Airbus Se Unsp/Adr

Thank you, Aurelia. Good morning, ladies and gentlemen. This is the ERBO's nine-month 2020 results release conference call. Guillaume Faure, 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 will conduct after the initial presentation. This call is also webcast. It can be addressed 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 will 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 nine-month 2020 results call, and thank you for joining us today. I sincerely hope you're all well. While we saw signs of a pickup in air traffic at the end of H1, the recovery over the summer was slower than anticipated and hoped. The virus is still circulating. Travel restrictions remain in place in most regions worldwide, and airlines are facing a difficult situation. The outlook for global air travel recovery has deteriorated, indicating that the crisis is far from over. Many uncertainties remain, especially on the evolution of the COVID-19 cases globally and travel restrictions. In this context, we remain prudent and humble. But all in all, our Airbus trajectory remains within the corridor of expectations that form the basis of our H1 communication. We further advanced on our cash containment and business adaptation measures, which remain on track. Our nine-month free cash flow before M&A and customer financing was negative 11.8 billion euros, including the payment of the penalties of 3.6 billion euros in Q1. Our EBIT adjusted was minus 0.1 billion euro, including minus 1 billion euro of COVID-19 related charges, of which minus 0.1 recognized in the third quarter. On the workforce adaptation plan, we've made good progress with our social partners and recognize a 1.2 billion euro restructuring provision in Q3, which is shown in our EBIT reported. Our strong liquidity position will support us in our ongoing efforts. It will also enable us to act in case new challenges are to come, and there will be new challenges. And we are preserving our ability to invest, innovate, grow, and perform again after the crisis to ensure we can return to normal operations in a strong position once the situation improves again. We remain in close contact with our customers to assess the situation on a case-by-case basis to find mutually acceptable agreements. The result of this intense collaboration is reflected in the third quarter deliveries. Indeed, we delivered 145 aircraft, and so production and deliveries converging in the quarter as targeted. Consistent with our ambition shared with you in H1, we also stopped cash consumption in Q3. In fact, our free cash flow before M&A and customer financing was at a positive €0.6 billion in the third quarter. Despite remaining uncertainties, with the measures put in place and with the visibility we gained in Q3, we feel sufficiently comfortable to issue a free cash flow guidance for the fourth quarter 2020. Next slide. Before we look at our commercial aircraft environments, I'd like to give you an update on the recent developments of two important topics for Airbus, the WTO disputes and Brexit. The WTO has recently announced its decision to authorize the European Union to impose almost $4 billion in annual countermeasures. Airbus supports all necessary actions to create a level playing field and to restore a level playing field and continues to support the EU's commitment to finding a negotiated settlement of this long-standing dispute to avoid lose-lose tariffs. On Brexit, the end of the negotiations are nearing and we remain concerned about the risk for a no-deal. We continue to plan for such a scenario to further eradicate and mitigate risks. We continue to look for further clarity, particularly around regulatory alignment, so that we can properly plan for the future. The shape of the future EU-UK relationship remains critically important for us. Now let's move to the commercial aircraft environment. Air traffic has continued to rise globally from the low point reached in April, but recovery has slowed down after the summer due to the increasing number of COVID-19 cases. and to travel restrictions, which are becoming tighter. Domestic markets continue to lead the recovery, particularly in China, but the relapse of the pandemic has slowed down progress in many other regions. International demand remains weak, and in many countries, quarantine remains compulsory for travelers. Since the beginning of the crisis, we recorded four cancellations As I highlighted before, airlines remain in a difficult situation and their balance sheets are impacted by the crisis. We continue to expect that air traffic will reach its 2019 level again between 2023 and 2025. The single air markets will lead the recovery while wide body will lag. Based on the agreements formed with our customers, a second wave of COVID-19 pandemic may result in maintaining the current production levels for longer and could have an influence on the timing and pace of the future single aisle ramp-up. We keep our supply chain informed to ensure that our industrial ecosystems will be adequately prepared to gradually increase production when the right conditions are met. Where are we on the... Order and delivery is here to date. Our backlog stood at 7,441 aircraft as of the end of September. We booked 370 gross orders, including 349 single aisle and 21 white bodies. Net orders were at 300 aircraft, following the cancellation of 70 aircraft, of which three aircraft in the third quarter. Next page. Looking at helicopters, in the nine months 2020, we booked 143 net orders, versus the 173 in nine months 19. The 68 net orders booked in Q3 include six H160 following the certification by EASA last July, that was obviously a major milestone for us, and one H215 for Nacanihan Air. In addition, we have recently signed a firm contract for the development of an upgraded version of the NH-90 for the French Special Forces. We have also booked a support contract with NASA for its fleet of H-135 helicopters. We expect the civilian parapublic market to remain soft, particularly in oil and gas, due to the persisting lower oil prices. Finally, in defense and space, In nine months 2020, we booked an order intake of 8.2 billion euros, which is plus 35% versus last year, including contract wins in telecom satellites in the UK and Middle East in the third quarter. We also received a firm order for an A330 MRTT from OCAR placed on behalf of NATO. On FCAS, the Future Combat Air System, France and Germany and Spain, I've recently signed an agreement to bring Spain into the Demonstrator Phase 1A. The negotiations between industry partners for the Phase 1B proposals are ongoing, and we are making good progress on that very important project. On the Eurofighter, we are awaiting the replacement of the existing Tranche 1 fleet in Germany, also called Quadriga. However, the exact timing of the contract award remains difficult to predict. We are also seeing further opportunities for this program, in Germany, Spain, Switzerland, and Finland. With regard to the Eurodrone project, the negotiations are still ongoing. And last but not least, we believe European defense budgets, be them national and European, will support the path towards building European sovereignty. And Airbus has the ambition to play a major role in this endeavor. Now, Dominique, I endeavor to you, Dominique, take you through our financials. Dominique?

