Airbus SE (AIR) Earnings Call Transcript & Summary

Good day, everyone, and thanks for holding. You're connected to the Airbus half-year 2026 earnings release conference call. This is Laura, moderating today's conference. Just so you know, throughout the presentation all attendees will be able to listen only, and this call is being recorded. Once the presentation wraps up, there will be a chance for you to ask questions. Right now, I'd like to hand things over to Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.

Thanks, Laura, and a very warm welcome to everyone joining us today to dive into our half-year 2026 results. I'm in sunny Amsterdam alongside our CEO, Guillaume Faury, and our CFO, Thomas Toepfer, and they're here to break down the numbers and take your questions. This call is planned to last one hour including Q&A, and the replay plus transcript will be available on our website. Also on the Airbus website, you can already find today's presentation and the detailed financial statements. Before we start, let me remind you that we will be making some forward-looking statements. I encourage you to take a look at our safe harbor statements in our presentation slides. Please have a quick read. With that, let's get things started. Guillaume, the floor is yours.

Thank you, and good evening, ladies and gentlemen. As JC mentioned, Thomas and I are with you here in Amsterdam to walk you through the H1 2026 results. First, let me say how glad we were to see so many of you at the Farnborough Airshow and at our 2026 business update last week. Today we're back in our quarterly disclosure cycle, presenting the H1 results. But before that, I'd like to take a moment to share my thoughts with everyone affected by the devastating wildfires in Europe and in Canada as well. For our part, we're focused on doing what we can, keeping our helicopters, aircraft, and firefighting solutions in service so they can best help wherever they're needed most. Although the global landscape stays complex and fast-changing, we continue on a strong upward trajectory across our civil and defense businesses. To meet rising demand, our immediate focus is on steady execution and ramp-up. Our commercial aircraft deliveries in Q2 reached a record number of 237 aircraft. That brings H1 deliveries to 351 aircraft, versus 306 last year. I'm pleased with the progress made by Team Airbus and by the entire ecosystem.

We’re really where we set out to be, and that validates the path we’re on. You can see it straight in the numbers: adjusted EBIT came in at €2.7 billion, and free cash flow before customer financing was -€0.1 billion, after a strong inflow during the second quarter. Our guidance for 2026 stays as it was. Now let’s turn to the commercial environment, beginning with the commercial aircraft business. Passenger traffic has dipped a bit lately because of the Middle East conflict and higher oil prices, though the pace of the decline seems to be moderating. We’ve had no cancellations and no deferral requests, and demand for our aircraft is still strong. If we look at the longer-term path, the commercial momentum we saw at Farnborough highlights solid demand right across the product and services portfolio. In H1, we booked 886 gross orders. For the A220, we booked 178 gross orders, as we welcomed the landmark order from AirAsia for 150 A220s. That’s a very strong endorsement of the A220 by AirAsia. Turning to the A320 family, we booked 605 gross orders. That takes our A320 family backlog to 7,467 aircraft, of which approximately 75% are for the A321. Moving on to the widebodies, on the A330 we booked 37 gross orders, including the latest order from Scandinavian Airlines, SAS, for 18 A330s.

And last, on the A350, we recorded 66 gross orders. With the family still developing, the -1000 ULR — the ultra-long range, the longest-range aircraft in the world — just finished its maiden flight, and yesterday you witnessed that record-breaking Airbus flight lasting more than 24 hours, or to be exact, 24 hours and 24 minutes. In the meantime, the A350 Freighter stays fully on schedule for a first flight before this year ends. Net orders came to 821 aircraft, including 65 cancellations, which were mostly embedded in our backlog valuation at the full year. Our backlog in units was 9,222 aircraft as of the end of June this year. Turning to Helicopters, in H1 we booked 215 net orders versus 171 in the first half of 2025. At the ILA Berlin Air Show, Airbus Helicopters signed a contract with the Ministry of Internal Affairs of Romania under the European initiative SAFE, Security Action for Europe. That acquisition of 12 multirole helicopters comprises 7 H160s and 5 H145s. Earlier this year, two subsidiaries of the Vietnam Helicopter Corporation placed an order for three Airbus H225 helicopters, and that matters because it supports the continuing expansion of their oil and gas offshore operations with this helicopter.

