Airbus Se Ord

Ladies and gentlemen, thank you for standing by. Welcome to the Airbus nine-month 2025 earnings release conference call. I am Sharon, the operator for this conference. Please note that for the duration of the presentation, all participants will be in a listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. At this time, I would like to turn the conference over to your hosts, Guillaume Faury, Thomas Töpfer, and Hélène Lagorge. Please go ahead.

Thank you, Sharon, and good evening, ladies and gentlemen. This is the Airbus 9 Month 2025 Earnings Release Conference Call. Guillaume Faure, our CEO, and Thomas Topfer, our CFO, will be presenting our results and answering your questions. This call is planned to last around an hour. This includes Q&A, which we will conduct after the presentation. This call is also webcast. It can be accessed via our homepage by clicking on the dedicated banner. Playback of this call will be accessible on our website, but there is no dedicated phone replay service. The supporting information package was published on our website earlier today. It includes the slides, which we will now take you through, as well as the financial statements. Throughout this call, we will be making forward-looking statements. I invite you to refer to our safe harbor statement that appears in the presentation slide, which applies to this call as well. Please read it carefully. And now, over to you, Guillaume.

Thank you, Hélène, and hello, ladies and gentlemen. Thank you for joining us today for our nine-month 2025 results call. We're here in Amsterdam with Thomas to run you through our results. Our operating environment remains complex and dynamic. Navigating strong demands combined with the specific supply chain tensions that have not changed still requires continuous operational discipline and agility, in particular in the environment of changing trade policies. We welcome the US-EU trade agreement which restores a stable and tariff-free environment for trade in aircraft and parts since the start of September. This is a crucial step that allows our global industry to move forward with the predictability it needs to invest and innovate. Yet, the still unstable geopolitical situation remains an area of continuous vigilance. In that context, we are rolling out our plan to reach the A320 family production target of rate 75 per month by establishing 10 A321 capable final assembly lines across four global sites. The recent addition of a second line in the United States and a second line in China marks a critical milestone in our global industrial growth strategy, but also enhances our overall business resilience. we are scaling up our operations and expanding capacity as we move forward with the commercial aircraft ramp-up. We're also committed to contributing to European defense and remain focused on delivering more competitive and innovative products and services with our two divisions, and we see a growing momentum. When it comes to European strategic autonomy, we have made significant progress toward the consolidation of our space activities together with Leonardo and Thales, aiming at establishing a leading European company. And I will come to this in a minute. In Q3, we delivered 201 commercial aircraft, and as the engine situation is showing signs of recovery, the number of gliders is now at 32 as of the end of September. This brings our year-to-date deliveries to 507 aircraft as compared to 497 last year. Deliveries continue to be back-end loaded as we navigate the engine situation. We have a strong year-end rally ahead of us, and our teams are in the sprint. Our EBIT adjusted to that 4.1 billion euros as of nine months 2025. This reflects the commercial aircraft deliveries and the solid performance at both Airbus Defence and Space and Airbus helicopters. Our free cash flow before customer financing was minus €0.9 billion. It notably reflects the inventory build-up that supports the Q4 deliveries and the ramp-up. On that basis, we maintain our 2025 guidance, which now includes the impact of currently applicable tariffs. And we'll come back to this later. Moving to space, we've made a major strategic step forward. We are very pleased with the recent announcement of signing a Memorandum of Understanding, an MOU, with Leonardo and Thales to form a new European space player in 2027. If you recall last year, I was clear we needed to focus on fixing our foundations and restore profitability. The turnaround plan is in full motion, and we are pleased with the first results. In parallel, we've been working on strategic options to create scale and increase competitiveness facing global players. The new company aims to unite and enhance capabilities in space by combining the three respective activities in satellite and space systems manufacturing and space services. The MOU is a collective industry commitment to strengthen the European space sector. The next steps include launching the social consultation process with our social partners, preparing to carve out the space businesses, and addressing regulatory needs. We have a busy journey ahead, and we are fully committed to this major and exciting project. Let's now look at our commercial environments, starting with commercial aircraft. Passenger traffic continued its growth momentum, while air cargo demand remained resilient. During the nine month 25, we booked 610 gross orders, including 116 in Q3. On the A220, we booked 40 gross orders, and looking at the A320 family, we booked 371 gross orders. This brings our backlog to 7,000 out of which around 75% are for the A321. And the 7,105 is just for the A320 family, of course. Moving to the white bodies, on the A330, we booked 90 gross orders confirming the high demand for this versatile product. Finally, on the A350, we booked 109 gross orders underpinning the continued commercial momentum of what has become the reference in the market. Net orders amounted to 514 aircraft, including 96 cancellations, which were largely anticipated and already embedded in our backlog valuation as of December 2024. Our backlog, total backlog in units, stood at 8,665 aircraft at the end of September. Looking at helicopters, In the nine months 25, we booked 306 net orders compared to 308 in the nine months 24, so very similar, and this is well spread across the portfolio. We continue to see positive momentum, in particular on the military markets, and we remain focused on securing new business opportunities in both our home countries and export markets. A new Airbus final assembly line will be established in India, to build H125 helicopters in collaboration with Tata Advanced Systems, aiming at capturing the full potential of the civil, parapublic, and military markets in South Asia. Let me conclude by highlighting that we have streamlined our small and medium tactical uncrewed aerial systems, U.S., the drones, offering into a single comprehensive portfolio managed by the Airbus Helicopters Division. This aims at delivering a focused market approach for defense and security customers and provides customers with cutting-edge capabilities for surveillance, intelligence, and operational flexibility. Finally, in defense and space, order intake stands at 6.8 billion euros for the nine months. On air power, this notably reflects an order from the Royal Thai Air Force for a next generation Airbus A330 MRTT+. This advanced aircraft is an evolution of the combat proven A330 MRTT, introducing innovations from the A330 NEO as well as upgraded military capabilities. So in particular, the new engine of the NEO that is now on the MRTT+. While on air power, let me highlight the recent contract with Germany for the acquisition of 20 Eurofighter aircraft to be produced at our final assembly line in Manching and to be delivered to the German Air Force starting from 2031. The order intake will be recorded once all contractual conditions are met, so the order intake is not yet recorded in the Q3. The momentum for the Eurofighter is also strong export market outside of the home countries of the Eurofighter, and that was also demonstrated by this week's commitment from Turkey, Turkey, to acquire 20 units. The Eurodrone program is making progress as we successfully completed the CDR, the so-called critical design review, earlier this month. This officially concludes the design phase and paves the way to prototype production and ground tests ahead of first flight. On FCAS, we remain convinced that Europe needs to have its future combatant system in order to meet its security challenges and further develop its critical skills and know-how in this field. Even the level of effort and investment required, we are convinced, I am convinced of the benefit of a collaborative approach and we intend to play a leading role in making it happen in a way or the other. On what concerns the defense part of our Airbus defense and space and helicopters businesses, we are observing a growing momentum, and we expect it will continue in the foreseeable future. And now, Thomas will take you through our financial.

