Airbus SE Provides 2024 Guidance Update Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ian Douglas-Pennant - UBS Investment Bank - Analyst : Thanks for taking my question. Maybe we could start with space. And then I got a question on commercial space. I understand why you might have challenges in the telecoms business. Why are these problems stretching out of telecoms and into navigation and observation, please. It's not obvious to me why the industry troubles would bleed across into those different end markets. And the second question is that the broad range of supply challenges that you highlight suggests this is not a specific but a broad-based problem. Many of your suppliers have got challenges that they're finding life hard. I put it to you that they are overleveraged of the COVID. And so they're struggling to fund the working capital needed to ramp up. If this is true, do you need to go through a large-scale price resetting exercise with them. I mean this would damage margins near term, but it would set you up in a better position for the longer term. Thank you.

Question: Ian Douglas-Pennant - UBS Investment Bank - Analyst : Thank you. I'm itching to ask another question but I'll obey the two question rule.

Question: Ken Herbert - RBC Capital Markets - Analyst : Yes, hi, good afternoon. Ken Herbert with RBC. Two questions, if I could. First, I'm just wondering, Guillaume, if you can provide any more granularity on your supply chain discussion. It clearly sounds like segments of the supply chain have deteriorated. It's not even so much maybe the pace of improvement isn't what you thought. But some aspects of the supply chain have worsened in the last three months from the initial guide. If you can provide more granularity on where you're seeing that and what gives you confidence that we'll start to see a recovery in that into the back half of the year and next year. And then secondly, just to confirm, it sounds like most of the reduction, obviously in the guidance on deliveries is centered on the A320 Family. But any clarification on A320 Family relative to A220 would be helpful. Thank you.

Question: Ken Herbert - RBC Capital Markets - Analyst : Thank you very much.

Question: Ben Heelan - BofA Securities - Analyst : Thanks for taking my question, guys. The first question is on the EBIT guidance. Can you help me understand a little bit because EUR5.5 billion of EBIT includes EUR900 million of charges that I'm not quite sure it's not very clear.

Question: Ben Heelan - BofA Securities - Analyst : Okay. And so we should assume that EUR900 million comes in Q2? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 24, 2024 / 5:45PM, AIR.PA - Airbus SE Provides 2024 Guidance Update Call

Question: Ben Heelan - BofA Securities - Analyst : Okay. And that this EUR900 million is an enormous number, right? After a year where you had EUR600 million of charges and commentary at the full year and 1Q is that you guys have done the review you've been through the state portfolio. So why are we seeing this creep of fairly material charges? I'm not sure I really understand what has changed in the last three, four months.

Question: Ben Heelan - BofA Securities - Analyst : Okay. Very clear. And again from your perspective, I mean, how do these issues in the space a recurring or seem to have been recurring over the last 18 months, changed your view around allocating capital to that division that does it is it worth waiting for these very large multi-year contracts if the risk is just so great from a profitability perspective?

Question: Ben Heelan - BofA Securities - Analyst : Okay. Alright, thank you again. Appreciate it.

Question: Tristan Sanson - BNP Paribas SA - Analyst : Yes, good evening, Tristan Sanson from BNP Paribas. Thanks for taking my question. The first one is on the space. I'm afraid I have to ask you as a warning on the on the [topic], the market is likely to see a bit of a new A400M type of situation. When do you think the program phasing will follow to see a significant reduction of the risk in that portfolio. In which year do you think you will have gone far enough to say, okay, this one are really under control and risk is now marginal, and we can look at (inaudible) come from. That's the first question. The second is on supply chain management. I think after 2022, a rephrasing of the guidance already, you have significantly strengthened the supply chain supervision. Is there anything you can do today to go further and make sure that the revision that you have to do today doesn't happen again put it in time in the future. Thank you.

Question: Tristan Sanson - BNP Paribas SA - Analyst : Thank you.