All in all, we keep seeing solid momentum across every one of our platforms, in the civil market as well as the military one, and our attention remains entirely — entirely — on meeting expectations. Then, turning to Defence and Space, we keep witnessing quite powerful commercial momentum throughout all business lines there, with order intake hitting €9.3 billion during the first half. Within Air Power, several significant contracts spread across the portfolio are what drive commercial performance. In particular, we saw healthy traction around the C295, with six orders so far this year, four of them coming from Thailand. As for the A400M, seven NATO nations have kicked off a strategic initiative aimed at setting up a multinational A400M fleet. At the same time, Airbus is collaborating closely with the French Air Force and the French Sécurité Civile, bringing the A400M firefighting kit into deployment to help out amid the terrible wildfires currently affecting southwest France. Shifting to Space Systems, Airbus won selection to develop and build two sophisticated next-generation radar instruments for the Copernicus Sentinel-1 NG constellation, along with the Aeolus-2 wind-sensing satellite. Crucially, we keep nurturing partnerships and collaboration, particularly with European startups, so we can benefit from the greater speed and agility they bring to the defense sector. We are likewise pushing AI applications forward throughout the sector and past it, particularly via the recent partnership with Mistral AI.

That covers my part. Thomas is up next to walk everyone through the financials.

Yeah, thanks a lot, Guillaume, and good morning, everyone — welcome to the call. I'm on page six of the presentation now, and I'd like to walk you through how we performed financially. On the left-hand side, as you can see, revenues for H1 2026 rose to €33.2 billion — that's a 12% increase year on year — mainly reflecting more commercial aircraft deliveries and a bigger contribution from our Defence and Space division, partly offset by the weaker U.S. dollar in 2026 versus the first half of last year. Turning to R&D on the right-hand side, our expenses edged up slightly compared with H1 of last year, standing at €1.5 billion. Just to remind you, R&D expenses are expected to rise in 2026, including to support the defense portfolio acceleration. If you turn the page, we come to EBIT adjusted. Our H1 2026 EBIT adjusted grew to €2.7 billion from €2.2 billion in the first half of last year, and that rise reflects the higher commercial aircraft deliveries and a strong performance in Defence and Space, partly offset by a less favorable hedge rate. Let me now turn to the EBIT adjustments, which are on the right-hand side of the page and which were broadly neutral overall in the first half of this year.

So as you can see, those figures included a €124 million favorable effect stemming from the mismatch in dollar working capital along with balance sheet revaluation — driven mostly by the mechanical impact arising from the gap between the transaction date and the delivery date — and of that, €166 million was positive in the second quarter. Second, there was a negative €123 million tied to integrating the former Spirit AeroSystems work packages, with negative €91 million of that in Q2. Then, again, a positive €60 million connected to the Airbus Defence and Space workforce adaptation plan, under which we released a provision, and the plan itself is moving forward as intended; out of the provision released, €46 million related to Q2. And finally, negative €43 million in other costs, M&A included, of which negative €27 million fell in the second quarter. All of this brings our H1 2026 EBIT reported to €2.7 billion — nearly the same figure as EBIT adjusted. The financial result came in at positive €186 million and largely mirrors the revaluation of certain equity investments as well as the participations held in venture capital funds managed by Airbus Ventures, and those are partly offset by revaluation of financial instruments and by the movement of the U.S. dollar. The tax rate on the core business remains at around 27%.