Thank you, Guillaume, and good morning, ladies and gentlemen. Our nine-month 2020 revenues decreased to €30.2 billion, down 35% year-on-year, driven by the difficult market environment impacting our commercial aircraft business, as we delivered about 40% less aircraft year-on-year, partially offset by better foreign exchange hedge rates. Our nine-month EBIT adjusted decreased to minus €0.1 billion. This reflects lower deliveries in commercial aircraft and some idle costs. We've taken the necessary steps to adapt our cost structure to the new levels of production and the benefits are materializing as we execute our plan. Nine-month EBIT adjusted also reflects minus €1 billion charges recorded due to impairments and write-offs triggered by COVID-19, of which minus 0.1 billion in Q3. Q3 EBIT adjusted was 0.8 billion euros, mainly reflecting lower commercial aircraft deliveries and the lower activities in the space business. Our nine months EPS adjusted stands at minus 32 euro cents per share, using an average of 783 million shares. Our nine months free cash flow before M&A and customer financing was minus 11.8 billion euros, of which plus 0.6 billion in Q3. Our Q3 free cash flow reflects the higher level of deliveries compared to prior quarter, our efforts on cash containment, as well as a strong focus on working capital management. Now, on to the next stage of profitability. Nine months 2020 EBIT reported was minus 2.2 billion euros, The level of EBIT adjustments totaled a net negative 2.1 billion euros and included minus 1.2 billion booked in Q3 related to the group-wide restructuring plan. The amount takes into account government support measures. It reflects the latest status of the negotiations with our social partners and therefore may be reassessed. Minus 358 million related to the A380 program cost of which minus 26 were booked in Q3, minus 374 million negative impact from foreign exchange and balance sheet revaluation, of which minus 209 million in Q3, and minus 128 million of other costs, including compliance costs, of which minus 11 in Q3. EPS reported includes minus 712 million of financial results. It mainly reflects a net minus 291 million related to Dassault Aviation as well as an RLI remeasurement of minus $236 million, mainly from amending the French and Spanish contracts to what the WTO considers the appropriate interest rate and risk assessment benchmarks. It also includes the impairment of the loan to OneWeb, recognized already in Q1. The tax rate on the core business is around 27%. The effective tax rate on the net loss is 7%. impacted by impairments of deferred tax assets in certain tax jurisdictions and on certain investments. The resulting net loss is minus 2.7 billion euros, with loss per share reported of minus 3.43 euros. Now, on to our hedging activities. In the third quarter, we adjusted our portfolio and rolled forward around $31 billion of hedges while containing the cash impact of hedges otherwise maturing in 2020. Our total hedging portfolio in U.S. dollars stands at $86.8 billion, with an average hedge rate of $1.25. The evolution in the portfolio hedge rate to $1.25 mainly reflects the forward points on the longer duration of the hedge portfolio after rollover. In nine months 2020, we implemented $3.9 billion of forwards, of which $1.4 billion in Q3, mainly to redesignate hedges disqualified from other aircraft-type families. $11.1 billion of hedges matured at a rate of $1.20 in the nine months with associated EBIT impact. In the quarter, $4.1 billion of hedges matured also at $1.20 with associated EBIT impact. We also bought $2.9 billion at $1.16 to finalize the implementation of rollover started in Q2. In addition, $3.1 billion of hedges have been disqualified in the nine months with maturity date mainly from 2022 and beyond, resulting in a negative impact to financial results primarily recognized already in the first half of the year. Now let's look at our cash evolution in the nine months of 2020. Our gross cash flow from operations of 1.6 billion euros mainly reflects our EBIT adjusted, but before COVID-19 related charges. We paid the 3.6 billion euros penalty in Q1 2020. Our working capital excluding penalties has increased by 8.7 billion euros, mainly driven by inventory bills and the timing of cash receipts and payments. Into three, working capital includes a positive effect from inventory as we managed to reduce the number of aircraft that we could not deliver to around 135, offset by decrease in trade liabilities. Year to date, A400M continued to weigh on our free cash flow before M&A, but less so than in 2019. Nine months capex is around minus 1.2 billion euros, 0.3 billion lower versus 2019. This is driven by lower spending in Q3 2020 in line with our cash containment efforts. On a full year basis, we still expect CapEx to be around 1.9 billion euros. Free cash flow reported was minus 12.3 billion euros. Customer financing contributed approximately 42 million euros, while M&A activities accounted for half a billion euros, mainly related to the acquisition of Bombardier's remaining stake in ACLP for a cash outflow of $500 million, half a billion dollars in the first quarter. Now, I would like to give you a short update on our liquidity at the end of September. In addition to the measures we had taken in H1 to improve the long-term visibility of our financing, we issued a $0.7 billion U.S. bond in July. of which Euro 0.2 billion was partially terming out the initial 15 billion credit line, which now stands at 9.3 billion euros as of 30 September. Overall, our adaptation efforts allowed us to maintain our liquidity position in Q3, which now stands at 30.4 billion euros at the end of September. The strong liquidity will continue to support us in navigating the crisis and will position us for growth once the situation improves. In addition, we reduced our net debt position compared to the end of Q2 from 0.6 billion to 0.2 billion euros. Post Q3, we took additional steps to extend the maturities of our funding sources. In October, we successfully refinanced our 3 billion euros credit facility maturing in 2021 by securing a new one for a total of 6 billion euros with initial maturity of three years and two extension options of one year This allows us to further term out the remaining special COVID 9.3 billion credit line, which now stands at 6.3 billion euros. Now back to Guillaume.