Airbus Se Unsp/Adr

Ladies and gentlemen, thank you for standing by. Welcome to the Hairboost Final Year 2020 Results Release Conference Call. I am Clotilde, the operator for the conference. Please note that for the duration of the presentation, all participants will be on a 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 Faury, Dominique Assam, and Thorsten Fischer.

Thank you, Clotilde. Good morning, ladies and gentlemen. This is the Airbus full-year 2020 results release conference call. Guillaume Faury, our CEO, and Dominique Assam, our CFO, will be presenting our results and answering your questions. This call is planned to last around one hour and 30 minutes. This includes Q&A, which we will conduct after the initial presentations. 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 will be making forward-looking statements The package you received contains the safe harbor statement, which applies to this call as well. Please read it carefully. Now, over to Guillaume.

Thank you, Thorsten, and good morning, ladies and gentlemen. Welcome to our full year 2020 results call, and thank you for joining us today. Together with Dominique, we will take you through our financial results. Last year has proven to be a challenging one for Airbus, and the aerospace industry, and it was far from the initial expectations we had set for 2020. We had to react and adapt. Starting early in the year, we took measures to navigate the COVID-19 crisis. First, to protect the health and safety of people and was really challenging at the beginning. Then in March, we took steps to further bolster our liquidity and launched immediately cash containment measures. In April, we recalibrated our industrial system by reducing our rates by around 40%, I'm sure you remember. So 40% compared to our previous plans, which allowed us to converge production and deliveries in the second half of the year. We also started to resize our commercial aircraft activities to adapt our global workforce to the new environment and to address our long-term cost structure. Following those measures, we have been progressing towards an improved financial and industrial balance in the second half of 2020. In this quite adverse market environment, we worked hand in hand with our customers, and as a result of that collective effort, we delivered 566 aircraft in 2020, including around 150 aircraft for which we were using the so-called e-deliveries, one of the solutions we developed to help customers to take delivery of their aircraft. Our full year delivery number demonstrates the balancing of production and deliveries as the year progressed. This together with other measures taken early in the crisis is also reflected in our financial performance. Our full year 2020 EBIT adjusted was at 1.7 billion euros, including 1.1 billion euros of COVID-19 related charges, mainly booked in the first nine months. Our EBIT reported was at minus 0.5 billion euros, including a 1.2 billion euro restructuring provision. Our full year 2020 free cash flow before M&M customer financing was a negative €6.9 billion, including the payments of the penalties of €3.6 billion in the first quarter. In the fourth quarter, our free cash flow before M&M customer financing was a positive €4.9 billion, significant achievement as most of the risks which we saw waiting on the fourth quarter predominantly did not materialize. Our customers continue to honor the commitments we found with them throughout the year, and we delivered a solid number of 225 aircraft in the fourth quarter. We also benefited from the good free cash flow performance of our divisions, Airbus Helicopters and Defense and Space, which strongly added to the resilience of the group during 2020, the first year of this COVID-19 crisis. As a result, the net cash position by end of the year was 4.3 billion euros. EPS reported was minus 1.45 euro, and there will be no dividend proposed for 2020. Overall, our 2020 financial performance confirms that the set of measures we put in place has been effective and delivered an outcome in line with our expectations. Throughout the year, we have demonstrated our resilience together with our employees, our customers, our suppliers, our industry partners, and with the support of our governments. Today, as we have entered 2021, it's clear that the crisis is not over and that it will likely continue to be a reality throughout the year. Indeed, we can see progress on vaccination campaigns, but new variants of the virus are spreading. And at the same time, we see reinforced lockdowns maintain or even stricter travel restrictions in many regions of the world, and global traffic numbers at low levels. This demonstrates that we continue to operate in a complex, volatile, fast-changing environment, and we expect that this volatile situation will continue to impact our business, and it creates uncertainties. The path to recovery is not necessarily linear. Therefore, we have to remain humble and probably demonstrate our resilience again. In this complex and uncertain situation, we issue guidance for 2021, which aims to provide some visibility. Now let's turn to our