For the half year, the effective tax rate comes in at approximately 26%, and that figure includes the tax impact from revaluing some equity investments, partly offset by the French surtax effect. Looking at 2026, we anticipate the French surtax will be broadly similar to 2025, which, as you remember, came to about €0.2 billion. Taking all of this together, net income works out to €2.2 billion, giving earnings per share of €2.84, and H1 2026 EPS adjusted came in at €2.61, calculated on an average of 789 million shares. Turning to page eight, let's look at our U.S. dollar exposure. During H1 2026, forwards totaling $11 billion reached maturity, and the related EBIT impact and euro conversions were realized at a blended rate of $1.21, compared with $1.18 in H1 2025. In the first half of 2026, we put in place $9.5 billion of new coverage spanning a 5-year horizon, using a mix of instruments that includes collars. The blended rate of $1.22 on this first half's additions mainly reflects the least favorable rate among our collars, which carry weight primarily toward the outer years of our hedging horizon. Consequently, our total U.S. dollar coverage portfolio, measured in U.S. dollars, is $74.3 billion at an average blended rate of $1.22, versus $75.8 billion at $1.22 at the close of 2025.

Turning to page nine, let's take a closer look at free cash flow. In the first half of this year, free cash flow before customer financing came in at -€1.2 billion, with the working capital change being the primary driver of that outflow. Of course, it notably mirrors the inventory build-up we planned in order to support ramp-up across all our businesses. As you can see, CapEx for H1 of this year was -€1.5 billion, and to back our ramp-up along with the successful integration of the former Spirit AeroSystems work packages, we anticipate CapEx will keep rising in 2026. Free cash flow was -€1 billion, which includes positive customer financing of €0.1 billion. As a general remark, a diverse and competitive financing landscape is what we continue to see in the first half of this year, and at present we expect liquidity to be sufficient in supporting our 2026 deliveries. With all of that, as the right-hand side of the chart shows, our net cash position was €8.4 billion as at the end of June, which also reflects the dividend payment and the acquisition of Unical, partly offset by the strengthening dollar environment. All in all, liquidity remains strong at above €30 billion.

With that said, I'd like to turn things back over to Guillaume.

Thank you. Moving on to the segment highlights, beginning with Commercial Aircraft: during the first half, as previously mentioned, we handed over 351 aircraft to 77 customers. I feel good about where we are as H1 closes, with a solid—perhaps even very strong—second quarter that let us bounce back from the weak deliveries in Q1. Looking at things by aircraft family, on the A220 we handed over 44 aircraft. The ramp-up continues, and our target remains a monthly production rate of 14 aircraft in 2028, so that is unchanged from what you already know. On the A320, we handed over 271 aircraft, including 167 A321s, which account for 62% of A320 family deliveries. The administrative hold-up that had an impact on deliveries of nearly 20 aircraft to Chinese customers is now resolved, those aircraft have been handed over, and the panel quality issue is mostly behind us, as we had anticipated. Our production rate path stays the same. Consequently, once again, there is no change for the A320. We anticipate hitting a rate of between 70 and 75 aircraft per month by the close of 2027, then stabilizing at rate 75. On widebodies, we handed over 36 aircraft, including 10 A330s and 26 A350s—that totals 36.

Regarding the A330, there's no change. We're aiming to hit rate 5 in 2029 so we can satisfy customer demand, and for the A350 there's no change either. We're still targeting rate 12 in 2028. The ramp-up rates we're targeting for our widebody programs remain the same, even though demand in the market is strong enough that it could justify going even higher. Now let's turn to the financials for our commercial aircraft business. Revenues rose 15% year on year, largely reflecting higher deliveries and increased services, and partly offset by depreciation of the U.S. dollar. EBIT adjusted climbed to €2 billion from €1.7 billion in H1 2025, thanks to the higher deliveries and partly offset, again, by a less favorable hedge rate. Turning to Helicopters, on the next page, in H1 2026 we delivered 144 helicopters, which is 6 more than in the first half of 2025. Revenues were broadly stable at €3.7 billion, reflecting a slightly less favorable delivery mix during the first six months. Consequently, EBIT adjusted came in at €240 million, reflecting a solid performance from programs, offset by higher R&D expenses. Let's wrap up our review with Defence and Space. Revenues grew 9% year on year to €6.3 billion, driven by higher volumes across all business units. That includes deliveries of three A400Ms in the first half, which is plus two compared to the first half of 2025.