Thomas? Thank you very much, Guillaume. And hello, ladies and gentlemen. I'm now on page seven of the presentation. As Guillaume said, I will take you through our financial performance. So as you can see on the chart, our nine-month 2025 revenues increased to $47.4 billion, which is up 7% year-on-year, and it mainly reflects the higher contribution from our divisions, the stronger services volumes across our businesses, and a higher level of deliveries partially offset by the U.S. dollar depreciation. And as you can see on the right-hand side, our R&D expenses stood at 2.1 billion for the first nine months of the year, lower compared to the nine months of 2024. And we continue to benefit from the prioritization of our activities, and we now expect that the R&D expenses will be slightly lower in 2025 than in 2024 when we talk about the full year. Now, let's look at EBIT adjusted on page eight. As you can see, our nine-month 2035 EBIT adjusted increased to 4.1 billion from 2.8 billion in the nine months of 2024. And of course, let me remind you that in the nine months of last year, we recorded 989 million of charges in our space business, which obviously did not repeat themselves. As of the nine months of this year, the higher commercial aircraft deliveries embed a less favorable mix, which is offset by a more favorable hedge rate and lower R&D expenses. And it also reflects a stronger performance in both divisions. So let me just clarify the impact of the currently applicable tariffs at this point. We expect this to represent anything between 100 and 200 million for the full year, of which, however, the vast majority will be recorded in Q4. And as you can see on the right-hand side of the page, the level of EBIT adjustments totaled a net negative 0.8 billion. And I'll just walk you through the items. It has in it negative 577 million impact from the dollar working capital mismatch and the balance sheet revaluation, mainly reflecting the mechanical impact coming from the difference between transaction date and delivery date, of which negative 186 million occurred in Q3. Secondly, it has negative 105 million related to the Airbus defensive space restructuring, which we recorded already in Q1. And it has negative 88 million related to the stabilization of certain Spirit Aerosystems work packages, of which 31 million recorded in Q3. And finally, negative 11 million other, including compliance costs and also M&A. So this takes our nine-month 2025 EBIT reported to positive 3.4 billion euros, and the financial result was positive 374 million, and it mainly reflects the revaluation of certain equity investments and the revaluation of financial instruments, partially offset by the evolution of the US dollar. The tax rate on the core business continues to be at around 27%. However, the effective tax rate is 32.4%, including the tax effect on the revaluation of certain equity investments, as well as a net deferred tax asset impairment. And we still expect the French surtax to result in an impact of around 300 million in 2025, both for P&L and cash. And in the nine months of this year, we recorded the part that is related to the year 2024, as well as the part corresponding to the first nine months of this year. And so the resulting net income is 2.6 billion euros, with earnings per share reported of 3.34 euros, as you can see on the chart, and the nine months 2025 EPS adjusted stood at 3.97 euros, based on an average of 790 million shares. Now with this, let's turn the page to page nine and look at our US dollar exposure coverage. Consistent with what we said during our business update, we began to implement a limited number of zero-cost colors, exactly 2.1 billion in the quarter, into our hedge portfolio. And the 2.1 billion is dollars, not euros, obviously. Now, this strategy aims at addressing the longer-term horizon with an acceptable level of volatility and to potentially capture the favorable evolution of the U.S. dollar in while at the same time being protected against a material weakening of the dollar. And let me just be clear, we do not aim at replacing our forwards, but rather to complement our coverage with a limited amount of colors. And as indicated, the colors will at this stage remain at around a single-digit percentage of the overall coverage. Now, with the integration of colors, the blended rate now includes the least favorable rate of our colors, and so Hence, it provides you with a protected or conservative view. And with all that being said, as you can see on the page, in the nine months of 2025, 14.8 billion US dollars of forwards matured with the associated EBIT impact and Euro conversions realized at a blended rate of $1.18 versus $1.21 in the nine months of 2024. And we also implemented 12.7 billion US dollars of new coverage at a blended rate of $1.18. And as a result, our total US dollar coverage portfolio in US dollar stands at 80.7 billion with an average blended rate of $1.21 as compared to $82.8 billion at $1.21 at the end of 2024. So now let's look at our free cash flow on page 10. Our free cash flow before customer financing was negative 0.9 billion in the first nine months of the year. And as you can see on the chart, this also was mainly driven by the change in working capital. And it notably reflects the planned inventory build up to support our ramp up across our businesses. And it also includes a favorable phasing effect of cash receipts and payments. On the A400M, the aircraft slightly weighted negatively on our free cash flow in the nine months of 2025 as the deliveries of the aircraft are back and loaded. However, we continue to expect it to be broadly neutral from a free cash flow perspective in the full year 2025. As you can also see on the chart, the nine-month capex number was negative 2.3 billion euros, and we continue to expect it to increase in 2025 to support our industrial ramp-up, so that the free cash flow was negative 0.8 billion, including customer financing of a positive 0.1 billion euros. What we can say is that the AQRA financing environment remains strong and competitive, and we expect sufficient liquidity to finance our 2025 deliveries. So with that, our net cash position stood at 7 billion euros as at the end of September, also reflecting the dividend payment as well as the weakening dollar environment. But I should stress that our liquidity remains very strong at around 30 billion euros. And in September, as you might have noticed, Moody's upgraded our credit rating to A1 with a stable outlook. And we think this is underlining our consistent strong credit management and the strength of our balance sheet. And with that, I would like to hand it back to Guillaume.

