, with a goal of producing approximately 50 737 aircraft per month by 2025 or 2026. In addition, due to a shortage of components, it is expected that the production and delivery speed of the Boeing 787, which is expected to compete with the Airbus 350, will also slow down.
Since January 5th, when an Alaska Airlines Boeing 737 MAX 9 aircraft, which had only been delivered for a few months, encountered a cabin door detachment incident during flight, Boeing has faced increasing pressure in factory quality control. At that time, the Federal Aviation Administration (FAA) ordered the Boeing 737 MAX 9 aircraft to be temporarily grounded for safety inspections and implemented a series of actions to strengthen supervision of Boeing production lines, including limiting the expansion of new 737 MAX aircraft. The European Aviation Safety Agency (EASA) has also issued a warning to Boeing to revoke its production license.
Due to quality issues and a crisis of trust, in addition to a slowdown in production capacity, Boeing's commercial aircraft delivery volume has also been continuously declining. According to Boeing's financial report, the commercial aircraft division added 125 net orders and delivered 83 commercial aircraft in the first quarter, compared to 130 delivered in the same period last year, a year-on-year decrease of 36%. Among them, 67 best-selling 737 aircraft models were delivered, a year-on-year decrease of 40.7%.
Compared to the latest data released by Airbus, the net order volume of Airbus commercial aircraft in the first quarter was 170, an increase of 20% year-on-year. In the first quarter of this year, Airbus delivered a total of 142 commercial aircraft, compared to 127 in the same period last year, a year-on-year increase of 12%. Among them, 116 best-selling A320 series aircraft were delivered, an increase of nearly 10% year-on-year.
Airbus order situation
However, although Airbus is constantly accelerating its production pace compared to its competitors, it is still limited by tight supply chains. In its financial report, Airbus also mentioned that "there are still no signs of improvement in the operating environment" and "geopolitical and supply chain tensions are still ongoing".
Airbus's supplier shipments were once tight, including products from Spirit Aerosystems. In addition, according to an analyst cited by foreign media in a report, expanding all commercial aircraft production lines simultaneously requires upfront investment, which has put pressure on Airbus's profits and cash flow for this quarter.
It is reported that due to Boeing's quality review, the shipment volume of the airframe from the airframe supplier Spirit has decreased. In addition, Boeing has recently stated that it is in talks to acquire this former subsidiary, with plans possibly scheduled for the second quarter of this year.
Foreign media quoted Airbus CEO Fu Li as saying in an interview that they do not want Airbus to purchase important work projects from their main and almost only competitors. Therefore, Airbus needs to find an effective path forward for both parties.
However, Airbus also has plans to cope with supply chain pressures. According to foreign media reports, Airbus management stated in an interview after the performance announcement that it will recruit 10000 new employees this year to cope with the increase in production, bringing its workforce to over 150000 for the first time. Chief Financial Officer Thomas Toepfer also stated that the company still has more inventory to cushion supply disruptions.