That gave us an adjusted EBIT of €487 million, helped by cost phasing that worked in our favor, better profitability, and larger volumes. I should point out that performance across the year is somewhat weighted toward the front half, which is about managing expectations. Now to guidance, and that is unchanged. In setting its 2026 guidance, the company assumes there will be no further disruptions affecting global trade or the world economy, air traffic, the supply chain, its own internal operations, and its capacity to deliver products and services. The 2026 guidance for the company is before M&A and takes into account tariffs currently in force. On that basis, for 2026 the company is targeting roughly 870 commercial aircraft deliveries, an adjusted EBIT of approximately €7.5 billion, and free cash flow before customer financing of about €4.5 billion. We will finish with our key priorities, and those are unchanged since last quarter and since the Farnborough Airshow. We stay sharply focused on ramping up across every program, drawing on our strong portfolio to deliver for our commercial and military customers. The core pillars of Airbus that underpin our company will keep guiding us: safety, quality, integrity, compliance, and security. To me, that is paramount. Amid a complex geopolitical backdrop, we take strength from our global footprint and our multi-year, diverse backlog.

Momentum looks strong at present and going forward as we begin the stage we outlined during the business update, with a sharp emphasis on pushing our sustainability ambition ahead. Profitable growth will keep being delivered while we move our main priorities forward. With that positive note, I'll pass things to you, JC, to start the Q&A.

Thanks, Guillaume and Thomas. So that we can get through the Q&A efficiently, let me lay out a few ground rules. First, before you dive in, please introduce yourself and your company. Second, we ask that you limit yourself to two questions, which keeps things fair for everyone in the queue. Finally, a small favor for the speakers: please try to keep a steady pace and speak clearly. That really helps us and everyone listening in to fully capture your questions. Now, Laura, could you please explain the Q&A procedure for our participants?

Thanks. We’re moving into the Q&A portion now. To ask a question, press #5 on your phone’s keypad. Our first question comes from Ross Law at Morgan Stanley. Go ahead.

Good evening, and thank you so much for taking my questions. First, regarding the defense margin in Q2, which was very strong at above 10%: were there any one-offs included in that figure? You clearly noted that profit is somewhat front-loaded this year. Could you perhaps explain precisely what is driving that, along with your expectations for margins across the second half? Then, turning to commercial, I know you generally prefer not to discuss monthly production rates, but could you give us a broad sense of where things stand right now on the core A320 and A350 programs? It appears you might be at roughly 60 on the A320 and 6 on the A350. When should we expect the next rate break? Thank you.

I'll begin with the second question. As you correctly pointed out, commenting on monthly production rates isn't something I favor. I put more faith in at least quarterly production rates, and if possible yearly ones. We are on ramp-up trajectories. To my mind, that is what matters. The aircraft count we delivered during the first half of the year aligns very well with that trajectory. For several reasons I mentioned in my introduction, we were able to make up in Q2 for the deliveries missed in Q1, and from where I stand that is truly the important thing. Keep in mind that we are on the trajectory required for this year and for the mid-term target. Regarding defense margins, Thomas, is there any one-off? What is your view on the Q2 margin?

Ross, I figured you'd catch that. The way I'd put it is no, there isn't any particular one-time item in H1 or in Q2. But, as I've mentioned on many occasions, including at other times, you should never read too much into one quarter when it comes to the margin trajectory. In fact, I'd describe the first half for defense as a semester in which a lot of things simply lined up favorably. Take the A400M export, for instance. We intend to step up R&D, though that hasn't fully come through yet. The same holds for headcount. An increase will come, but it hasn't shown up much in the first half. I'd say it's simply a lot of factors converging that generated a very strong margin even without any, shall we say, accounting one-off. I think we shouldn't get ahead of ourselves. It doesn't signal that this margin will carry on into the second half of the year. Naturally, we see it as a good sign that we're on track toward the mid-term target we communicated for defense last week.

