roughly stable (at 1.39 $ vs. €)
|Airbus deliveries||around 490|
|Airbus gross orders||up to 300|
|EBIT* before one-off||around € 2 billion|
|Free Cash Flow after customer financing||minus € 1 billion (excluding A400M)|
As in many industries, the macro-economic environment, which includes the recent oil price increases, has impacted the financials of EADS’ commercial customers. The deterioration creates a risk on the commercial delivery outlook. Nevertheless, the Group is cautiously envisaging an improvement of the economic and market conditions in the next months.
Looking ahead to 2010, the Group is still cautiously monitoring its production rates in a soft market environment. Delivery of Power8 savings, a better aircraft pricing level and further progress in space and defence will be challenged by deterioration of hedge rates and uncertainties surrounding the A380 and if unresolved in 2009 the A400M.
October 2009 figures further confirm the bottoming out of the cycle for freight and passenger traffic, notably in emerging economies. Worldwide passenger traffic has increased for the first time since November 2008.
From an economic standpoint, the continuous weakening of the dollar – although not an immediate threat in the short term thanks to the Group’s long-term hedging policy and cost-cutting initiatives – is challenging EADS’ performance because of a weakening hedge book over time. The long-term dollar level is an important driver for EADS’ earnings power over the coming years.
In a challenging market, EADS maintains its estimate for a new gross orders figure of up to 300 aircraft in 2009. Production rates remain stable. 2009 deliveries are expected to be around 490 aircraft. For 2010, EADS is still working with its customers to establish a total delivery outlook including the A380 programme. Using €1 = $1.39 (used in the previous guidance) as the average spot rate, EADS 2009 revenues should be roughly in line with the 2008 level. However, further deterioration of exchange rates in the fourth quarter could lead to slightly lower Group revenues.
Due to ongoing uncertainties on the magnitude of the potential A400M and A380 charges in the fourth quarter, EADS is not able to give a guidance for EBIT* for the full year. Under a continuation scenario, which is deemed the most probable, the A400M provision for which €2.4 billion in charges have already been accrued has a wide range of possible outcomes depending on the negotiation process and could substantially alter the financial statements of EADS in the future.
EBIT* before one-off for full-year 2009 should amount to around €2 billion. In a difficult environment, the Group’s Cash Flow management continues to deliver better results than expected with a cash-flow consumption now expected to be less than €1 billion (excluding A400M) including lower customer financing needs than anticipated.
* EADS uses EBIT pre-goodwill impairment and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to income or expenses of a non-recurring nature, such as amortization expenses of fair value adjustments relating to the EADS merger, the formation of Airbus S.A.S. and the formation of MBDA, and impairment charges.