Airbus SE (AIR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Airbus 9-Month 2026 Earnings Release Conference Call. I'm Laura, the operator for this conference. Please note that for the duration of the presentation, all participants will be in 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 Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.

Thank you, Laura, and a very warm welcome to everyone joining us today to dive into our 9-Month 2026 results. I'm in Amsterdam alongside our CEO, Guillaume Faury, and our CFO, Thomas Toepfer, who are here to break down the numbers and take your questions. This call is planned to last 1 hour, including Q&A, and the replay plus transcript will be available on our website. Today's presentation and the detailed financial statements are already available on Airbus' website. Before we start, let me remind you that we will be making some forward-looking statements. I encourage you to take a look at the safe harbor statement in our presentation slides. It's important stuff, please have a quick read. With that, let's get things started. Guillaume, the floor is yours.

Thank you, JC, and good day, ladies and gentlemen. Hello, everyone. We appreciate your joining us today for the 9-Month 2026 earning call. Thomas and I, as JC mentioned, are in Amsterdam to walk you through our results. First, I want to offer my deepest sympathies to all those impacted by the terrible train accident in Spain earlier today. Our thoughts go out to the victims, their families, and the first responders handling the accident. It occurred on a line linking Madrid and Seville, two cities that are very dear to us here at Airbus. Turning ahead, the worldwide geopolitical and operating environment continues to be complex for Airbus and its customers, who are dealing with volatile jet fuel prices. Against that background, we keep our upward trajectory, pushing ahead with our civil and military ramp-up to deliver on our strong backlog. Turning to our divisions, defense momentum stays strong in Europe and globally. Our portfolio keeps demonstrating its essential role in ensuring sovereignty and security. In our commercial business, we delivered 196 aircraft in Q3, bringing our year-to-date deliveries to 547, up from 507 over the same period last year, 40 more. While achieving this, we are addressing two quality topics that I will detail later.

Once again, our delivery profile is weighted toward the back end. Right now, our teams are fully mobilized to make the year-end rally a success. Against that backdrop, EBIT adjusted came in at €4.5 billion, free cash flow before customer financing was -€1.3 billion, and our 2026 guidance is unchanged. Let's now turn to the commercial environment. Beginning with commercial aircraft, passenger traffic proved largely resilient despite the volatile backdrop, while air cargo continues its upward trend. We are still watching closely how the macroeconomic environment might affect air traffic and our customers. Our robust and diversified backlog underpins our own company's resilience. In 9-Month 2026, we booked 1,174 gross orders, comprising 182 A220s, 830 for the A320 Family, and 67 A330s. For the A350, we booked 95 gross orders, among them 34 A350 Freighters, which underpins our strong widebody order momentum. Net orders totaled 1,105 aircraft, including 69 cancellations, which were largely embedded in our backlog valuation at full-year 2025. Our backlog in units stood at 9,310 aircraft at the end of September 2026. Let me highlight the growth we anticipate for the services market, as outlined in our latest Global Services Forecast, which projects that market demand will double over the next 20 years.

Airbus offers a comprehensive set of services spanning the whole aircraft lifecycle, and our ambitions in that area are considerable. Turning to Helicopters, during the 9 months we recorded 311 net orders, versus 306 across the same 9 months of 2025. That order intake covers 10 of the so-called UH-72B, the Lakota helicopters, destined for the US Army to modernize its fleet, and those are derived from the widely successful H145. Regarding the H225M, Romania's government has signed a contract to procure 12 Airbus multi-role helicopters. That contract is the second one Romania and Airbus Helicopters have signed within the framework of the European Union SAFE initiative. Last, we marked the official launch of series production of the H140 in Germany — excellent, the H140 helicopter — with the first airframe successfully built on the newly set-up assembly line earlier this quarter. All in all, we keep seeing good momentum across both the civil and military markets and stay fully focused on delivering on expectations. Last, on Defence and Space, we continue to observe very strong order dynamics for the division, with order intake at €11.5 billion across all segments, €11.5 billion in the 9 months. That's very strong. In Q3, we secured strong wins in Space Systems, driven by the growing momentum towards European strategic autonomy.

