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Confirming leadership
In 2005, Airbus received more orders than ever before in its 35-year history, maintaining its industry leadership in terms of both number of orders and deliveries. Production rates were steadily ramped up in line with the record order backlog. This success reflects both unprecedented demand for new aircraft and Airbus’s use of innovation to provide airlines with the fuel efficiency and operating flexibility that they need.
The year was significant for Airbus’s two new aircraft programmes. The A380 double-deck airliner flew for the first time on 27th April. Not only is the 555-seat plane the largest to fly, it is also the most technologically advanced, with advanced aerodynamics, high-pressure hydraulics and increased use of carbon fibre-reinforced plastic. The A350 250–300-seat, wide-bodied long-range aircraft was launched in October, offering airlines the technology available on the A380.
In terms of costs, the Route 06 cost-saving programme, which was launched in 2003 with a €1.5 billion cost reduction target for 2006, is on track. While the programme is being implemented, there is now a focus on continuous efficiency improvement, both within Airbus and among its suppliers.
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| (€m) | 2005 | 2004 | Variation |
| Revenue | 22,179 | 20,224 | +10% |
| EBIT | 2,307 | 1,919 | +20% |
| Order intake | 78,254 | 25,816 | +203% |
| Order book | 201,963 | 136,022 | +48% |
| In number of aircraft | 2005 | 2004 | Variation |
| Deliveries | 378 | 320 | +18% |
| Order book | 2,177 | 1,500 | +45% |
Airbus achieved its highest-ever revenue in 2005. At €22.2 billion for the year to 31st December 2005, these were 10% higher than 2004 (€20.2 billion). Deliveries of 378 aircraft of 100 seats or more, compared with 320 in 2004, was the chief driver of this increase. EBIT grew by 20% to €2.31 billion (€1.92 billion in 2004), and the EBIT margin expanded to more than its 10% target (9.5% in 2004).
Airbus was responsible for 56.6% of 2005 deliveries, and has now delivered 4,130 aircraft to airlines since its inception. Production rates are steadily increasing on both the A330/A340 line and the single-aisle line, and will reach a scale of 7.5 and 30, respectively, per month in the spring of 2006. The output of the A320 line is the highest ever achieved by any aircraft manufacturer. It has been made possible due to flexible production techniques and strong production lead-time reduction.
Order book
2005 was an unprecedented year for new orders, with Airbus taking 1,111 firm orders valued at some US$95.9 billion at catalogue prices. This was well ahead of Airbus’s previous record year, namely 1998 with 556 orders, and gave Airbus a market share of 52% in terms of aircraft units and 45% in terms of value. This leaves Airbus with the largest order book it has ever had, totalling 2,177 aircraft valued at some US$220.3 billion at list price. In terms of order book size, it has a 55% market share.
The majority of 2005 orders came from Asia and the Middle East, with some substantial orders also coming from Latin America and from Europe’s new low-cost carriers. The largest orders came from China, including the order for 150 
single-aisle aircraft placed by the China Aviation Supplies Import and Export Group (CASGC) in December, for which down payments have been received. Leasing companies also continued to play an important role, placing orders for up to 195 aircraft.
New orders for A380 included contracts signed with three customers for 20 aircraft, exceeding the target of one additional customer a year until entry into service. These new customers include the first in China, China Southern, the first in India with Kingfisher, and a second large freight carrier, UPS, based in the United States. The orders clearly reflect the benefits of the new double-deck plane’s unprecedented capacity to Airbus customers. Total firm orders for the A380 now stand at 159 from 16 customers. Certification is planned in time for delivery to the first customer, Singapore Airlines, by the end of 2006.
The new A350 250–300-seat long-range airplane won 172 orders and commitments from 13 customers between its October launch and the year end. Some 87 of these were firm orders from nine customers and leasing companies. Commitments for this new model are substantially higher than they were for its direct competitor in the medium capacity long-range class at the same period of time after commercial launch. They reflect well on the commercial appeal of the aircraft, including its advanced technology and its operational commonality with the rest of the Airbus families.
