Airbus earnings soar on the back of Boeing woes

Airbus earnings surged in the first quarter as the European planemaker churned out higher numbers of its A320 narrow-body jet, which is the biggest global rival to Boeing’s grounded 737-Max.

Airbus delivered 126 A320s, a model that appears to have overcome a run of engine manufacturing faults just as the 737 faces questions about its future after two fatal crashes in five months.

Adjusted earnings before interest and tax jumped almost 40-fold to €549m, providing a solid starting point for chief executive Guillaume Faury, who took over from long-time head Tom Enders last month.

While some 737-Max operators have indicated that they will consider a switch to Airbus’ latest A320neo, the Toulouse-based company has said it isn’t banking on a flurry of new orders, partly because its narrow-body production capacity is sold out over the next few years.

Mr Faury said he expects that the crisis at Boeing will be “temporary”.

Still, the commercial aircraft market is robust and Airbus is evaluating its ability to lift A320 production capacity, he said, reiterating a target for 880 to 890 jetliner deliveries across the lineup in 2019.

Airbus shares traded 0.9% lower, giving a market value of €94bn. The stock has surged 45% this year, outstripping Boeing, where gains have been limited to 18% as it battles to return the Max to service.

Mr Faury said he wants to smooth out production to avoid having deliveries back-loaded to the fourth quarter, as has been the case in recent years.

That led him to rein in ambitions to lift A320 output to 70 or more planes a month from the 60 planned this year while ordering a review to establish what rate the supply-chain could handle.

Airbus is still facing problems ramping up deliveries of the A321, its biggest narrow-body, amid issues with the highly customised cabin.

It also handed over just three A330neo wide-bodies after turbine supplier Rolls-Royce was hit with production delays, out of an overall total of 162 aircraft.

The company said talks are progressing on amended contracts for its A400M military transport plane, with a resolution expected by the middle of the year.

- Bloomberg