One thing worth highlighting is that Eutelsat chose Airbus to construct another 229 OneWeb low Earth orbit satellites. Beyond that, it's encouraging to see IRIS² advancing as a European program, and our contribution will involve building platforms for no fewer than 66 LEO satellites. At this point, Thomas will walk you through the financials. Thomas?

Yes, thank you so much, Guillaume, and good morning, everyone. Welcome to this call. I'm currently on page 6 of the deck, and I'd be glad to walk you through how we performed financially. Let's begin with revenues, which appear on the left side of the chart. You'll note that our 9-Month 2026 revenues rose to €50.6 billion, an increase of 7% year-on-year. This primarily mirrors greater commercial aircraft deliveries along with a larger contribution from our Defence and Space division, though it was partly offset by the weaker US dollar relative to the 9 months of 2025. As shown on the right side of the chart, our R&D expenses kept rising as expected, in particular to back the acceleration of the defense portfolio, and R&D came to €2.3 billion at the end of September 2026. Moving to EBIT adjusted on the following page, our 9-Month 2026 EBIT adjusted grew 8% to €4.5 billion, up from €4.1 billion across the 9 months of 2025. This mirrors the greater commercial aircraft deliveries, a robust performance in Defence and Space, again partly offset by a less favorable hedge rate and the increased R&D expenses I mentioned earlier.

Turning now to the EBIT adjustments — they came in at plus €55 million for the 9 months of 2026, and you'll find them on the right-hand side of the page. That €55 million figure comprised a positive €270 million effect from the dollar working capital mismatch and balance sheet revaluation, largely reflecting the mechanical impact arising from the gap between transaction date and delivery date, with positive €146 million of that in Q3. Offsetting this was a negative €235 million tied to integrating the former Spirit AeroSystems work packages, negative €112 million of which fell in Q3. Then back to positive: €60 million connected with the Airbus Defence and Space workforce adaptation plan, unchanged since Q2. Last but not least, negative €40 million in other costs, including M&A, of which positive €3 million came in Q3. All of this brings our 9-Month 2026 EBIT reported to a positive €4.6 billion. The financial result, which you can see on the lower right-hand side of the page, was positive €155 million, mainly reflecting revaluation of certain equity investments and the participations held in the venture capital funds managed by Airbus Ventures. Those are partly offset by revaluation of financial instruments and by the evolution of the US dollar.

The tax rate for the core business is still hovering at about 27%. The effective tax rate, though, comes in near 25%, and that includes the non-taxable effect of revaluing some financial investments, partly offset by the impact of the French surtax. Looking ahead to 2026, we anticipate the French surtax will be roughly on par with 2025, which, as you may remember, came to about €0.2 billion. Net income as a result rose 36%, reaching €3.6 billion across the first 9 months of the year, which works out to earnings per share of €4.54, and our 9-Month 2026 adjusted EPS was €4.26, calculated on an average of 790 million shares. Let's move on now and examine our coverage of US dollar exposure. During the 9 months of 2026, $17.1 billion in forwards reached maturity, and the related EBIT impact and euro conversions were realized at a blended rate of $1.20, compared with $1.18 in the 9 months of 2025. Across the first 9 months of 2026, we put in place $15.7 billion of new coverage spanning a 5-year horizon, using a mix of instruments that includes collars. The blended rate of $1.21 on those additions reflects in particular the least favorable rate among our collars, which carry weight mainly toward the outer year of our hedging period.