The long-range A330, A340 and A350 Family took 166 orders from 18 customers, its highest-ever level of annual gross orders. The market for new aircraft in this 250–300-seat long-range market is estimated to rise to more than 3,000 aircraft over the next 20 years.
Most of the orders were for the highly successful single-aisle A320 Family. With 918 orders, its highest-ever order intake, it achieved a 62% market share and continued as market leader in this segment. With an order backlog of 1,652 aircraft, the A320 Family is the preferred choice of low-cost operators, which placed more than a third of the year’s orders. This Family is also the clear favourite of the Chinese aviation market.
A320 derivatives sold well in the corporate jet market, with the Airbus Corporate Jetliner Family logging 15 firm orders. This took the total number of orders for the Family to more than 60.
Becoming global
In order to adapt to secure growth for its shareholders and its employees, Airbus is seeking partnerships with industrial organisations in China, Russia, the United States and other countries.
Ties with Chinese civil aviation were extended during the year, following the signing of several agreements for increased co-operation. Two contracts signed with China Aviation Industry Corporation I and II (AVIC I and II), the state-owned aviation organisations, were followed in December by an agreement to study the feasibility of an industrial partnership to set up an A320 final assembly line in China. Today, five Chinese companies from AVIC I and II are involved in manufacturing parts for the single-aisle Family. Airbus is committed to increasing procurement volumes to reach US$60 million per annum by 2007, and US$120 million by 2010.
Collaboration with Russian companies was also expanded. In August, Airbus and Irkut, the Russian scientific production company, signed a preliminary agreement outlining Russian participation in the development of the A350 and future aircraft programmes. By 2007, Airbus intends to offer Russian companies contracts with an aggregate value of US$110 million annually. Airbus originally opened its Moscow office in 1995. Its Russian programme covers numerous research and technology projects and design work, as well as wide co-operation in the certification field.
Airbus’s presence in North America was enlarged with a new engineering centre in Mobile, Alabama. This new facility will work on commercial and military derivative aircraft – including the A330, A340 and A350 jetliners, and the KC−30 advanced military tanker. The centre is due to begin operations in 2006 and is expected to employ approximately 150 people.
In Australia, Airbus extended its research partnership by establishing a research and technology framework agreement with the Melbourne-based Co-operative Research Centre for Advanced Composite Structures.
Customer services
As part of its continuous drive to improve customer service, Airbus moved its customer services department to new offices on its Toulouse site, where it installed all 1,000 staff under one roof. The offices have a 24-hour call centre.
Airbus took several steps designed to help its customers make cost savings. Most importantly, it froze the price of spare parts for the third year running. It also decided to place all technical data online, or on CD-ROM, which will save airlines time and reduce their costs. Additionally, Airbus designed a fuel management software programme for airlines. The web-based AirS@avings provides fuel cost index values for either individual flight journeys or city pairs. It helps to reduce and optimise fuel consumption.
Online services were upgraded with a new business-to-business portal called Airbus World, where airlines and operators can share information. This is complemented by a new spare parts e-catalogue.
Airbus also set up the first Maintenance Repair and Overhaul (MRO) network, with 13 MROs, in order to help airlines find the best quality maintenance services wherever they are. This was complemented by the Airbus Modular Spares Service, a comprehensive support package designed to help airlines improve management of their spares stock. Once again, this is intended to save airlines time and money.
Airbus’s existing order backlog alone will lead to deliveries rising by more than 10% in 2006 and continuing at a high level for the next few years. Furthermore, with the full implementation of the Route 06 cost-savings programme and additional continuous efficiency improvements, Airbus is preparing to confront an anticipated deterioration in the Euro/US Dollar hedging rate from 2007.
While 2005 orders were exceptionally high, Airbus is optimistic it can maintain the record level of the order backlog throughout 2006, given the strength of Asian demand. This would keep visibility on future deliveries consistently high through to the year end. Looking further forward, US airlines did not participate in 2005’s surge in orders, but are expected to invest in new, more fuel-efficient aircraft at some point in the next few years.