Thank you, Thomas. Very clear. So now, let's start with commercial aircraft. In the nine months, 2025, we delivered 507 aircraft to 79 customers. Looking at the situation by aircraft family, on narrowbodies, we delivered 62 A220s and 392 A320s. And out of the 392 A320 family aircraft, 250 were A321s, representing 64% of the deliveries for the A320 family. We are very pleased that Air New Guinea has taken delivery of its first A220, becoming the 25th global operator of the aircraft, which is now flying with carriers on five continents. The A320 family reached a major milestone, becoming the most delivered airliner in history. There's a bit of pride here, as you can see. And we continue to ramp up towards a rate of 75 A320 family aircraft per month in 2027. That's no change compared to previous assumptions. On the A220, the current balance between supply and demand has led to an adjustment of the ramp up trajectory and the ramp up ahead of us. We are now targeting to reach rate 12 in 2026, allowing time for the integration of the spirit aerosystem work packages, mostly the wings, and the progressive introduction of engine durability improvements for our customers. This means more work to reach breakeven, and our team are actually on it. In the nine months We delivered 53 white bodies, of which 20 A330s and 33 A350s. On the A330, we're currently stabilizing at a monthly production rate of 4. As previously introduced, we are now targeting to reach rate 5 in 2029 to meet the customer demand for the A330. On the A350, there's no change. We continue to target the rate 12 in 2028. When it comes to the A350 freighter, I'm pleased to say that we started the assembly of the first flight test aircraft in Toulouse with the first flight planned next year. In a nutshell, we continue to produce in line with the plan. The challenges for the year have not changed, notably with cabin and for the A320, the persisting tensions on engines, resulting in 32 gliders at the end of September. The engine situation is showing signs of recovery, and we continue to work closely with the engine manufacturers to deliver on our 2025 commitments. Now let's look at the financials for our commercial aircraft business. Revenues increased 3% year-on-year, mainly reflecting the higher number of deliveries and growth in services. EBIT adjusted was at 3.3 billion euros in the nine months, driven by favorable hedges rates and slightly lower R&D expenses, while the increase of deliveries embeds an unfavorable mix. Looking at helicopters, in the nine months we delivered 218 helicopters, 28 more than at nine months of 2024. Revenues increased around 16% to 5.7 billion euros, reflecting a solid performance from programs and services growth. EBIT adjusted increased to 495 million euros, reflecting growth in services as well as higher deliveries, as I mentioned earlier. And let's complete our review with defense and space. Revenues increased 17 percent year-on-year to 8.9 billion euros, driven by higher volumes across all business lines. EBIT adjusted stood at 420 million euros, supported by higher volumes and improved profitability in line with the divisional mid-term trajectory. On the A400M program, we are engaged in positive and forward-looking discussions with the launch nations and OCA. This was notably marked by the agreement reached in June with OCAR to advance seven deliveries for France and Spain and to further increase the visibility we have on the production for the program. In light of uncertainties regarding the level of aircraft orders, Airbus continues to assess the potential impact on the program's manufacturing activities. Risks on the qualification of technical capabilities and associated costs remain stable. And now on to our guidance, which, as you have seen, is maintained. On the basis of its 2025 guidance, the company assumes no additional disruptions to global trade or to the world economy, to air traffic, the supply chain, the company's internal operations, and its ability to deliver products and services. The guidance now includes the impact of currently applicable tariffs. The guidance also includes the impact of the integration of the certain Spirit AeroSystem work packages based on preliminary estimates and an assumed closing in the fourth quarter of 2025. On that basis, the company targets to achieve in 2025 around 820 commercial aqua deliveries and a bid adjusted of around 700, sorry, of around 7 billion euros We're not yet there. And the free cash flow before customer financing of around 4.5 billion euros. Just to clarify my statement on EBIT, we target an EBIT adjusted of around 7 billion euros. The anticipated impact of the integration of certain Spirit Aerosystem work packages on the company's guidance remains broadly in line with previous estimates. But maybe, Thomas, you want to be more precise on some of those elements?