Question: David Perry - JPMorgan Chase & Co - Analyst : Yes, good evening to Guillaume and Thomas. I got two questions, please. One is short, in fact, from the other a bit more philosophical. First one, just clarify, you said the new guidance is pretty [spirit]. I realize you're still in negotiation, but should we assume maybe that the guidance has to be lowered when you consolidate spirits is that the way to think about it? Or maybe you could just give us some qualitative help. On the second question, maybe a bit more philosophical. But I'm just wondering how you came up with 75 a month will now be in 2027 because why not 2028 or 2029? Because these problems are clearly pretty deep. They keep seem to be happening every six months to a year. So just are you confident of 75 a month in 2027? Thank you.

Question: David Perry - JPMorgan Chase & Co - Analyst : Okay. Thank you. Could you just say a little bit more about the two engine companies, [LEAP] and GTF? I mean, is one more to blame than the other. I mean, it seems to be -- because you've consistently said the engine companies have not been quite consistent, other things. And so it's very abrupt change.

Question: David Perry - JPMorgan Chase & Co - Analyst : Will you be stitching compensations from them.

Question: David Perry - JPMorgan Chase & Co - Analyst : Thank you, very much.

Question: Charles Armitage - Citigroup Inc - Analyst : Good evening. Hi. Two questions. On first of all, if we just work through your 30 planes, less EUR50 million each, EUR450 million, EUR900 million from Space, plus you've got a bit of what you've presumably got a bit more over staffing costs as well. To me, that sounds closer to EUR1.5 billion reduction than EUR1 billion. So if we look at your guidance moves from EUR6.5 billion to EUR7 billion down to EUR5.5 billion. That either means internally you were closer to the EUR6.5 billion to EUR7 billion before and or that EUR5.5 billion is still at risk. So which one of those is it. And the second question is just I mean, I'm still slightly struggling on the supply chain and the communication because as I understand it, you give your schedule, you're expecting or expected schedule to the suppliers. And as a several years you've being saying we want to go to rate 75 in 2026. So is it that they just haven't invested all? or is it they didn't believe that you would get there. I'm still slightly wondering what whether this is a miscommunication or incompetence on their side. And that's the sort of the observing rather than doing. And I understand it's a lot more complicated than I've just made up.

Question: Charles Armitage - Citigroup Inc - Analyst : Thank you.

Question: Olivier Brochet - Redburn (Europe) Ltd - Analyst : Yes, good evening. Two quick ones, please. On the engine makers, both of them, do you have today commitments from both Pratt and CFM for 2027 and if not when do you think you will get that. And second, can you confirm that the Rolls Royce is not a part of your problems -- particularly parts of the problems today please? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 24, 2024 / 5:45PM, AIR.PA - Airbus SE Provides 2024 Guidance Update Call

Question: Olivier Brochet - Redburn (Europe) Ltd - Analyst : I was asking the question actually on '27.

Question: Olivier Brochet - Redburn (Europe) Ltd - Analyst : And that is set for your head or you are not (multiple speakers)

Question: Olivier Brochet - Redburn (Europe) Ltd - Analyst : Thank you.

Question: George Zhao - Sanford C Bernstein & Co LLC - Analyst : I hope we can hear me this time around. The first question, you talked about one of the implications being in your temporary over [static]? And how temporary will this be given the slower ramp-up? And what does that do for your margin until you get to rate 75 and do you plan on further slowing down that rate of hiring, in the meantime? And second question, quick one for defensive and space. If you take out the EUR900 million of charges, it's the target for solidly mid-single margin target for this year. Is that still valid? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 24, 2024 / 5:45PM, AIR.PA - Airbus SE Provides 2024 Guidance Update Call

Question: Phil Buller - Joh Berenberg Gossler & Co KG - Analyst : Hi, good evening. Thanks, for squeezing me in. And only topic of the supply chain from the outside rate 75 is so ambitious for a while. But given the shift to the right, I was hoping you could share what the current rate or the plan for '25 or '26 might be I guess it would just be helpful to understand from the outset that the revised plan isn't a hockey stick and offers risk. And just one very small follow up on the provision topic, if I may. I appreciate that's the best assessment today and a one-off. And how far are we through the review process for DNS please [pages]? Is it 100% complete or how far through are we now? Thanks.