So because of that, our total portfolio covered in US dollars comes to $74.4 billion, with an average blended rate of $1.22, compared with $75.8 billion at a blended rate of $1.22 at the close of 2025. Now let's turn to the next page for a closer look at free cash flow. Free cash flow before customer financing came in at -€1.3 billion across the 9 months of 2026, and that outflow was primarily driven by the working capital change. As you'll remember, this notably mirrors the inventory buildup tied to our back-end loaded delivery profile, along with the planned ramp-up in support of our businesses. CapEx for 9-Month 2026 was €2.4 billion, and to support our ramp-up and the successful integration of the former Spirit AeroSystems work packages, we expect CapEx to keep rising in 2026, as mentioned earlier, no change. Free cash flow was -€1.1 billion, including customer financing of positive €0.2 billion, and across the 9 months of 2026 we continue to see a diverse and competitive financing landscape, and at present we expect sufficient liquidity to support our 2026 deliveries. Overall, as you can see on the right-hand side of the page, our net cash position was €7 billion as at the end of September, which also reflects the dividend payment and the acquisition of Uniha, slightly offset by the strengthening US dollar environment, and of course, our liquidity stayed strong at around €30 billion.

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

Thanks, Thomas. Let's begin with commercial aircraft. During the 9-Month 2026, we handed over 547 aircraft to 84 customers — that's 40 more aircraft than in the comparable period a year earlier — comprising 68 A220s, 428 A320 Family aircraft, and 51 widebodies. Our targeted production rates remain unchanged, and we keep pushing the ramp-up forward. Both of our second A320 Family FALs, in the US and in China, are delivering now, and we just inaugurated a new delivery center in Toulouse, which are key milestones as we develop our global footprint. Regarding the A350 Freighter, I'd like to underscore once more the successful completion of its maiden flight, taking us one major step closer to handing this game-changing aircraft over to the air cargo market. That marks the beginning of the flight test campaign ahead of entry into service in the second half of 2027, so no change there. On engines, the picture is also largely the same. For the A320 Family, Pratt & Whitney engines are still the main so-called pacing item for the ramp-up, but we expect to get what we need in order to reach our 2026 objectives. On Spirit, nearly a year after acquiring the former Spirit AeroSystems work packages, integration is still challenging, but our teams are on it.

I also want to bring you up to speed on a couple of quality matters. First, regarding the A321: we found a deviation in surface protection on a particular stringer, and that is creating a near-term effect on the timing of our operational flow — so, my apologies, it's on specific stringers, not merely one, but a series of stringers. The problem has been contained, a fix exists, and every stringer that has been newly coated meets the requirements. We are delivering the aircraft concerned. This is not a safety matter, and the in-service fleet keeps flying. A second quality matter I'd like to brief you on affects the A330. We have examined all aircraft in production after a finding in a horizontal tail plane. We acted right away, we strengthened our controls, and every aircraft now leaving production has been inspected and is deliverable. On the whole, we keep producing according to plan, and our commercial ramp-up is continuing. Now let's turn to the financials for the commercial aircraft business. Revenues were up 8% year-on-year, chiefly reflecting the higher deliveries and increased services, partly offset by the weaker US dollar. EBIT adjusted rose to €3.4 billion from €3.3 billion in the 9 months of 2025, driven by the higher deliveries, partly offset by higher R&D and a less favorable hedge rate.

Turning to Helicopters, we handed over 226 rotorcraft during the 9 months, which is 8 more than in the 9-Month 2025. Revenue was essentially flat at €5.6 billion, while EBIT adjusted came in at €445 million, and both numbers reflect a delivery mix that was less favorable. Let's wrap up our review with Defence and Space. Revenue rose 5% year-on-year to €9.3 billion, powered by greater volumes across every business unit. Those volumes, together with improved overall profitability, produced an EBIT adjusted of €672 million. On R&D, the operational ramp-up is still proceeding gradually. The Q3 increase partly reflects a one-off catch-up effect. Now turning to our 2026 guidance, which remains unchanged, the company assumes no further disruptions to global trade or the world economy, air traffic, the supply chain, its internal operations, and ability to deliver products and services. The company's 2026 guidance is before M&A and includes the impact of currently applicable tariffs. On that basis, the company targets in 2026 around 870 commercial aircraft deliveries, an EBIT adjusted of around €7.5 billion, and a free cash flow before customer financing of around €4.5 billion. With that — and this is the last slide — we will close with our key priorities. Before I hand over to you for the Q&A, let me summarize what is driving Team Airbus as we head into the final stretch of the year.

