Aircraft manufacturer- Airbus, airplane leasing company Avolon and engine maker, General Electric Aviation, have recoded significant dip in their revenues in the third quarter of 2020.
Industry experts attribute this development to the difficult market environment resulting in fewer airplane deliveries, lower cost efficiencies and adjustment of business to the the new COVID -19 market environment.
For instance, Airbus’ commercial revenues were down by 32.9 per cent in the third quarter compared to same period in 2019, to €7.738 million. Adjusted earnings dropped by 52.4 per cent year-on-year, to €666 million. The results came amid a fall in deliveries and lowered cost efficiency.
In the first nine months of 2020, Airbus’ consolidated revenues fell by 34.6 per cent to €30.2 billion. This was attributed to the “difficult market environment impacting the commercial aircraft business”, with around 40 per cent fewer deliveries year-on-year.
A total of 341 commercial aircraft were delivered in the first nine months, compared to 571 in the same period in 2019. These comprise 18 Airbus 220s, 282 in the Airbus 320 family, nine Airbus 330s and 32 Airbus 350s.
During the third quarter of 2020, a total of 145 commercial aircraft were delivered including 57 deliveries in September.
Airbus’ adjusted commercial earnings for the first nine months fell from €3,593 million in 2019 to €-641 million. Ditto for reduced deliveries and lower cost efficiency, this also included €-1.0 billion of COVID-19 related charges.
Airbus said the “necessary steps” have now been taken to adapt the cost structure to the new levels of production, with benefits now starting to show. At the end of September, the number of commercial aircraft that could not be delivered due to COVID-19 had reduced to around 135.
Confirming the development, Airbus Chief Executive Officer, Guillaume Faury said : “ After nine months of 2020, we now see the progress made on adapting our business to the new COVID-19 market environment.
Despite the slower air travel recovery than anticipated, we converged commercial aircraft production and deliveries in the third quarter and we stopped cash consumption in line with our ambition.
“Furthermore, the restructuring provision booked shows our discussions with social partners and stakeholders have advanced well. Our ability to stabilise the cash flow in the quarter gives us confidence to issue a free cash flow guidance for the fourth quarter.”
Net commercial aircraft orders for the first nine months totalled 300, compared to 127 in the year-before period. Airbus’ order backlog comprises 7,441 commercial aircraft as of 30 September 2020.
Airbus also took a €26 million hit in the third quarter relating to programme costs for its discontinued A380, with the total for 2020 now standing at €358 million.
The company withdrew its full-year 2020 guidance in March and said no new guidance would be issued on commercial aircraft deliveries or earnings due to the continued impact of Covid-19.
In a related development, aircraft engine manufacturer – General Electric Aviation (GE) has reported a 39 per cent drop in revenues in the third quarter compared to the year-before period, to $4,919 million.
There were 385 fewer engine sales year-on-year. This included sales of 172 LEAP-1A and -1B units, which were down 283 from last year. Services revenues were also down, primarily due to lower commercial spare part shipments and decreased shop visits.
Profits dropped 79 per cent year-on-year to $356 million, while orders were down 54 per cent to $4,072 million, with declines of approximately 60 per cent in both the Commercial Engines and Services business units.
