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Airbus achieved record orders and deliveries, while beginning to implement its 
Power8 restructuring to restore competitiveness.
2007 surpassed Airbus’ previous records in terms of both orders and deliveries, while also presenting major industrial challenges.
By year end, the order backlog at more than 3,400 aircraft was the highest ever, representing full production for the next six years at increasing rates. Deliveries, which included the first A380 double-decker plane, passed a major milestone with the 5,000th delivery.
At the same time, management embarked on a major restructuring to secure the Company’s competitiveness, which has been undermined by sharp falls in the U.S. dollar. The four-year Power8 turnaround programme, launched in February 2007, overachieved its goals for the year. By 2010 management aims to reduce annual costs by €2.1 billion and make cumulative cash savings of €5 billion.
Airbus deliveries increased to 453 aircraft (434 deliveries in 2006), representing 51% of the market, and Power8 achieved initial cost reductions. Revenues remained stable at € 25.2 billion, in spite of a decrease in revenue recognition for the A400M military transport currently being developed and an unfavourable U.S. dollar impact of € 1,080 million. The Division’s EBIT loss grew to € 881 million (€ -572 million in 2006), reflecting charges related to the A400M programme delay, Power8 and the launch of the refined A350 XWB medium-capacity long-range aircraft.
Airbus is carefully managing its industrial ramp-up, as it increases the rate of production for both its new models like the A380 and existing aircraft like the A320 (pictures).
|
(€m) |
2007 |
2006 |
Variation |
|
|
|
|
|
|
Revenues |
25,126 |
25,190 |
+0% |
|
EBIT |
-881 |
-572 |
-54% |
|
Order intake |
117,323 |
53,367 |
+120% |
|
Order book |
283,829 |
210,115 |
+35% |
|
|
|
|
|
|
In number of aircraft |
|
| |
|
Deliveries |
453 |
434 |
+4% |
|
Order book |
3,421 |
2,533 |
+35% |
Winning record orders
Reinforcing the order backlog, Airbus won 1,458 new firm gross orders, valued at USD 181.1 billion at catalogue prices. This exceeds Airbus’ previous record of 1,111 orders in 2005, and represents a 51% share of the market for aircraft with more than 100 seats, both in terms of units and value. Net orders, after accounting for cancellations, stood at 1,341, totalling USD 157.1 billion at catalogue prices. This represents 49% of the market by units and 48% by value.
In Asia-Pacific and the Middle East, fast-growing airlines were the chief drivers of new orders. Demand also remained strong from low cost and legacy carriers in Europe and the United States, which are modernising and expanding fleets.
The A380 won 33 new firm gross orders, as existing customers reaffirmed their confidence with additional orders and new customers confirmed the aircraft’s strong appeal.
The A350 XWB received 290 firm orders from 12 customers, showing the market’s positive response to the design refinements, and that it fully meets long-range requirements. At year end, total firm orders for the A350 XWB stood at 292.
The A330/A340 Family had its highest ever annual gross order intake, winning 221 gross orders (187 net) from 29 customers and increasing its backlog to nearly 400 aircraft.
Airbus’ popular A320 Family of single-aisle planes won 914 gross orders (913 net), closely following 2005’s record of 918. With more than 5,800 aircraft ordered, the A320 continues to be the world’s best selling commercial jet.
Strong sales took the Airbus Corporate Jetliner Family past the milestone of 100 sales, just ten years after it was launched.
Implementing Power8
Power8 aims to build a “new Airbus”, a fully integrated company that will be leaner, more efficient and more productive. The result should be faster aircraft development and a clearer focus on Airbus’ core business – as aircraft architect and integrator, in addition to supporting the operations of its aircraft.
The programme achieved its goals for the year, notably reducing annual costs more than the year’s € 300 million target. Additionally, integration took a step forward with the eight mostly national Centres of Excellence consolidated to four fully transnational organisations, covering fuselage and cabin, wing and pylon, aft fuselage and empennage, and aerostructures.
EADS and Airbus intend to transform Airbus supply chain by selling aerostructures manufacturing sites to buyers that will form long-term partnerships with Airbus, becoming strong tier-one suppliers.
Managing production increases
Airbus is carefully managing its industrial ramp-up, as it increases the rate of production for both its new models and existing aircraft.
The industrial recovery plan for the A380 is being implemented. A total of 25 airframes had been assembled by year end, and ten A380 have flown, comprising five test aircraft and five customer aircraft. A further development milestone was the freezing of the new Digital Mock-Up design that will be used for aircraft not yet assembled, with the first Power-On expected in early 2008. A380 ramp-up will continue in 2008 onwards, with the full production rate of four per month to be attained in 2010.
A320 production is also being ramped up, with production planned to reach 36 per month by the end of 2008 and 40 per month in 2010 – the highest rate ever for a commercial airliner. Additionally, A330/340 production is scheduled to be eight a month in 2008, reaching ten per month in 2010.
Simultaneously, Airbus continued to develop its newest aircraft, the A350 XWB, which passed the overall design freeze milestone in July. By year end, the majority of system suppliers were onboard, with work allocation almost complete.
The newest member of the A330/A340 Family, the A330-200 Freighter, was launched in January 2007, with first delivery scheduled for late 2009.
Increasing international cooperation
Airbus focused on building strategic relationships with international partners in Russia and China.
Airbus signed three new agreements with the Russian United Aircraft Corporation, giving it a 5% stake in the A350 XWB airframe, establishing a joint venture for A320 civil freighter conversion and making it a shareholder in the Engineering Centre Airbus Russia.
In China, the joint venture contract for the A320 Final Assembly Line in Tianjin was signed, and assembly is now scheduled to start in 2009. Airbus will hold 51% of the joint venture, and the Chinese consortium will hold 49%.
Industrial cooperation with China was reinforced by the signing of a memorandum of understanding with the National Development and Reform Commission allocating 5% of the A350 XWB airframe to the Chinese aviation industry. The associated joint venture manufacturing centre, based in Harbin (China), for composite material parts and components is expected to open in 2009.
Expanding customer services
In 2007, Airbus continued to develop and expand its comprehensive portfolio of support and services, named Air+, from which operators can pick and choose according to their individual needs. New innovative services were developed, such as the Airbus Flight Hour Services, which helps minimise aircraft on-ground time during repairs.
Becoming eco-efficient
Airbus is determined to play a leading role in making aviation more eco-efficient through technology. It became the first aerospace company to receive the ISO 14001 Environmental Management System Corporate Certification for all sites and products. Additionally, it announced a commitment to help the aviation industry grow while reducing its impact on the environment.
Consequently, Airbus signed an agreement to research the benefits of synthetic jet fuels with several partners including Qatar Airways, Rolls Royce and Shell International Petroleum.
At the end of 2007, Airbus order book further increased to a record total of 3,421 aircraft. In 2008, orders (around 700 aircraft) are expected to exceed deliveries once more, although the level of airline demand might be impacted by the current economy and credit crunch environ-ment. Airbus will deliver more aircraft than it did in 2007, in line with the planned ramp-up.
Airbus will focus on A350 XWB development work with the goal of reaching the detailed definition freeze by year end.
Airbus will continue to increase the A380 production rate in 2008, in accordance with the delivery plan.
Airbus will continue and expand its Power8 restructuring in order to remain competitive in the face of a weak dollar and to ensure the long-term future of the company.