Thanks, that’s really helpful.

Our next question comes from Benjamin Heelan at Bank of America. The line is yours.

Evening, folks. Trust you're doing okay, both of you. Appreciate the question. So, the first one concerned the A400M. Guillaume, you brought up that announcement regarding the multinational force. Could you offer us some guidance and color on what that might potentially mean when it comes to orders? And then second, on Spirit, you've had that business for some time now. Can you give us an update? What are you seeing? How is that business doing? Where do you stand on the path toward driving the improvements there for the 350? Thanks.

Thanks, Ben. Yes, I can confirm we're both doing well, and I hope you are too. Regarding the A400M, yes, it's a strong validation of the A400M regarding Europe's airlift requirements. In fact, we're seeing solid momentum behind the A400M across several fronts, and that's what really counts for me. We're confident about the near-term and medium-term path for the A400M, and we're also getting positive feedback on the A400M wherever it's deployed in operations, and I was genuinely pleased with the initial operational feedback on using the A400M for firefighting missions. That's something we'd been aiming at and had been looking at for a few years now, but it's now been put to the test in real conditions. Good, strong momentum for the A400M. The multinational force is indeed a great opportunity for us. It mirrors the MRTT approach, where we have the same model, the same framework, and that brings considerable satisfaction to the European nations participating in the multinational force. I view it as a very strong potential use case for the A400M.

On Spirit, I'd note that we've owned that business since December 8th of last year. There haven't been any real major surprises, and that also means we're confirming the financial assessment of what it implies for 2026 and 2027 — specifically, a negative low triple-digit EBIT impact this year, but a high negative triple-digit impact when it comes to cash flow. Why is cash flow so much more negative? The reason is that we're front-loading the investments we need to make. Second, working capital is an issue. We want to build up some buffer stocks. We're paying our suppliers on time to stabilize the supply chain. Naturally, the integration costs also show up in the cash flow. Frankly, there's no change relative to the financial indication we gave you earlier this year at the full-year call. Another point I'd make: no change on integration either. It's progressing well — challenging in both key locations, of course — but I'd say it's in line with our ramp-up ambitions for the A350 and the 220, so there's nothing to report that's off-track regarding the ramp-up.

That’s very clear. Thanks.

Our next question comes from Milène Kerner at Barclays. Please go ahead.

Good evening, Guillaume, Thomas, and Jean-Christophe. I have two questions as well, please. First, on free cash flow: your guidance suggests roughly €5.7 billion of free cash flow during the second half of this year. A year ago, you brought in 6.2 on lower delivery volume, and inventories now sit almost €7 billion above where they stood at the end of December. If we set aside the Spirit impact, could you help us bridge what stands in the way of a bigger cash flow figure this year? My second question concerns FX and hedging. You said last year that you were seeking to optimize the hedging policy and possibly bring in more options. Even so, the $9.5 billion of new hedges added in H1 were once again locked in near $1.22 per euro. Can you tell us where that process stands and whether any shift in hedging strategy should be anticipated going forward? Thank you.

I believe both of those questions are for me.

Thomas, those are too tough for me, and I’d like to hear the response to the first one.

Regarding the first item, I believe my comment about EBIT for a single quarter holds true for cash flow as well. Cash flow, naturally, isn't always completely linear—we were quite happy with the positive €1.3 billion recorded in Q2, though I'd add that things aren't particularly stable. Given what we've delivered in the first half of the year, I'd say we're on track for the full year relative to guidance, but I'd also caution against getting ahead of ourselves. The inventory buffer matters a great deal since we need to account for the ramp-up not just for 2026, but beyond that we're aiming for a far smoother transition into 2027. Second, as you pointed out, Spirit, plenty of cash flow items still lie ahead of us. The figures we're observing, I'd say, align with the guidance for the company's full-year cash performance. On your second question about the hedging policy, it's true—we've mentioned that we also employ options. That's what I meant when I noted we've implemented collars within our hedging strategy as well. Those collars get reflected at the least favorable rate, which means using them doesn't automatically produce what you might call an optically better hedge rate across the portfolio we hold, because we report the most conservative figure to you—yet naturally they deliver the optionality that, should the dollar strengthen, we can exercise those collars at a more favorable rate.

