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Airbus had its best year ever for deliveries. Following the A380 delays, and to improve competitiveness, it launched the Power8 reorganisation plan.
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|
(€m) |
2006 |
2005 |
Variation |
|
|
|
|
|
|
Revenues |
25,190 |
22,179 |
14% |
|
-572 |
2,307 |
– | |
|
Order intake |
53,367 |
78,254 |
-32% |
|
Order book |
210,115 |
201,963 |
4% |
|
|
|
|
|
|
In number of aircraft |
|
|
|
|
Deliveries |
434 |
378 |
15% |
|
Order book |
2,533 |
2,177 |
16% |
In response to challenges ahead, Airbus launched the Power8 plan. This turnaround plan will enable Airbus to face the substantial challenges of US dollar weakness, increased competitive pressure and the financial burden related to the A380 delays, and also to meet its other future investment needs. This programme aims to transform the Airbus business model and to develop a global network of partners. It will allow Airbus to devote its resources to core activities and to eliminate inefficiencies within its current structure. The programme aims to achieve full industrial integration of Airbus by establishing a new industrial organisation, with transnational Centres of Excellence replacing the existing national structures. This transformation will happen progressively over several years, accompanying the further extension of Airbus’s global footprint.
Airbus management will implement cost reduction and cash generating measures leading to EBIT contributions of €2.1 billion from 2010 onwards and an additional €5 billion of cumulative cash flow from 2007 to 2010.
Commercial results
Airlines continued to order large numbers of aircraft to meet future demand for air travel and to replace ageing fleets with more efficient aircraft. 2006 was Airbus’s second best year ever in terms of orders and its best ever for deliveries. Airbus has a record backlog, improving visibility for the next five years at very high production rates. Airbus has now delivered more than 4,500 aircraft.
Airbus delivered a record 434 aircraft (378 in 2005). This led to revenues of €25.2 billion, representing a 14% increase compared to 2005 (€22.2 billion). The Division’s EBIT was supported by strong sales volumes, a favourable aircraft mix and a higher contribution from the sell-down of customer financing assets. But after allowing for the financial impact of the A380 issues, A350 related charges, increased research and development costs and less attractive dollar hedges, Airbus finally reported an 
EBIT loss of €-572 million (2005: €2,307 million). The EBIT also includes a €352 million provision for A400M contingencies to deal with risk and technical challenges in the Airbus work share.
With 824 new gross orders (790 net orders), Airbus achieved 44% market share. Airbus’s backlog stands at 2,533 aircraft, the highest volume ever reached by a manufacturer. With an increase of 16% over last year, Airbus now has 51% of all outstanding orders.
China and India’s fast growing aviation industries ordered large numbers of wide body and single aisle aircraft. Airbus and the China Aviation Supplies Import and Export Group Corporation (CASGC) signed their second contract, the aircraft industry’s largest ever single transaction, for 150 A320 Family aircraft and a Letter of Intent for 20 A350XWBs. Sales to India included both single-aisle and wide body aircraft, with orders for 43 single-aisle aircraft from Indian Airlines, ten A320s from GoAir and five ultra long-range A340-500s from Kingfisher.
A large part of the year’s sales tally was for Airbus’s highly popular Single-Aisle Family, with a total of 673 orders taken from 47 customers, including 20 new ones. Low cost carriers ordered 212 A320 Family aircraft. Leasing companies also showed their confidence, with eight leading lessors ordering 64 single-aisle and 50 wide body aircraft.
Airbus’s A330/A340 Family also had a good year, with 134 firm orders from 17 customers, including seven new ones – a 5% increase over 2005. The A330 Family has now received more than 600 firm orders, a strong endorsement of this environmentally friendly, long-range twin engine aircraft, which is the recurrent leader in the medium to extended range category. However, the A340 suffered from its lack of fuel efficiency as a four engine aircraft.
The A350XWB, Airbus’s latest aircraft and the most modern medium-capacity long-range aircraft, received a good initial response. Launched in October 2006, the A350XWB received two firm orders and 40 commitments in 2006, and also had 100 firm orders and 82 commitments remaining for the former A350 aircraft.
In spite of its industrial difficulties, major airlines gave their backing to the A380, demonstrating their confidence in the double-decker and its importance to their business models. Singapore Airlines and Qantas placed new orders for nine and eight aircraft, respectively. However, FedEx cancelled its order for ten A380 freighters. At year-end, the A380 had 166 orders and commitments from 15 customers. The first plane is scheduled for delivery to Singapore Airlines in October 2007.
The corporate jetliner market was robust. A 59% market share made the Airbus Corporate Jetliner family market leader for the third year running. 15 customers, including 13 new ones, ordered 21 aircraft, comprising 20 single-aisle aircraft and one A330.
Including the A350XWB Family, Airbus now has a total of 16 models, and has sold 7,097 aircraft to 250 customers.
Programme milestones
While the A380 remained in the limelight throughout the year, concluding with type certification in December, the year was also marked by a continuous and steady production ramp-up of the other Airbus aircraft families and the industrial launch of the A350XWB.
A380
Both Airbus and the aviation industry passed a significant historical milestone when the A380 received joint European Aviation Safety Agency (EASA) and Federal Aviation Administration (FAA) Type Certification on 12thDecember 2006. This confirmed the A380’s technical excellence.
The certification covered the Rolls-Royce Trent 900 powered version of the A380 – certification of the Engine Alliance powered variant is expected by the end of 2007.
A comprehensive industrial recovery plan was introduced to prepare for the second half 2007 ramp-up of deliveries, drawing on the best tools and methodologies from across Airbus.
A320
In response to strong demand for A320 Family aircraft, Airbus plans a steady production ramp-up programme from its rate of 30 aircraft per month achieved in 2006, to 32 in early 2007, rising to 34 in early 2008 and to 36 at the end of 2008 – the highest production rate for any commercial airliner.
A330/A340 Family
The programme maintained a high output of 7.5 aircraft per month, which will increase to eight per month by early 2008. The A330-200F freighter, the only modern solution for the mid-size freighter market, received authorisation to offer during the year.
International alliances
Airbus is forming industrial and research partnerships with international leaders in specialist fields. In 2006, Airbus signed agreements with organisations in China, Russia, Poland, Japan, South Africa and Turkey.
Airbus signed an important framework agreement in China, outlining establishment of an A320 Family final assembly line. Aircraft assembly is planned to start in 2009, with the aim of producing four aircraft a month by 2011.
In Russia, Airbus is progressively implementing a long-term co-operation programme in the areas of research and technology, engineering, aircraft component manufacturing and material purchase.
Environment
Through innovation, Airbus is taking steps to minimise the environmental impact of its products and activities. Airbus has a leading role in the “Clean Sky” joint technology initiative, which aims to reduce CO2 emissions by 50%, NOX emissions by 80% and perceived external noise levels by 50% by the year 2020.
Airbus has also now achieved ISO 14001 certification at all of its European plants, preparing the way for corporate certification in 2007.
In 2007, Airbus will steadily ramp up its single-aisle and wide body long-range production lines, and is expected to deliver between 440 and 450 aircraft.
The first A380 will be delivered to Singapore Airlines, and the recovery plan fully implemented to prepare for 2008 deliveries. Development and industrialisation of the A350XWB Family will also be a top priority, as new customer orders are placed for this aircraft type. 2007 is a crucial year for Airbus. Successful implementation of Power8 is essential to regain competitiveness and will lead to the company’s complete reorganisation.
Overall, Airbus will strive to restore confidence among its customers and other stakeholders.
