Half Year 2024 Airbus SE Earnings Call Transcript

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

Question: Ben Heelan - BofA Securities - Analyst : Thank you for your time. Thanks for taking the questions. And the first question I had was around these reports on restructuring and your comments about restructuring in the commercial business. Could you give us a little bit of color as to what you're actually trying to achieve with that? Are there any cost savings numbers that you can talk to and what sort of benefit that that's going to have on the margin in the second half of the year?

Question: Ben Heelan - BofA Securities - Analyst : Okay. Very clear. And then my second question was that there was clearly a lot of hiring that went on in the commercial business in Q2. I think it was over 4,000 people and as a business. Now you're up at 155,000 people. I mean, how can we think about it counts from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 30, 2024 / 5:30PM, AIR.PA - Half Year 2024 Airbus SE Earnings Call And my understanding was we've kind of reached the level of scale that the business needs from a headcount perspective to support the ramp. You've talked about having a lot of excess cost while we wait for these ramps to come through. So how should we think about the higher is the headcount from here?

Question: Ben Heelan - BofA Securities - Analyst : Okay. Thank you.

Question: Milene Kerner - Barclays plc - Analyst : Yes, good evening. Thank you for taking my question. I have two, please. The first one is on your employee performance at the commercial aircraft. If I based on your guidance of EUR5.5 billion at the implied pre-R&D EBIT for the extra 28 airplane you will deliver in the second half compared to that here will be north of 20 million per plane on non-organic basis. Could you please comment on what will drive that? And related to this question, I wonder if there is a bit more detail that you can share with us on how your cost works out through Q3 and Q4, including the overhead cost and the productivity that you were earlier mentioning following Ben's question. And then my second question was on your delivery outlook beyond 2024. Obviously, I'm not expecting you to give a delivery guidance for next year 2026. But based on your current production rate and targeting a rate of 75% by 2027 on the A320 and 12 by 28 on the A350, that would imply an annual CAGR of low double digit based on the program delivery share that you had last year. So, based on this, is it fair to assume low double-digit delivery growth per annum after this year?

Question: Milene Kerner - Barclays plc - Analyst : Yes. My second question was just more to see, I mean, how we should think of your delivery, I mean, beyond this year. And if we actually take the CAGR implied by your production target on the A320 and on the A350, I mean the CAGR low double digit. So, is it a fair assumption that we should put in our model for the delivery growth next year and in 2026?

Question: Milene Kerner - Barclays plc - Analyst : Thank you.

Question: Olivier Brochet - Redburn Atlantic - Analyst : Two questions. The first one on the A220 and the funding that you've just announced and realized part of it, what are you aiming for with it? Is it to cover the ramp-up and the investments needed? Or is it even for new program launches. And does it have any financial consequences for the consolidated group? And the second question is, is on tariffs. Are you concerned about potential changes in the U.S.? Or are your customers talking to you about what they can do concerns they have around that, especially on the suspended WTO ruling for 2026?

Question: Olivier Brochet - Redburn Atlantic - Analyst : Thank you very clear.

Question: Tristan Sanson - BNP Paribas - Analyst : The first one will be on Defense & Space margin in Q2 back the EUR989 million charge you've taken is actually a quite good quarter in terms of profitability, especially if you consider that you have an increase in R&D to sales reflow of 140 bps year-over-year. So can you tell us whether there was anything exceptional or mobile how these other different businesses are behaving. And the second question is actually pretty similar, but on commercial airports. You had quite a good performance compared to expectations on commercial aircraft EBIT. Can you tell us whether this is result of the early impact of your performance initiatives? Or was there anything else has been, I don't know, been more profitable than expected over that quarter?

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

Question: Douglas Harned - Bernstein - Analyst : Good evening. Thank you. After as you look back at the last three years, there have been a lot of issues with relatively small tier two and three suppliers. And what I wanted to get at the first question is, is that still the case, whether it is either directly to you or through larger suppliers like Spirit or Honeywell? And if it is still the case and what is the path to getting back to normal in a sense, can you see the through the end line of dealing with the small suppliers? And that's my first question.

Question: Douglas Harned - Bernstein - Analyst : Well -- and then to the second to follow on that. So, when you look at the issues you have today with some of these large structural suppliers, engines, interiors, and you look at the changes you've made to the delivery outlook, how has that affected your production outlook in a sense? Because as you've said, engines and seats, those come at the end of the file. Are you still producing at the same rate, bringing those airplanes out into inventory, and then essentially keeping production going?

Question: Douglas Harned - Bernstein - Analyst : So if I have it right in the short term, you'll still take the airplanes off through the file even if you need seats engines. But long term, you've got to adjust these rates to be consistent with those suppliers? Is that is that right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 30, 2024 / 5:30PM, AIR.PA - Half Year 2024 Airbus SE Earnings Call

Question: David Perry - JPMorgan Chase & Co - Analyst : So thank you for squeezing me and Thomas have a two questions, please. One, could you just -- I was a bit surprised by how much LEAP deliveries were below expectations. So, I just wanted you to comment a little bit on your confidence level there that GE and Safran will get back on track for this year and next year? And secondly, just picking up on the comment earlier where I think you broadly endorsed what Milene said about a 10% CAGR in deliveries. It's interesting, the consensus probably has a 20% CAGR in EBIT through '27, '28. Would you think that's the right framework, Thomas, that 10% growth in deliveries could give you 20% CAGR in EBIT?