(Bloomberg) -- Airbus SE's (PA:AIR) second-quarter profit doubled as the company accelerated deliveries of its best-selling single-aisle jetliner following delays at the model’s two engine providers.
Adjusted earnings before interest and tax increased to 1.15 billion euros ($1.35 billion) from a restated 572 million euros a year earlier, Toulouse, France-based Airbus said in a statement Thursday. Analysts had estimated a figure of 1.05 billion euros, based on six estimates compiled by Bloomberg.
Customer payments for the re-engined A320neo family of planes had been held up by a three-month halt in handovers of Pratt & Whitney-powered jets, which have been dogged by a series of glitches, and manufacturing issues concerning aircraft with turbines from General Electric (NYSE:GE) Co.-led CFM. Airbus has since made headway in reducing the number of planes parked outside its plants from a May peak, with 110 Neos delivered in the first half out of 239 in total.
Chief Executive Officer Tom Enders, who plans to stand down next year, said that while Neo deliveries surpassed those for the original A320 model in the second quarter, meeting a target of 800 handovers across Airbus’s full aircraft lineup for 2018 as a whole remains challenging.
Cost-Split
“Our operational focus in commercial aircraft remains squarely on securing the production ramp-up,” he said. Airbus is also assessing how to split additional costs from parked narrow-bodies with both engine suppliers.
The A350 wide-body program has shown strong progress, according to the CEO, with the “cost curve” improving as output is increased to 10 planes a month by the year’s end. Combined with higher asking prices as the jet exits its launch phase, when more bargains are on offer, that helped account for the bulk of earnings improvements in the first half, though Enders said it’s still too early to decide on further production ramp-ups.
Airbus confirmed plans to lift adjusted Ebit by about 20 percent to 5.2 billion euros this year before the integration of the new A220 plane acquired from Bombardier Inc. It also still expects free cash flow before disposals and acquisitions of approximately 3 billion euros.
Demand for Airbus’s planes remains strong, the company said, with more than 430 orders and commitments worth in excess of $62 billion booked last week at the Farnborough air show in England, the year’s biggest industry expo.
The company booked a 98 million-euro provision against price escalation on the delayed A400M military transport program, together with costs of 21 million euros from its H160 helicopter and 40 million euros in compliance and merger expenses. At the same time it had a 157 million-euro gain from the sale of assets in its defense and space division.
The CEO clarified comments published at the weekend on a possible combination of Airbus’s military aircraft assets with those of BAE Systems (LON:BAES) Plc, saying he “was not suggesting” an outright merger of the businesses but that their parallel next-generation fighter programs should “converge.”
(Updates with comments from CEO conference call.)