In every one of our businesses, what we're focused on is meeting the strong demand and expectations of our customers, and safety and quality sit at the heart of everything we do. In these complex and, as I put it, fast-changing environments, our priorities are clear, and our teams are fully mobilized to meet our objectives. With that, I guess Thomas and I are now ready for your questions. To do that, I'll hand things over to JC. JC, the floor is yours.

Thanks, Guillaume, and thanks, Thomas. So we can get through the Q&A efficiently, let me lay out a few guidelines. First, before you dive in, please introduce yourself and your company. Second, we ask that you limit yourself to two questions so everyone has a chance to ask one. Finally, please try to keep a steady pace and speak clearly. With that, Laura, could you please explain the Q&A procedure for participants?

Thanks. At this point we'll open it up for questions. To ask one, hit #5 on your phone's keypad. Our first question comes from Ross Law at Morgan Stanley. Go ahead, please.

Good evening, and thank you so much for taking my questions. My first one concerns the supply chain and where the bottlenecks currently sit. You said engines are broadly tracking to plan, but where seats are concerned, Safran last week flagged a risk of delivery delays running from the end of this year into 2027. I'd be interested to know whether that could affect your ability to meet this year's guide, or whether that risk is already embedded in your planning assumptions. My second question is about the buyback. You announced a €5 billion buyback back in July, with an ambition to start it in the second half. It would be great to hear your updated thoughts on the timing of the launch here, given your confidence in full-year guidance and the fact that the stock has pulled back ever since the summer. Thanks.

Yes, thank you so much for those questions. I'll address the first one, and then pass things to Thomas for the share buyback question. On the risks and bottlenecks, those are in fact incorporated into the delivery guidance we have reaffirmed. Within the supply chain, we called out the engines, since they truly are the pacing item—the one generating the greatest tension on the A320 Family. As for the others, we keep confronting a difficult situation with the former Spirit AeroSystems work packages, as you recall, and it remains the case that section 15 for the A350 sits on the critical path, but once again, all of that is incorporated in the year-end outlook, and we believe we have what we need to keep ramping at the pace we previously highlighted toward the production rates provided for the 220, 320, 330, and 350. Nothing new on that front at this moment, and with that, I'll hand over to you for the share buyback question, Thomas.

Right. Like you mentioned, we announced the share buyback at the air show this summer, and we stated that the ambition was to begin it in the second half of this year. Naturally, I don't want to get ahead of any potential official announcement about the share buyback, but what I can say is that our view hasn't changed at all. The ambition remains the same, so we see no reason to depart from that. Once more, I don't want to get ahead of things or jump to anything that would come across as an official announcement. Stay tuned, and again, our ambition is unchanged.

Much appreciated. Our following question is from Benjamin Heelan with Bank of America. You have the floor.

Yeah, good evening, everyone. Hope you're all doing okay. So, first question, Guillaume — you seem to be coming across as more negative when it comes to Spirit. Did something happen? Could you give us a bit of an update on that? And second, where do things stand in your talks with Pratt regarding engine deliveries for next year? Thanks.

Hi, Ben. Thanks. We're doing fine, and I hope things are going well for you too. Honestly, whether you look at Spirit or Pratt, the situation hasn't shifted. Spirit was a tough integration and it still is, and it's quite complex — I'm not sure whether I come across as more negative than I did previously, but when we went into this acquisition, we understood we were taking on demanding work packages. Section 15 sits on the critical path of the 350, and that's still true. With Pratt, again no change. We keep working off the same assumptions. There's nothing positive or negative I can report on that call. We believe we have what's needed for 2026, and for 2027 the figures remain the same. Our ramp-up assumptions still rest on the same engine count from the two manufacturers, Pratt included, for next year. In essence, the substance is unchanged.