Incidentally, that is something we’ve already been carrying out on a modest scale during the first half of this year, and it gives us confidence to raise—or to move further along that route and lift—the proportion of options, or collars, as you may refer to them, within our overall portfolio. Again, I believe the optics of the figure I gave you—the 1.22—perhaps do not entirely capture the optionality and the opportunity available to us here. At present, I’d say we are happy with what we are observing, and we will keep pursuing that hedging policy step by step, though with no fundamental change. I think that was your question as well.

Thanks, Thomas.

Thanks, Thomas.

Our next question is from Chloé Lemarié at Jefferies. Please go ahead.

Good evening, Guillaume, Thomas, and Jean-Christophe, and thanks for taking my question. My first one concerns the number of gliders. You said previously that you weren't building any more — I just want to confirm that's still true, and whether you had any in inventory at the close of the first half. My second question follows up on what Ben asked about Spirit. Could you perhaps narrow the range of that low three-digit million impact you cited for the full year, or at least tell us how it looked in H1 so far, please? Thank you. Thomas?

Regarding Spirit, no — I think I'd stop there, with the guidance we've given about the Spirit impact. So I don't think I'll add anything more on that. Guillaume, perhaps you could take the gliders question?

There aren't any gliders in the sense of airplanes sitting undelivered purely due to engines. Things are normalized for us now. We don't keep engine buffers, and we don't have engines from Pratt & Whitney sitting ahead of what we require, yet no aircraft is going undelivered for lack of an engine. There are a few other reasons we might not deliver an aircraft without engines, but I wouldn't label those gliders — meaning planes that are ready to go out the door yet held back because of engines. That really is an important point.

Perhaps just as a follow-up, should we assume that this is perhaps still tied to some panel issues that remain and that you're still working through, or could it be interiors?

Panels? No — the panel is behind us, if that’s what you’re asking.

That's very clear. Thanks.

The panel issue has been resolved — it's behind us, all right?

Yes, that's very clear.

Our following question is from Sam Burgess at Goldman Sachs. Sam, you have the floor.

Much appreciated. Good evening, Guillaume, Thomas, and Jean-Christophe, and many thanks for raising that. First, turning back to the A400M, is there any chance that more nations could come on board with that initiative? Is it largely a matter of shared service and support, or, picking up on what Ben mentioned, do you see appetite for incremental orders there? My second question is simply whether you can give any further color on the talks with Pratt and any update on how the 2027 and 2028 picture looks? Thanks.

On your second question, the brief answer is that I don't have a great deal to add beyond this: we expect to keep receiving from Pratt & Whitney, for 2026, 2027 and beyond, the engine count that has at last been settled and that forms the existing basis for the 2026 delivery guidance, in line with the mid-term targets we set out previously. There isn't anything very notable to report regarding Pratt, other than that negotiations over the dispute continue as it relates to the consequences of the downwardly revised figure for 2026 and 2027. Turning to the A400M, yes, it's true that additional countries could join the initiative for the multinational European force—the pooling and sharing arrangement. I'm not across the specifics of that; I understand it remains open to other nations, but it is already quite substantial. Yes, it's true that this aligns with the market dynamics we observe for the A400M. Progress is slow, yet it is heading in the right direction, with more customers placing orders for the A400M. That's something we'll gladly report as matters develop. As with military customers—not with civil customers either, but even less so with military ones—we don't comment before things become official from the customer's standpoint, because these are defense matters.

We've got solid momentum and real optimism about additional orders going forward, plus a very concrete multinational force — one that's actually already public.

That’s really helpful. Thanks so much.

Happy to.

Our next question is from Olivier Brochet with Rothschild & Co. Please go ahead.