Yes, let me just add a couple of precisions and details to what you said, Guillaume. So, first of all, on tariffs, as I said earlier, we expect this to represent anything between 100 and 200 million for the full year, but the vast majority of the total amount will be recorded in Q4. And secondly, on spirit error systems, when we say broadly in line, what do we mean is that the closing date is now expected before the end of the year, and all parties are putting all necessary efforts into the closing process, and this is on track for the operational readiness for day one. But of course, it is later than what we had anticipated at the beginning of this year when we put out the guidance. Now this shift of the closing into Q4 comes with a partial relief to free cash flow because we didn't own the business and therefore we did not record any negative operational result in our free cash flow. On the other hand, you have also seen in our financial statements that we of course provided credit lines to Spirit which are recorded below the free cash flow line. So in total, this remains broadly neutral in terms of the net cash position for the company But everything else being equal, you could take this slight free cash flow positive adjustment in the range of a low triple digit number into your models if you want. But obviously, the order of magnitude is not such that it led us to change the guidance. And with that, back to Guillaume.

Thank you, Thomas, for those precisions. And I'll conclude with our key priorities, and they have not changed. We are and we remain fully committed to executing the next steps of our commercial aircraft production ramp-up together with our suppliers. Our focus is twofold, addressing the remaining specific supply chain tensions, in particular on narrow-body engines where durability remains a headwind, as well as cabin, while also preparing the integration of the key Spirit Aerosystem work packages. As we focus on our production goals, we're also maturing the critical technologies that will define the successor of the A320 family in line with our ambition to pioneer the next generation of commercial aircraft. When it comes to Airbus Defence and Space, we are progressing on our transformation and contributing to establishing a European space leader. On European Defence, the industry is clearly in motion. We are embracing this challenge by leveraging the combined expertise of our defense and space and helicopters divisions to drive scale and cooperation in Europe. And now let's turn to your questions in the Q&A.

