Corporate Presentation
Corporate Review
Airbus
Airbus enjoyed a landmark year. The Airbus family, ranging from the 100-seat A318 to the 555-seat A380 now in production, emerged as the global market leader. Airbus met its delivery targets, surpassing its competitor for the first time, and consolidated its position as ideally placed to benefit from the expected upturn in passenger aviation.
The year in review
|
Operating in a market which was still difficult and uncertain due to the conflict in Iraq, the SARS impact, the gloomy economic outlook, Airbus not only managed its business effectively and prudently, but improved underlying profitability. EBIT margin pre-R&D reached 16.5% in 2003. The A380 programme which is now going through its investment peak, led Research and Development (R&D) to a record level of 10% of revenues; After R&D, EBIT margin stood at 7.1%. Cash has remained a management key focus and was sustained by continuing customers' advance payments. Also, customer financing additions – a key measure for aircraft manufacturers in difficult markets – were carefully controlled, and customer financing exposure net increase was limited to a modest 3% of annual revenues. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial results
The year saw deliveries of 305 aircraft, slightly ahead both of the targeted 300 and of the 2002 figure of 303. This represented 52% of the global market.
284 firm orders were won from 24 customers (four of them first-time Airbus buyers) worth $32.8 billion at catalogue prices; net order intake for the year was 254 aircraft after allowing for cancellations. At the end of December the order book stood at 1,454 aircraft, representing some five years of production at current levels.
Overall, this result underlines the leadership of Airbus in all segments of the market. Airbus now offers a complete product range from 100 to 555 seats which is clearly becoming the industry standard. Particularly remarkable is the 80%+ market share of orders achieved by the A330/A340 in the wide-body, long-range sector.
A318
 |
First deliveries of the A318, the smallest member of the Airbus single-aisle family, were made to Frontier Airlines in the US and to Air France. The A318 seats 107 passengers in a standard layout. |
| A320 Family |
A340
Airbus made the first deliveries of the A340-500, the longest-range airliner ever built, to Emirates, Qatar and Singapore Airlines. The aircraft enables them to open up new, very long distance no-stop routes such as Sydney–Dubai or Los Angeles–Singapore.
A380
Work progressed on the double-deck A380. Four customers – three of them placing orders for the A380 for the first time – placed orders during the year, bringing the total order book up to 129 at the end of 2003 and confirming the market’s interest in this revolutionary aircraft.
The programme currently involves more than 6,000 engineers at Airbus sites around the world, linked by the proprietary Airbus Concurrent Engineering system. The 50-hectare main assembly facility in Toulouse is being completed, and will join other sites in France, Germany, Spain and the UK, in which production work is progressing as planned. 2003 saw the completion of a number of key subassemblies including the centre wing box, the nose and forward fuselage sections and wings. The complex delivery network – which includes sea, river, road and air transport links – was successfully tested, and is scheduled to be used for the first time in the spring of 2004.
The work allocations for the project are substantially complete, with 98% of all subcontracts by value placed by the year end. The list of suppliers includes companies from many countries such as Japan, Korea, Malaysia and Australia.
Military programmes
Airbus is successfully applying its experience and resources in three major defence programmes – the A400M military transport, the Multi-Role Tanker Transport Aircraft (MRTT – based on the A330-200 and A310-300) and the UK’s Future Strategic Tanker Aircraft (FSTA – based on the A330-200). In these programmes, Airbus manufactures and delivers ‘green aircraft’ to the EADS Military Transport Aircraft Division which is in charge of integration and commercialisation. These businesses give Airbus a strong buffer against fluctuations in the civil market.
Airbus freighters
 Beluga |
There are currently more than 150 freighters in service with cargo operators, including FedEx, DHL, TNT, Air Hong Kong, UPS and other carriers. The A300F4-600R is the industry’s best-selling cargo plane, and during 2003, six further orders were placed, bringing the total order book to 61. Airbus has now moved into the very upper end of the freighter market with the launch of the A380-800F, based on the double-deck A380, which will carry a massive payload of 150 tons. The aircraft can accommodate 71 large cargo pallets – over 30% more than its nearest competitor. Customer |
|
| interest has meant that for the first time ever, production go-ahead could be given simultaneously for the passenger and freight versions of a new aircraft. There are 17 firm orders outstanding for the A380-freighter from three customers, with the first deliveries scheduled for 2008. | ||
A380 production
| The first A380 is to have its maiden flight in early 2005. Production of major components began in 2003, and the first of the major subassemblies (the wing spar box) was delivered to Saint-Nazaire in August. Airbus plants in France, Germany, Spain, and the UK are all involved, and are linked by the Airbus Concurrent Engineering system. |  |
|
| A380 cockpit production | ||
| This relies heavily on information technology and allows the reduction of time spent in the development cycle, the optimisation of production and the avoidance of many teething problems – as well as savings in non-recurrent costs. During 2003, first trials were performed to verify the compatibility of the trucks with the road infrastructure to Toulouse, where final assembly will take place | ||
Outlook
 Transport’s test of the main components of the A380 |
For 2004, Airbus still foresees a fairly soft market, which could become steadier in the last part of the year and pick up in 2005. Airbus deliveries are planned to be close to 300, compared to 305 in 2003. The total R&D budget for Airbus is expected to remain about stable at approximately €1.8 billion, with more than half for the A380. Included in this R&D budget are about €100 million development that will be capitalised in compliance with the accounting rule on development costs (IAS38). |
| Thanks to the large hedge portfolio put in place by the Group, Airbus is expected to be unaffected in 2004–2005 by the US Dollar’s volatility and weakness against the Euro. For subsequent years, a significant cost-saving programme entitled ‘Route 06’ is designed to bolster resistance to the effects of a sustained low level of the dollar. | |
For the longer term, global air traffic is forecasted to grow at close to 5% p.a., and the current surplus of aircraft is expected to unwind itself; Airbus – with a highly competitive product range which is the most comprehensive and modern in the industry – is exceptionally well-positioned to benefit strongly from the market recovery expected to begin in 2005, a year before the A380 enters service. At the same time, Airbus plans to see its R&D budget progressively decreasing as the A380 gets closer to entry in service.
