Earnings at Airbus have experienced a severe drop of more than half, primarily due to major writedowns in its space division.
The company’s adjusted earnings before interest and taxes (EBIT) plummeted by 56%, amounting to €814 million (£686 million) for the period ending in June.
Significant Drop in Earnings
Earnings for Airbus dropped by more than half due to large writedowns in its space operations. The adjusted earnings before interest and taxes (EBIT) decreased by 56% to €814 million (£686 million) for the period ending in June.
Major Writedowns in Space Division
Airbus cited its space division as a significant cause for the financial downturn. The space unit received charges amounting to €989 million, which was higher than initially anticipated. This unit has been facing challenges that the company is actively addressing.
Revenue Performance
Despite the earnings plunge, Airbus reported revenues of €28.8 billion in the first six months of the year. This can be attributed to the delivery of 323 commercial aircraft during that period. The commercial aircraft segment saw an increase in revenues by 4%.
Commercial Aircraft Deliveries
A total of 323 commercial aircraft were delivered by Airbus. This included 28 A220s, 261 A320 Family, 13 A330s, and 21 A350s. The order backlog stands at 8,585 commercial aircraft at the end of June 2024.
Guillaume Faury, the CEO of Airbus, mentioned that the half-year financial performance primarily reflects the substantial charges in their space business. “We are addressing the root causes of these issues,” he said.
Defence and Space Orders
The Airbus Defence and Space division reported an order intake worth €6.1 billion. Moreover, four A400M military airlifters were delivered within the first half of the year.
Revenue from the Defence and Space segment increased by 7%. This was mainly driven by the Air Power business. However, this positive performance was partly offset by changes in the Estimates at Completion assumptions in Space Systems.
Future Outlook
For its 2024 guidance, Airbus is assuming that there will be no additional disruptions to the world economy. This includes air traffic, the supply chain, and the company’s internal operations.
Airbus aims to increase its deliveries and prepare for the next steps in ramping up its production. The company is also focusing on addressing specific supply chain challenges.
The firm’s top priority remains to protect the sourcing of key work packages. This is essential for maintaining the planned ramp-up and meeting delivery targets.
The steep decline in Airbus’ earnings underscores the significant challenges it faces, particularly within its space division.
Despite these setbacks, the company remains committed to addressing its issues and maintaining its position in the aerospace sector.