Thank you, Guillaume. Thank you, Thomas. We will now start our Q&A session. Please introduce yourself and your company when asking a question. Please limit yourself to two questions at a time, and this includes sub-questions. Also, as usual, please remember to speak clearly and slowly in order to help all participants, particularly ourselves, to understand your question. So Sharon, please go ahead and explain the procedure for the participants.

Thank you, Ellen. We will now begin the question and answer session. If you would like to ask a question, please press star 11 on your telephone keypad. That is star 11 to ask a question. We will now go to our first question. And our first question today comes from the line of Benjamin Heelan from Bank of America.

Please go ahead. Benjamin Heelan from Bank of America Ben, we don't hear you. Can you hear me now? Yes. Yes. Sorry about that.

First question was on the margin. Margin, I think, in Q3 looks pretty positive. Could you just talk through some of the drivers? It looks to me as a very positive mix in commercial, but any comments there would be helpful. Thank you.

Well, Ben, I think we're repeating ourselves a little bit when we say that the margin of a single quarter should not be overestimated or overinterpreted, I would say. So, the margin in commercial indeed was, let's say, positive. That does not necessarily come from the mix. The mix was actually not specifically helping us in Q3, but it was more driven by, let's say, cost discipline in terms of SG&A, R&D, where the lead program that we have started is now really showing its full effect. So we're pretty pleased with, I would say, the efficiency that the company has shown over the course of the year and specifically in Q3. So the things that we have done are not, let's say, of short-term nature, but we expect them that we can actually keep them in our trajectory. And secondly, I would say in defense and space, all divisions are showing a good performance. There's two drivers for it. One, that our improvement program for space is actually showing good effects, and we're very pleased with the results that we see, not only in terms of measures that they take, but first outcome, which is rather better than what we had expected. And secondly, as Guillaume pointed out, a good momentum in defense in general, where we see not only good order intake, but also, let's say, good margins for the first nine months of the year. So I would not specifically point to the mix, but rather some self-help measures and operational discipline that are helping.

Okay, thank you. And then a follow on. I know you won't give us a delivery number for 2026 today, but are there any building blocks that you can provide to point us broadly in the direction of where we should be headed for next year from a delivery perspective in commercial? Thank you.

I would say not more today than what you know already in terms of ramp up trajectory for the A320, the 330 and the 350. There's a change as you have seen on what we target for next year on the A220 where we target to reach rate 12 instead of rate 14. So nothing new on that horizon except this slight modification on the 220. and we'll be targeting rate 5 for the A330 a bit later. So that's basically a lot of stability in the ramp-up trajectory compared to what we had shared earlier in the year. Cool. Thank you.

Appreciate it.

Thank you. Your next question comes from the line of David Perry from J.P. Morgan. Please go ahead.

Yes, hi. Good evening, Guillaume and Thomas. So two quick ones from me. Just on this tariff impact, Thomas, if it all falls in Q4, do we annualize that impact going forward? And then on space, can you just clarify exactly what you're putting in? Unless I'm mistaken, I think you're putting a little bit more than just the manufacturing business, but maybe I've misunderstood on that. And maybe... Any other comments you want to make in terms of like, is this going to have a meaningful impact on the ADS margin going forward, this transaction? Are you making any equalization payments or receiving any? Thank you.

So on the two questions, the tariff impact, let me repeat what I said. So the total full year impact will be between 100 and 200 million. Why is the majority of that occurring in Q4? because the material that we have shipped or that is necessary has already been shipped into the United States, but we hold it as work in progress so that we will only record the impact of the tariffs once the material is actually built into the aircraft and the aircraft is sold. So therefore, to your question, you should not annualize the Q4 effect, it's a specific, let's say, impact of this year where a lot of the pre-September 1st effects are currently captured in our WIP and will then only materialize when the aircraft is delivered. That is the mechanic behind it. And on your second question, if I understood correctly, you're referring to Bromo. So what are we bringing into that cooperation? Two businesses, essentially. Our space services business which is currently mainly in CI and our space systems business which is also a subdivision of defense and space and obviously what has nothing to do with it is the launcher business which is completely separate but we're bringing in both services and space systems.

Okay and does the transaction have a big impact on the on the sort of future margin of ADS?

Well, I mean, we do expect that there will be mid-triple digit synergies five years after the closing of the transaction. So I would say in the medium term, it should be clearly accretive to the margin. We will then hold a 35% stake in something which is more efficient and more profitable than what we have today. But let's be honest, in the very short term, I would not put in a big impact in the model that you probably have.

Okay, thank you very much.

Thank you. Your next question comes from the line of Ross Lowe from Morgan Stanley. Please go ahead.

