Airbus offers bleak guidance despite topping fourth-quarter earnings estimates

By Steve Goldstein

Airbus, the European conglomerate that shares the large-jet market with Boeing, reported fourth-quarter results on Thursday that didn’t make inspiring reading.

The fourth-quarter numbers were actually a little better than consensus expectations. Its adjusted earnings before interest and tax dropped 35% to €1.83 billion ($2.21 billion), on a 19% drop in revenue to €19.75 billion. That was ahead of consensus expectations for an operating profit of €1.66 billion on revenue of €19.18 billion.
The issue was the guidance. Airbus /zigman2/quotes/208224336/delayed FR:AIR +1.20% doesn’t expect to deliver more aircraft in 2021 — as the world gets inoculated with COVID-19 vaccines — than the 566 it delivered in 2020.
Airbus /zigman2/quotes/210553709/delayed UK:0KVV +1.77% expects its adjusted EBIT to rise to €2 billion, after earning €1.7 billion last year and €6.95 billion in 2019.
Free cash flow, excluding mergers and acquisitions and customer financing, is forecast to break even.

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The outlook: The stock market reaction, if anything, was kind, with the shares losing about 4% in morning trade. Analysts at Bank of America said the Airbus profit guidance looks conservative, even if deliveries are unchanged this year. And management may simply be trying to set a low bar — Airbus did insert the words “at least” before setting out its 2021 guidance.

Air France-KLM /zigman2/quotes/205396176/delayed FR:AF 0.00% , a client of both Airbus and Boeing /zigman2/quotes/208579720/composite BA -0.88% , also reported results on Thursday, and said it expects capacity to return to 2019 levels by 2024, implying a more hopeful recovery to air travel.

From the archives (December 2020): Tariffs over Airbus and Boeing dispute to be lifted by the U.K. post-Brexit

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