Airbus Orders Plunge

Airbus's first-half 2019 results read almost like fantasy fiction now, after looking at the airframer's first-half 2020 results. Then, Airbus was flying high on the strength of its A320 family, the uptake of the A220, and the growing popularity of the A350. And the Boeing 737 MAX grounding was beginning to have a positive effect on the Airbus order book. The company reported €31 billion ($36 billion) in revenue in the first half of last year.

That was then, and it's a far cry from now. Airbus released its first-half 2020 results today, and the company reported a €1.6 billion loss in the half. But more startling was the order book. In the first quarter of this year, Airbus notched 290 orders for its aircraft. In the second quarter, just eight. It delivered 196 aircraft in the first half of this year, versus 389 aircraft in the same period of 2019. The backlog remains strong, though, with more than 7,500 aircraft in its backlog. But the company said it couldn't deliver 145 aircraft in the first half of this year because of the Covid pandemic.

Airbus is slowing its production lines and has said it will reduce its headcount by 15,000 employees. Although Airbus does have a defense unit, the company doesn't rely on its defense sales to buoy it during a commercial aircraft downturn in the same way Boeing does. Revenues at its Helicopters and Defense and Space units were down -2% and -9% respectively, compared with -48% for its commercial aircraft unit.

The chaos caused by the Covid pandemic shows no signs of letting up this year, CEO Guillaume Faury said. "We face a difficult situation with uncertainty ahead," he said. The company is committing preserve cash through the end of the year.

There was a bit of good news for Airbus, though. A long-running saga finally has come to an end. For 16 years, lawyers from the European Union and the U.S. have been waging a war of paper in the World Trade Organization over launch aid for new aircraft programs. The U.S. claimed the governments of France and Spain gave Airbus illegal financial aid to launch the A350, a claim the EU has denied. With the threat of U.S. tariffs looming, Airbus has renegotiated the terms of the loans with the French and Spanish governments, bringing the aid in line with WTO rules.