Hi, evening. Thanks for taking my questions. So the first one on your full-year delivery guidance. So given that the engine suppliers have essentially said that they're getting you the engines that you need, what are the main challenges or bottlenecks that are standing from here into your end? And then looking ahead to 2026, Obviously, engines are seemingly becoming less of an issue compared to 24 and 25, supply chain overall performing better. Is there any reason why you won't be able to deliver a double-digit increase in deliveries in 26, which is a growth rate you previously referred to? Thanks.

Maybe I take the questions. When it comes to 2025 and the full year around 820 aircraft, The main challenge is the volume of aircraft that remains to be delivered in the fourth quarter. And what we will have to deliver in the last month is indeed quite unprecedented. We are not yet at the point where we will have all what we need to secure all deliveries. We are still expecting engines in the weeks to come that will support some 2025 deliveries. But the main challenge is indeed volume, backloading of the year, and making sure that there's no mishap or no challenge ahead of us that would postpone aircraft and cross the line of the end of 2025. So a lot of work. The supply chain and the engine situation looks like we're going to make it. But again, still a lot on our plates. About the engine tensions, they will persist. There is indeed a bigger backdrop of airlines needing more engines for their in-service aircraft on the Pratt & Whitney side, but as well on the CFM side. And the engine makers need to continue to ramp up the production of parts and engines to serve both the manufacturer, the aircraft manufacturers, and their airline and lessor customers. So we are not out of the woods when it comes to tension on engine availability. We think we will have what we need for the trajectory we have sketched out for 2026. But again, we are not at the point of guiding for 2026. But I confirm and I maintain what I said earlier. We are consistent with the ramp-up trajectory that we have given previously this year and next year, namely reaching the rate 75 on the A320 in 2027, the rate 12 on the A350 in 2028, and the rate 5 on the A330 in 2029, as far as I remember. only change A220, a slightly lower rate for next year. We are in a steep ramp-up on the 220, and we now target to reach the rate 12 for next year, which is still a very steep ramp-up. But we believe this is the best balance between the different constraints we have next year and a lot of work, actually, on the A220 to get there by next year, including the integration of the wings and other work packages that will come from the integration of spirits.

Okay, thanks, Guillaume.

Thank you. Your next question comes from the line of Clarila Mary from Jefferies. Please go ahead.

Yes, good evening, Guillaume, Thomas, and Helen. Thank you for taking my question. The first one would be on the maintain guide. It looks fairly conservative for Q4 given the expected delivery growth, so I understand tariffs are a headwind, but any other moving part you'd like to share to help us understand the the building blocks for the Q4 year-on-year. And the second one, I think Guillaume, you commented on the press call about gliders being half of what they were. Could you just clarify whether this is at NQ3 or more recently, and maybe compare and contrast the situation between the LEAP and GTF powered aircraft, please? Thank you.

So maybe I start with the guidance and the main to-do. So starting from the 4.1 billion as of the nine months, let's start by saying last year we did 2.6 billion in Q4 of last year. I would say there's clearly a positive effect from the volume. You can attach roughly half a billion to it if all the deliveries materialize. But yes, then I would say there's at least two headwinds. One is the tariffs, and secondly, R&D, we're expecting that R&D will be slightly lower than last year, but that still could mean that in Q4 R&D would be higher than last year. So that is a headwind that you should have on your list. On the other hand, yes, I do believe that the two divisions, helicopters and ADS, could be performing positively, and that would be then a positive. So if you take those together, that would bring me then to the around seven. It all hinges on the deliveries, and as Guillaume said, it's a very, very steep ramp up. The teams are on it. And if we make the deliveries, obviously, then I think the financial numbers should clearly be in sync with it.

Thank you, Thomas. When it comes to the question on gliders, we stood at 60 gliders by end of Q2. And we stood at 32 gliders by end of Q3, so by end of September, roughly a month ago. The situation obviously is dynamic as we are targeting to be with zero gliders by the end of the year. And as I said earlier, we still need to receive engines in the weeks to come to be fully sure that we will have what we need. But engine manufacturers have confirmed that they will deliver what we need to reach that objective of zero glider and reaching our guidance. And when it comes to the situation LEAP versus GTF, actually it's both. And as we speak, it's shared between the two engine manufacturers. And I can't be precise enough, but it's not far from balanced between the two, not far from 50-50 between LEAP and GTF. But again, it's a dynamic situation. almost by the day as we deliver a lot of aircraft those weeks. So I can't be more precise than this at this very moment.

Very clear. Thank you.

Thank you. We will now take the next question. And the question comes from the line of Sam Burgess from Goldman Sachs. Please go ahead.