commercial position. I would like to kick off on commercial with some comments on the developments that have occurred in the last days of 2020. First, on WTO, we continue to believe that the U.S. tariffs and the tariffs create a lose-lose situation. I believe the time is right to move towards a negotiated settlement. On Brexit, the potential disruption from a no-deal scenario has been avoided, and we are pleased to continue to work with our many stakeholders in the spirit of collaboration and long-term partnerships. Now let's look at the commercial aircraft environment in details. After global air traffic reached a low point in April last year, domestic travel started to recover slowly until after the summer, albeit at a very different pace between regions. The recovery came to a halt in the last quarter. International traffic remained weak throughout the year. Overall passenger air traffic measured in RTKs declined by 66% in 2020 versus 2019, according to IATA. With new virus variants emerging, many countries have further tightened travel restrictions. The latest IATA forecast also predict that there will be most likely no significant improvement in passenger volumes before Q3 2021. Airlines will continue to suffer. Most of them will continue to burn cash for most of the year, so we will continue to closely monitor their financial health. All in all, we believe that 2021 will be another challenging year for the industry. We continue to expect the market to recover between 2023 and 2025 on the 2019 numbers, with domestic and regional markets recovering first. International traffic, mostly operated by white bodies, will probably remain weak for longer and will not return to pre-COVID levels for some years. In January, we gave an update on production rates in response to the market environment. Production rates will remain lower for longer. On A320, production rates will gradually increase from 40 aircraft per month currently to 43 in the third quarter and 45 in the fourth quarter 2021, which represents a slower ramp-up than the previously anticipated 47 aircraft per month from July. On A220, rates will increase from four to five aircraft per month from the end of Q1 2021, and wide-body production is expected to remain stable at current levels. Now, let's look at our order and deliveries in 2020. We booked 383 gross orders in 2020, including 360 single aisle and 23 white bodies. Despite the magnitude of the crisis, we saw only 115 cancellations in 2020, but we need to carefully watch that trend going forward. Net orders at 268 aircraft, which include 141 A321, of which 37 XLRs. Our backlog in units remains above 7,000 planes. At group level, our backlog in value decreased to 373 billion euros in 2020. It means in value, only around 10% of the year-end 29 backlog we lost is related to the COVID-19 crisis. Now looking at helicopters. In 2020, we maintained our leading position in the civil and public market, despite the current environment. Over the past year, we booked 268 net orders, including 31 NH90s for the German Bundeswehr, recorded in Q4, and 11 H160 following the certification of this helicopter by EASA last July. Key services contract wins include a firm contract for the development of an upgraded version of the NH-90 for the French Special Forces and a support contract with NASA for its fleet of H-135 helicopters. In 2021, we see good momentum for campaigns in our home countries, especially in public services, while the commercial market will most likely remain soft. Finally, in defense and space, in 2020, our order intake increased to 11.9 billion euros. This represents a book to build above one and an increase of 39%, mainly driven by major contract wins in military aircraft. military aircraft business, we signed in November the contract to deliver 38 new Eurofighter aircraft to the German Air Force. The order from Germany also reinforces our position in current campaigns, such as in Spain, to replace its legacy F-18s, as well as in Switzerland and Finland. On FCAS, following the official signature of the Spain industry contract, three partner nations are progressing towards a formal cooperation agreement. The 18-month joint concept study and the phase 1A of the demonstrator portion are progressing too. The goal for 2021 is for FCAS to enter the preliminary demonstrator development phase for the next generation fighter and the remote carrier aircraft. With regards to Eurodrone, we further advanced on the negotiation with OCAR. We believe European defense budgets national and European, will support the path toward building European sovereignty, and Airbus has the ambition to play a major role in this endeavor. Space systems order intake growth was mainly driven by telecommunication satellites and Earth observation and science. In telecom satellites, we see an upturn after a low market in recent years, albeit in a very competitive market environment. As in recent years, the space market will continue to experience significant transformation in the near term, and in 2020 showed signs of recovery from a low market. So, now Dominique will take you through our financials. Dominique.