Our following question comes from Chloé Lemarié at Jefferies. Chloé, you have the floor.

Yes, good evening, Guillaume, Thomas, and JC. Thanks for taking my question. My first one is about the A321 and the stringers issue. That still appears to be something of a pacing item. Could you perhaps tell us how many aircraft are currently being held back because of this problem? My second question concerns Project Bromo. From your viewpoint, could you give an update on the timeline, any pacing item, and any of the proposed remedies that have been submitted to the authorities? Thank you.

I appreciate the questions. The second one I'll hand over to Thomas. Regarding the stringers, as I mentioned, what it does is alter the timing and how quickly we execute over the near term. From a technical standpoint, it won't cause any aircraft to go undelivered this year. That's our current expectation, and it's the most I can tell you. It's an operational challenge that we're working through. It creates extra work and will impose additional constraints on the aircraft's life that we're handling together with customers, but as far as the 2026 deliveries go, I don't anticipate any impact, or any significant impact, on them.

Let me perhaps say a few words about Bromo. I'd also say there's no fundamental change here. Let me remind you of what's on our plate for 2026 and what lies ahead of us going into 2027. For 2026, we essentially have three major tasks to complete. One is the discussion with the antitrust authorities. Those talks are constructive, but they haven't been concluded yet. I'll come back to that in a moment. Second, we have negotiations with our social partners. There, we've broadly wrapped up the negotiations, so we're well on track on that front, which obviously is largely within our own control. Number three, as we've always said, 2026 will be marked by some heavy work on carve-out, specifically for Airbus, because the assets we want to contribute into Bromo are spread across several legal entities, so there's quite a bit of carve-out work to be done. That is also progressing according to plan. Having said that, what we don't fully control when it comes to timing is obviously the antitrust process. As I said, it's constructive. We're responding to all the requests coming to us out of Brussels, but it hasn't been concluded yet. So I would say our ambition is completely unchanged.

Our ideal goal is to reach a signed definitive agreement during 2026, and that signing would serve as the prerequisite for completing the deal in 2027. Once more, not all of it lies entirely within our hands, yet we stay optimistic about this transaction.

Sam Burgess from Goldman Sachs has the next question. Go right ahead.

Good afternoon, Guillaume, Thomas, and JC. It's nice to be on the call. My first question goes back to the stringer matter. Could I just verify whether that rework is taking place after the final assembly line? So perhaps the way to think about it is that it's creating some delay in deliveries, yet it isn't affecting the underlying production? Then, just regarding Spirit integration costs, I believe you've now recorded roughly €235 million of one-off charges through 9 months, as you said earlier on the call, Thomas, but that quarterly increase has stepped up quite a bit. Could you give us your expectation for the full-year cost here, and perhaps the trajectory of those one-off charges into 2027? Thanks.

So for the stringers, once the problem was pinpointed, we had component parts, MCAs in production, we had aircraft in the FAL, in the final assembly line process, and we also had aircraft that had already been delivered. I don't have the count of aircraft or items in each of those different categories, but basically, it's not a safety issue for aircraft in service, and this has to be handled through the way maintenance will be carried out going forward. There's work underway and discussion with customers about how to deal with this. I don't think it's really critical, but it needs to be managed. For aircraft that are in the production process at different stages of production, we are correcting the topic, and aircraft continue to be delivered. It takes time, it has had a short-term impact as we had to understand the situation, to do the investigation, to understand the criticality, and then find the appropriate measures. As I said earlier, we took the appropriate measures, we correct the situation, and aircraft will be delivered. When it comes to the full-year 2026 deliveries, we don't expect impact on the deliveries, or at least not that I know, and in any case, not significant impact.