Great. Thank you, Guillaume and Thomas, for taking the question. A couple from me. Thomas, can we just circle back on R&D? From memory, your initial expectation was R&D would be a bit above 2024 levels. I might have missed it, but what specifically is driving this trimming of R&D versus your initial expectations? And is that kind of sustainable going forward, or do we get some catch up in FY26? And the second question, I know you don't want to dwell too much on individual quarters, but in your press release, you do explicitly mention a less favorable mix on deliveries year to date. Do you expect that mix to become more favorable in Q4? Thank you.

So on R&D, we're roughly 200 million below the 2024 numbers for the first nine months of the year, if I'm not mistaken. That is mainly a function of our lead improvement program where we're focusing on the things that really matter, but have the courage to also terminate some projects where we think they're simply not yielding the results that we feel they should. And that means less external consultants. That means less spending on all kinds of things. So it's not trimming R&D, as you said it, with with a lawn mower approach, but it's really very specific and focused with a program where we think let's focus on the things that matter most to the company. That was pretty successful in our view. And so therefore, while admittedly we said at the beginning of the year that we would expect R&D to slightly increase, we're now of the view that With the successes that we have, which we think are sustainable, we should be slightly below previous year for the full year, but that still means that in Q4, as I said in my previous answer, there might be a slight increase in R&D. Now, going forward, what is unchanged is that we do expect R&D to increase in line with revenues, so as a percentage of revenue, I think you should keep it constant in your model, but of course, starting from a somewhat lower base in 2025. And then on the mix, it's simply a function that we have delivered more A220s, and you know that they have a lower margin than the rest. So it's just a function of all the ramp-ups and the numbers that we have given you. Great.

That's very helpful. Thank you.

Thank you. Your next question today is, comes from the line of Ian Douglas Pennant from UBS. Please go ahead.

Good evening. Thanks for taking my questions. The first is another on the supply chain. Aside from engines and the acquisition of Spirit being delayed, are there any other pain points that you'd like to call out in a supply chain that are causing the changes to the schedules that you've talked about today or elsewhere? Secondly, we've seen a number of A320neos being retired this year. I wonder, do you have any comments on why that might be happening, how sustainable you think, whether they are edge cases or how we should interpret some very young aircraft being retired?

Thank you. On the supply chain, of course, the main area of concern attention and concern our engines, as we mentioned earlier. The rest of the supply chain is actually doing much better than in 2024 and previous years, significantly better. The number of missing parts and the depth of delays is significantly better than it was before. We continue to have issues and delays on cabin equipment, interiors, seats. And that's probably more of a mid-term issue than a short-term one, given the fact that this part of the industry has been, since COVID or since the recovery after COVID, sort of overwhelmed by the combination of demand for new aircraft and retrofits and extension of the life of products. When it comes to your question on the retirement of A320neo, I'm a bit surprised. That's not what I have in mind. Maybe there's a confusion with aircraft being on the ground because of missing engines, in particular on the flat side. But that's not something that is consistent with what I have in mind. It's not retirement of aircraft as much as I know. But we'll look at your question.

Thank you. We will now go to the next question.

And the next question comes from the line of Douglas Harnert from Bernstein. Please go ahead.

Good evening. Thank you. The first question is, if you could update us on the A350. It looks like delivery is maybe a little bit better in October, but this has been very slow and Maybe you could update us on progress with spirit, with interiors related to the A350 and getting those rates up. And then a second question is, we've heard some cautious comments from CFM on getting out to 75 a month, particularly most recently from Saffron. Where do you stand now in working with the engine providers on ensuring that you can get to that? 75 a month at some point, hopefully by the end of 2027.

So on the A350, we continue to believe we will be consistent with what we have indicated so far, meaning that the start of the ramp-up on the A350 has been sort of delayed by a year. given the challenges and the difficulties we've had with the Section 15 of SPIRIT. So we don't expect an increase compared to 2024 in 2025, but there is indeed a phasing and a quite significant level of backloading in deliveries in 2025. The ramp-up then comes later. we think we'll catch up in the sense of maintaining reaching the rate 12 by 2028. We are mostly challenged by difficulties and delays on interiors, on lavatories, on seats. That's mainly what we're suffering from on the A350. And it's not different compared to previous quarters and even compared to 2024, unfortunately. When it comes to the ramp-up of the A320, actually CFM is in line with us. That's confirmed regularly that they are in line with us on the need for rate 75 on the ramp-up trajectory. So I'm slightly surprised with the remark because the level of alignment with CFM is very strong. They had significant issues this year that has led to a lot of gliders and delays in delivering their engines, but they're catching up. And again, I'm comfortable that they will be back to where they have to be by end of this year to then deliver on the ramp-up trajectory to support us in 26, 27, till we reach the rate 75. I'm not suggesting they don't have their challenges, so I don't know what was the nature of the comment precisely. They have their challenges, obviously, but we are moving hand in hand when it comes to ramping up the A320 with the CFM engine, at least that's my current perception, and that's consistent with the last weeks and months meetings and interactions with CFM.

