Chief Executive Officer, Airbus SE
Airbus CEO Guillaume Faury Talks Earnings | Bloomberg Talks
Airbus SE reported a cash outflow in the first half as supply-chain challenges with engines for its best-selling A320neo jet delayed deliveries of new aircraft. He discusses his company's earnings with host Romaine Bostick.
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About Guillaume Faury
Guillaume Faury, CEO of Airbus, stated at the Farnborough International Air Show that the company aims to launch its next-generation single-aisle aircraft in 2030, with entry into service in the second part of the following decade. He said the aircraft would offer a fuel burn benefit of around 25%. Faury noted that aircraft demand remains strong, with a backlog of more than 9,200 aircraft, and that the conflict in the Middle East is increasing demand for fuel-efficient aircraft due to high oil prices. He reaffirmed that Airbus would reach a production rate of 75 aircraft per month. Regarding defense, Faury commented that Europe wants to rearm and become more self-sufficient, which he said is also expected by the United States within NATO. He called for better collaboration on defense spending in Europe, stating that it is important for money to be "well spent in Europe" through partnerships.
Transcript (11 segments)
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Interviewer0:07
We do want to stay in the transportation space and take a look at the European plane maker, Airbus, the world's largest plane maker. It reported second quarter earnings earlier today and the big concern was the big cash burn. I had a chance to catch up with the CEO of Airbus earlier today, Guillaume Faury. Here's what he had to say.
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Guillaume Faury0:25
What we see in the first half of the year is a number of deliveries that is at 306, but we also have to have in mind that we have 60 aircraft sitting on the ground fully finished but with engines missing. We call them gliders. So if you look at what we've been able to produce including the gliders, actually we are mostly on track with what we expected to do in the first half. So we count on engine makers, namely CFM and to a smaller extent Pratt & Whitney, to recover on their engine deliveries to Airbus so we can be back on track with the number of deliveries. So actually the negative free cash flow that we have recorded for the first half reflects mainly those missing deliveries and engines missing leading to aircraft on the ground. Overall, we have confirmed our guidance because we believe we will get those engines and we'll be back to where we need to be.
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Interviewer1:27
Are the delays in getting those engines related to labor issues or is that more for parts and just some holdups in the supply chain?
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Guillaume Faury1:35
Well, that's more the latter actually. These are more short-term issues that were generated in the first half of the year. When we look at the CFM situation, GE faced industrial difficulties in the beginning of the year. They delivered their course, the hot section of the engines, late to the other partner which is Safran, and then Safran faced a strike, a seven-week strike that impacted very significantly their ability to deliver on time. They are recovering now. So it's really a timing issue facing industrial challenges and we believe they are in the situation now to deliver us back to normality till the end of this year. So that's the outlook for the next part of the year.
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Interviewer2:20
With regards to the backlog of orders, I am curious as to what adjustments, if any, you have had to make in light of some of the lower demand coming out of the US, the restructuring of the order book over at Wizz, as well as a few other customers that at least for right now might be on the sidelines.
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Guillaume Faury2:37
Actually, what we face at Airbus is a very high level of demand overall. We have by far more demand than the ability to supply. We have a very strong backlog, the biggest backlog in the industry. And this backlog keeps going up, keeps growing. So we are not looking at it as a risk for our business moving forward. The overall global demand keeps growing and we are doing our very best to ramp up to serve that demand.
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Interviewer3:06
How linear is that? And more importantly, Gil, there's a big question here about whether some of your customers are actually asking for an acceleration in delivery of their order book.
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Guillaume Faury3:19
Well, actually most of them if not all of them are asking for an acceleration in the delivery. As I said earlier, we are held back by the ability of engines. We are ramping up on the A320 family, which is the bulk of what we do, up to a production rate, a monthly production rate of 75 aircraft a month by 2027. That will be the highest ever achieved for a commercial aircraft. So that's the challenge we have in front of us. It's a good challenge because it reflects the strong demand we have for our products.
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Interviewer3:53
You gave guidance and for investors here that explicitly did not take into account the framework of a deal between the United States and the European Union. When do you think you'll have a little bit more confidence of factoring in that trade deal into your guidance?
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Guillaume Faury4:08
Well, that's an important question to us. We had the news over the weekend of the agreement and the fact that civil aviation will be back to the so-called zero for zero meaning no tariffs. That's something we have enjoyed since 1979 and drove the success of this industry. We need something out and implemented. We need an agreement in force as soon as possible to be able to be back to normal operations. That's something important to us but we welcome the agreement. We hope it's going to be in force as soon as possible and ideally more a matter of weeks than a matter of months.
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Interviewer4:49
Guillaume Faury there, the CEO of the world's largest plane maker Airbus. They reported earnings a little bit earlier in the day. The shares over there in France fell slightly in the cash session and their ADRs here in the US a little bit more than...