Airbus Se Unsp/Adr

Gentlemen, thank you for standing by. Welcome to the Airbus Q1 2020 results release conference call. I am Aurelia, the operator for this conference. Please note that for the duration of the presentation, all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to your hosts, Guillaume Faurie, Dominique Assam, and Torsten Fischer.

Thank you, Aurelia. Good morning, ladies and gentlemen. This is the Airbus Q1 2020 results release conference call. Guillaume Fourie, our CEO, and Dominique Azam, our CFO, will be presenting our results and answering your questions. This call is planned to last around one hour. This includes Q&A, which we'll conduct after the initial presentation. This call is also webcast. It can be accessed via our homepage, where we have set a special banner. Playback of this call will be accessible on the website, but there is no dedicated phone replay service. The supporting information package was emailed to you earlier this morning. It includes the slides, which we will now take you through, as well as the financial statements. Throughout this call, we'll be making forward-looking statements. The package you receive contains the safe harbor statement, which applies to this call as well. Please read it carefully. Now, over to Guillaume.

Thank you, Torsten, and good morning, ladies and gentlemen. Welcome to our Q1 2020 results call. Thank you for joining us today. I hope that you, your families, are doing well and remain safe in these difficult COVID-19 times. Aerospace is among the sectors that have been most affected by the coronavirus pandemic, which is an unprecedented situation. In fact, as I said many times already now, Our industry is now facing the gravest crisis in its history. This is particularly true for commercial aircraft. Demand for air travel has collapsed amid the travel restrictions and the lockdowns put in place by the many countries around the world. Our customers, the airlines, have reduced capacity, grounded a very large share of their fleet temporarily, and are implementing measures to reduce cash spending. This also includes a full review of their capex and pre-delivery payment schedules. Not all of this is yet fully visible in our Q1 2020 final. That 281 million euros and free cash flow before M&A and customer financing at minus 8 billion euros, including the payments of the penalties on the fine of 3.6 billion euros. Before the payment of the penalty, free cash flow before remaining customer financing is indeed at minus 4.4 billion euros, which is roughly at the level of Q1 2019. After a solid commercial and industrial performance at the beginning of the year, we have taken prudent steps to ensure the future of Airbus to prepare as best as we can for a return to normal operations once the situation recovers. In Q1 2020, cancellations were at a reasonable level, but many customers are asking to defer their deliveries or are simply physically unable to take delivery of their aircraft. We are adapting to this new reality as fast as possible to find the most adequate solutions. We are, I call it, facing reality. We're taking a realistic approach to proactively manage our order book and to match production with our best understanding of this new demand and trying to best meet the customer expectations and commitments. Under our watchtower process, we are constantly talking to airlines and vessels to understand their different requirements, and we are closely monitoring their own financial health and situation. We put particular focus on delivering aircraft which are industrially engaged by leveraging the related prepayments on hand. Based on our best assessment of the overall situation, we decided three weeks ago to adapt our commercial aircraft production rates downwards by roughly one-third, while protecting our ability to further adapt as the global market further evolves. For us, the urgent priority is to implement a short-term cash containment plan. We are doing this and to address the longer-term cost structure to right-size the company. We're implementing a number of temporary social measures across sites in coordination with our social partners. We have rigorously prioritized our capex spent, projects, R&D, and our general cost structure in terms of business criticality and timing, resulting in a very significant reduction. With our strong balance sheets and the measures taken in March to further bolster our liquidity, we've protected our financial flexibility to adapt to the new environment and to ensure what I call the business continuity. We are also advocating support from governments to our airline customers, to the ecosystem, and obviously to our suppliers. We are still at an early stage of this crisis, so we have to remain humble. The situation is still evolving and We are very carefully managing our ability to understand all the implications. After withdrawing the 2020 guidance in March, we continue to assess the impact of the COVID-19 on our business. Given the limited visibility, in particular on the delivery situation, we do not issue a new guidance. In summary, our industry is a complex and interdependent ecosystem. with many different parts, and we are doing our best to keep those parts synchronized in a COVID-19 environment which is still evolving. We're in constant dialogue with our customers, partners, suppliers, and the many stakeholders, and we need and we will navigate this crisis with them together. Looking into our commercial aircraft environment in more detail, We start to see some signs of recovery in China, albeit at a very slow pace. Passenger capacity declined by minus 85% at the peak of the crisis in China in mid-February compared to pre-COVID-19 situation and recovered to a minus 60% in April. That's the latest data available I have. In its latest market report, IATA now expects RPKs to be down by minus 48% year-on-year in 2020 and a decrease of passenger revenue by minus $314 billion versus 2019 levels. We see leasing companies continue to play a significant role in actively financing and remarketing aircraft. For most of them, their financials were robust before entering the COVID-19 situation with no repayment hours in the short term. ECA financing has been reopened last year and we expect demand for ECA support to increase this year. By the way, I want to thank the ECA and EDC who have confirmed their continuous availability of support for the crisis and beyond. This is very helpful. Now looking at Q1 orders. In Airbus, after a good start to the year in January, the commercial dynamic changed as the COVID-19 situation developed. In Q1, we booked 356 gross orders. Net orders were at 290 aircraft, and our backlog was at 7,650 aircraft. We recorded 66 cancellations, which represents a lower level than last year. On Q2 2020, On the Airbus A220, we booked 42 planes, 42 net orders, and our backlog was at 529 aircraft. On the A320 family, 248 net orders were added, and our backlog stood at a 6,220 aircraft mark. This brings our market share in the single life segment in terms of backlog up from 58% to 60% over the last 12 months, with half of the gain in the last quarter. Our A330 backlog amounted to 323 aircraft after four cancellations. Moving to the A350, we booked 21 gross orders, including 10 more Dash 900 for Air France, and recorded 17 cancellations. Our backlog was at 569 aircraft. Next slide, looking at helicopters. In Q120, we booked 54 net orders versus 66 in Q119. We concluded the HeliExpo 2020 with 38 orders, including 12 additional H145 for metro aviation. On the H145, we booked also an additional order for six H-145 for the Ecuador Ministry of Defense. And we also secured an order for 15 UH-72, the military version of the 145 for the US Army. In addition, we booked two Super Puma for the Japanese Coast Guard. We expect the civil and parapublic to remain soft in 2020, particularly in oil and gas, mainly due to the very low oil prices. But we continue to see good prospects in military. Finally, in defense and space, we booked orders of up to 1.7 billion euros, including contract wins in military aircraft services, secure communications and telecommunications satellites, and the phase 1A of the FCAS project signed in February. Also in defense and space, discussions are ongoing on contracts like German Eurofighter batch one replacement and the tornado succession. As always, the exact timing of contracts award is difficult to predict. However, in the current environment, we see a number of opportunities in the field of defense with our European governments that are very important to us. So now I'll... And I give the floor to you, Dominique, to guide us into more details and the financial data. Dominique, the floor is yours.