Very good. Thank you.

Thank you. Your next question comes from the line of Ken Herbert from RBC. Please go ahead.

Yes, good evening, Guillaume and Thomas and Helene. I wanted to pivot and ask about the A220, if I could. The lower guidance for deliveries still seems relatively ambitious considering sort of where you are today on that program. Can you talk more about challenges with that ramp and what gives you incremental confidence still at the 12 a month in 26? And then as a second part, There continues to be speculation about maybe a third variant of that program. How do you view the investments in that and the potential return on that program, considering what seems to be a more challenging ramp and some incremental comments about some demand pressure? Thank you.

Thank you for the question. So, indeed, we are in a steep ramp up for the A220. The team has a lot on the plate and now they have on top to integrate the wings and other work packages of the A220. So that's indeed a lot of work to get to where we want to be. So we think the right 12 for next year is a good balance between the different challenges and the demand and supply situation and the quantity of work to be delivered. Indeed, it's still a significant ramp-up, but what we learned from this year is that a rate 12 for next year, reaching rate 12 next year, actually, is something we believe is well in the cards. So, basically, that's all about the quantity of work, all what needs to be achieved, the ramp-up in both Mirabel and Mobil. You know, we have two files. the number of variants of different configurations that we have to deliver, and industrial optimization to be able to accelerate the pace of production to that level. When it comes to the third variant, which is also nicknamed the Dash 500, the first two variants being the Dash 100 and the Dash 300, that's something we believe the program will need and benefit from, We have demand from airlines and from the airline customers for these variants that on paper looks really as a very competitive product. We have said that the Dash 500 is not a question of if, but is a question of when. And we're still with the same type of statements. But again, we're giving priority to the short-term work and the short-term challenges that we have to perform the ramp-up, to move forward, to break even with the program, to digest the spirit work package that will be now under our responsibility. So that's to be the way we're looking at the year and the years ahead of us. Thank you.

Thank you. We will now take our final question for today. And the final question comes from the line of Olivier Brochet from Rothschild & Co, Redburn. Please go ahead.

Yes, good evening, Guillaume and Thomas. Thanks for taking the question. the first one is very simple on tariffs you mentioned a number should we think of the impact on cash to be similar for 25 and 26 please and second on space on accounting and and and the deconsolidation that you might be doing. Should we think of a deconsolidation, sorry, for that? And will it lead to some separation costs, please?

So the second question is too difficult, and the first one as well. So I hand over to Thomas.

So the first one, obviously, is easy for me. The answer is yes. I mean, roughly the EBIT and the cash impact is the same. So you can put that into your model. On the space consolidation, so obviously what we have to do is go from an MOU to signing and then from signing to closing. Closing means in order to be ready for that, we have to carve out the business and currently the business is spread over many legal entities and countries. So to your question, yes, we do have the task as Airbus to create a operationally and legally standalone separate business. until 2027, which can be then put into the new legal entity. That will come with not insignificant, let's say, separation costs. And we said, however, in the statement on Bromo that they would be in line with industry standards. So I think you can plug in a normal number into your models, but it's not insignificant given the size of it. for 2025 that will not have an impact on our financial results.

Okay, that's helpful. Thank you.

Thank you, Guillaume. Thank you, Thomas. This now closes our conference call for today. If you have any further questions, please send an email to Olivier, Victoria, or myself, and we will get back to you as soon as possible.

And Hélène? I'd like to announce to the audience that you will actually move to new challenges still in the financial directorate of Airbus, under the leadership of Thomas, in the commercial aircraft team. And you will have Jean-Christophe Haenou as a successor. Jean-Christophe is joining from the strategic team. and we'll take over on the 1st of December. So very soon we will have JC, nicknamed JC, with us. And with this, Hélène, I would like to thank you very warmly for the pleasure of working with you, for the quality and the precision of all you've been doing with us, for your constant voice on the calls. and for your very good availability with all our investors and analysts and all the financial community. So I wish you, we wish you with Thomas, all the best moving forward to your new job, and I'm sure there will be opportunities for you to answer questions on what it is and what you will be doing next. So again, thank you, Hélène, and welcome, JC. And bye-bye, everyone. Thank you.

Thank you, ladies and gentlemen. The conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant evening. Goodbye.