Full Year 2024 Airbus SE Earnings Call Transcript

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

Question: Benjamin Heelan - BofA Global Research - Analyst : Yes. Morning, guys. I hope everyone is well. Thank you for the question. Can you talk a little bit more about Spirit and the challenges in the second half of the year? And just kind of outline a little bit what actually is happening? What are the challenges? What are they struggling with? Is it labor? Is it capacity? Just a little bit more color on that. Thank you.

Question: Benjamin Heelan - BofA Global Research - Analyst : Okay. Thank you. And another question, I guess, one for Guillaume. Guillaume, you've talked about space and the discussions that you're currently in with Thales and Leonardo. What do you actually -- like what is a good outcome for you these negotiations? What are you hoping to achieve? Is it to create a European champion, which Airbus can be part of? Is it to consolidate the other assets yourself? Like can you just give us a little bit of color? Like in a good scenario, what do you see is the outcome of these negotiations? Thank you.

Question: Benjamin Heelan - BofA Global Research - Analyst : And just a very, very quick one. Is there any chance that --

Question: Benjamin Heelan - BofA Global Research - Analyst : Is there any chance that Ariane could be part of that negotiation as well?

Question: Benjamin Heelan - BofA Global Research - Analyst : Thank you.

Question: Tristan Sanson - BNP Paribas Exane - Analyst : Good morning, everyone, and thank you for taking my questions. The first one is on raw materials. Can you, Guillaume, give us a quick view on how you see the raw material supply situation in 2025? And how do you think it's going to support the ramp-up plan for the years to come? And the second question is a quick one, but can you confirm that on the Spirit, the financial of the Spirit deal, the revision of the cash costs related to the integration of the assets are in the range of about EUR1 billion over a period of three years? Is that the right [magnitude]? Thank you very much

Question: Tristan Sanson - BNP Paribas Exane - Analyst : That's very clear. Thank you, Thomas.

Question: David Perry - JPMorgan - Analyst : Yes. Good morning. I just wonder if you can help us a little bit with the delivery guidance. I know you say around 820, but let's just assume it's 820, it's 54 extra planes. Can you just help us think about the different models? I mean, A350 deliveries are actually down in '24. So are they expected to pick up again in '25? And what's it implying for the growth in the A320 in particular?

Question: David Perry - JPMorgan - Analyst : Okay. And do you think deliveries will actually increase on those two models?

Question: David Perry - JPMorgan - Analyst : Thank you. Appreciate it.

Question: Ross Law - Morgan Stanley - Analyst : Morning, everyone. Thanks for taking my questions. The first one is just on engines. What exactly is driving the lower supply in H1? Is this just simply an allocation issue between OE and aftermarket? Or is there anything else going on with the engine suppliers? And then just on the special dividend, it's going to cost you on EUR800 million in total, but net cash was [11.8,] so about EUR1.8 billion above the EUR10 billion threshold. So why wasn't the special dividend slightly higher? Are you saving additional cash for something in particular?

Question: Ross Law - Morgan Stanley - Analyst : Understood. Thank you.

Question: Chloe Lemarie - Jefferies - Analyst : Yes Thank you for taking my question. I have two, if I may. The first one is on the additional charge in Defence and Space. So it seems like it's not linked to the completion of the review in this one project that remained outstanding. So could you please confirm what really drove that revision and your level of confidence you now have fully de-risked the space business? And the second one would be on the 2024 to 2025 EBIT bridge. I was wondering, in particular, if you could split out what you factor in for potential ramp-up cost and inflation, please. Thank you.

Question: Chloe Lemarie - Jefferies - Analyst : And ramp-up costs, anything that you factored in?

Question: Chloe Lemarie - Jefferies - Analyst : Okay. Thank you.

Question: Doug Harned - Bernstein - Analyst : Good morning. Thank you. On the A350, when you look at the slower ramp right now, can you describe how much of the effect is coming from issues at Spirit versus issues with interiors, which have been continuing for some time. That's the first question. And then second, we're in an uncertain environment right now with respect to US tariffs. Can you talk about how you're thinking about the potential impact on Airbus? And are there some steps that you're taking to mitigate any potential impact of possible tariffs.

