On Monday, European aerospace giant Airbus (AIR.PA) highlighted short-term production challenges and announced a delay in its A350 freighter program. Despite these setbacks, the company expects a 7% increase in deliveries this year, aiming for around 820 jets while addressing ongoing issues in its space and defense sectors.
Airbus recorded an additional charge of 300 million euros ($312.84 million) for its struggling Space division, bringing the total financial hit over several years to nearly 2 billion euros. The latest charges primarily stem from satellite programs, with nearly 1 billion euros in losses over the past two years due to delays in its OneSat reprogrammable satellite initiative.
The new charge reflects revisions to estimates of competition for those programs and a reassessment of commercial risk. The company did not identify specific satellite programs, but executives in a call with analysts said the charges were primarily related to those building communications and navigation satellites. They also cited the loss of two Pleiades Neo high-resolution imaging satellites in a recent launch failure.
On the playmaking side, Airbus said the logjam of 100 undelivered A320neo passenger jets was now down to 86. The company is eyeing up production of the narrowbody aircraft to 70 jets per month next year to meet strong demand. It also plans to deliver 60 A380s this year and has enough orders to sustain assembly of the slow-selling military transport aircraft for a few more years.
However, Airbus warned of tightening supply constraints in the industry that could push up prices for parts and services. It also lowered its outlook for world traffic growth this year to 3.6% and said it would need to accelerate sales of low-emissions jets to help airlines cut fuel burn per revenue passenger kilometer.
The group’s defense and space unit, which includes the struggling A400M military transport aircraft, took a further charge of 112 million euros for a legal case in which it is being investigated over allegations of corruption. It was the second such legal case in a decade for the company investigating dozens of its top executives. The company expects another 117 million euros in charges for this and other investigations this year. These will be reflected in operating profit and free cash flow and are expected to weigh on the mid-triple digits in each. This is compared with an operating profit of 4.46 billion euros and a free cash flow of 4.5 billion euros in 2024.