Question: Doug Harned - Bernstein - Analyst : Very good. Thank you.

Question: Olivier Brochet - Redburn Atlantic - Analyst : Thank you very much for taking my questions. I have two, if I may. The first one is on the cash flow for '25 to '27. Could you give us a sense of how the -- outflow evolves so that period and the space cash outflow? That's the first one. And the second one: How do you assess the risk that the issues on the A350 Spirit continue into 2026?

Question: Olivier Brochet - Redburn Atlantic - Analyst : Appreciate the answer. Thank you.

Question: Christophe Menard - Deutsche Bank - Analyst : Good morning. Thank you very much for taking my question. The first one would be on the free cash flow bridge from '24 to '25. Could you help us understand the moving parts? I understand the Spirit aspect has to be excluded in the compensation. Also from the previous question, I understand that there is no space impact, as you just said. So just to understand the bridge in terms of the free cash flow. And the other question was also related to A400M. Can you comment on the commercial outlook? I mean, you said that you were very more selective on the contract quality. So what commercial outlook are you considering for the coming years? I mean I think the last deliveries is in 2029, as per the current backlog. So what are -- what do you have in mind for other contracts? Thank you.

Question: Christophe Menard - Deutsche Bank - Analyst : Thank you very much.

Question: Robert Stallard - Vertical Research - Analyst : A couple of questions for you. First of all, Guillaume, with regard to your delivery forecast of around 820 aircraft, how confident are you that this year, Airbus can meet that delivery given the supply chain challenges and what's occurred over the last two years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 6:30AM, AIR.PA - Full Year 2024 Airbus SE Earnings Call And then secondly, a specific supply chain question. Does Airbus have any exposure to the Precision Castparts plant that's burned down in Pennsylvania? Thank you.

Question: Robert Stallard - Vertical Research - Analyst : Thank you very much.

Question: Ken Herbert - RBC Capital Markets - Analyst : Yes. Hi. Good morning. I have two questions, if I can. The first is, it looks like the assumptions for free cash flow at Spirit imply a significant improvement in the cash burn in 2026 and 2027, if you assume roughly mid-single-digit -- hundreds of millions on half a year in '25 and a similar amount in '26. Is there anything in particular you can point to or call out that helps with confidence on the free cash flow improvement in '26 over '25 at Spirit? And how deep, as part of your due diligence, have you been able to get into the operations there, specifically on the A350? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 6:30AM, AIR.PA - Full Year 2024 Airbus SE Earnings Call And then my second question is on the A220, you're maintaining the production guidance implies over a 2x ramp on that program in the next two to three years. Seems like a stretch from where I'm sitting, but maybe anything you can say to help with confidence on that ramp as well would be appreciated.

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

Question: Ian Douglas-Pennant - UBS Equities - Analyst : Thanks for squeezing me in at the end. I really appreciate it. Another question on Spirit, but I'm not going to ask you about the free cash flow split again. I'm going to ask a slightly longer-term question. I assume the difference between the EBIT impact and the free cash flow impact the next few years is the CapEx requirements, but please correct me if I'm wrong. Once this CapEx program is then -- looks like it's completed in 2027, does the cash flow profile of this business return to something like normal? Or should we consider a continued weak cash flow, let's say, from 2028 plus? I'm not asking for exact guidance, but just any kind of lease country on what that program looks like and the outturn of it, please. And then the second question is on the supply chain. I just wondered, would it be reasonable to see Spirit as some kind of case study for the aerostructure suppliers in general? What I mean by that is, if you did the same work that you've done at Spirits, if you were able to, at other Aerostructure suppliers, and that -- and the work that you did at Spirit led you to believe there's much more investment required to support that ramp up, how confident can you be that you wouldn't have that same experience if you looked at other aerostructure suppliers, please? Thank you.