Airbus SE (AIR) Earnings Call Transcript & Summary

Thanks, Kai. Good morning, everyone. This is the conference call for Airbus's H1 2020 results release. Guillaume Faury, our CEO, and Dominik Asam, our CFO, will present our results and take your questions. We expect this call to run about one hour and 15 minutes. That includes Q&A, which we'll hold after the initial presentation. There's also a webcast of this call. You can reach it through our homepage, where a special banner has been set up. A playback of this call will be available on the website, though there's no dedicated phone replay service. The supporting information package was emailed to you earlier this morning. It contains the slides, which we'll now take you through, along with the financial statements. During this call, we will be making forward-looking statements. The package you received includes the safe harbor statement, which applies to this call as well. Please read it carefully. Now, over to Guillaume.

Thanks, Thorsten. Good morning, everybody. Welcome to our H1 2020 results, and I appreciate you being with us today. As you know, COVID-19 set off a situation for the aerospace industry that was unexpected and without precedent, and given how large it was, we had to move quickly to put an adaptation plan in place so our business could be adjusted to the new commercial aircraft environment. The most recent view of the commercial aircraft business lines up with the commercial aircraft rate that Airbus set in April. There could still be small tweaks. Our visibility is improving for the short term and for 2020 and 2021. As we see things today, we think we have established the right calibration point — one that fits the new environment, or at least our current understanding of it. Our industrial system, our entire supply chain included, has adapted to the new levels, and our output follows the new production plan. That gives me confidence in our ability to adapt further should the situation change. In fact, we launched a broad set of cash containment measures. We adjusted incoming supply so we could manage working capital. We made use of the partial unemployment schemes available to flex our workforce. We went through our R&D roadmap and other fixed costs, and we reduced 2020 CapEx while still safeguarding key projects such as the A321XLR and our DDMS project — the ones that matter for preparing the future.

We're also tackling our cost base for the long haul. Plans have been announced to adapt the global workforce and resize the commercial aircraft activity. That adaptation should lead to roughly 15,000 active workforce positions being cut no later than summer next year, summer 2021. We're cooperating with our social partners to contain the social impact within this broader picture of enormous strain on economies. The full set of available measures will be relied upon, while preserving our skills, competencies, and know-how to the greatest extent possible, so that we're ready to satisfy customer demand once the market recovers, since we believe a recovery will come. Our H1 financials show the COVID-19 effect flowing through in the second quarter, offset by our adaptation measures. In Q2, 74 aircraft were delivered, a touch better than what I expected upon entering the crisis at the end of Q1. H1 EBIT adjusted stood at -EUR 0.9 billion, pushed by commercial aircraft deliveries that came in 193 aircraft below the prior year. About half of the first-half 2019 level. EBIT adjusted also takes in EUR 0.9 billion of COVID-19-related charges, which aren't presented as adjustments. Free cash flow before M&A and customer financing sits at EUR 12.4 billion, including -EUR 4.4 billion in Q2.

In Q2, free cash flow before M&A and customer financing came to -EUR 4.4 billion. Excluding the fine under the deferred prosecution agreement, our Q1 free cash flow was likewise -EUR 4.4 billion — which shows that despite just 74 deliveries in Q2, the steps we've taken to keep cash under control, among them adjusting incoming supply, already produced results during Q2. Those results are partly offset by weaker cash flow stemming from the small number of deliveries in the quarter — the 74 I mentioned earlier. The solid liquidity we have accumulated will carry us through our continuing efforts. It will also let us respond should fresh challenges arise, and we are safeguarding our capacity to invest, innovate, grow, and perform again after the crisis, so that we can get back to normal operations from a position of strength once conditions improve again. Before we turn to the commercial aircraft environment, let me return to the WTO dispute. We recently reached agreement with the French and Spanish governments on amendments to the A350 RLI — the Repayable Launch Investment contract — so that it reflects the interest rates and risk assessment benchmarks the WTO deems appropriate.

By completing this last step, Airbus believes it is now fully in line with every WTO ruling — there is no doubt about that. As I see it, that eliminates any basis for U.S. tariffs going forward. Now, turning to the commercial aircraft environment in more detail. The most recent world economic outlook forecasts global GDP growth of -4.5%, so nearly -5%. Sorry, -4.9%, so nearly -5% in 2020. The latest IATA data indicate that RPKs in June stood at 13.5% compared with a year earlier. Domestic travel came in at roughly 32%, with China recovering and reaching around 65%, while international air traffic was at approximately 3% versus June 2019. That was a very low level for us. Airlines are still in a tough position, and there are as many situations as there are customers. The range of situations is wide. They have been re-examining their fleet plans, and we have worked closely alongside them to reach mutually acceptable agreements and to settle on a new delivery profile, airline by airline, which provides visibility both to the customers and to us by setting out a new path forward. Our assessment is that air traffic will return to its 2019 level at some point between 2023 and 2025. The single-aisle market should lead the recovery, while we think wide-body will take longer.

Given where the market stands right now, we've made a small reduction to A350 production — from 6 down to 5 each month, for the time being. From the conversations I've had with customers — and there are a lot of them — it seems they're operating our aircraft more heavily than competing models through this crisis, and they keep telling me our product line is the right fit for the world after COVID-19. Last, I want to express appreciation to our ECAs, EDC among them, for standing by us continuously, and we anticipate that ECA financing will grow. Turning now to H1 orders. During H1, we logged 365 gross orders, with leasing companies accounting for much of that. In Q2 — despite it being aviation's worst quarter ever — net orders came in roughly flat, in fact +8 aircraft. As of H1, net orders total 298 aircraft, so nearly 300 aircraft, and our backlog stays high at 7,584 aircraft. Cancellations came to 67, and just 1 of those fell in the second quarter. Now to helicopters. For H1 2020, net orders reached 75, compared with 123 during H1 2019. Q2 brought some solid orders, among them 3 five-bladed H145 — the product certified in June. It's a new and very powerful product. We also booked 1 Super Puma and 4 H135 for the Japan National Police Agency in Q2, plus 1 H160, in its corporate version.

The 160 has also been certified recently, meaning we just recently certified two very important products for the future of Airbus Helicopters. Regarding the market, we expect the civil and parapublic segment to stay soft in 2020, particularly in oil and gas, given persisting lower oil prices and pressure on that segment. The support plan announced by the French government in June includes these future order commitments: eight H225M for the French Air Force, 10 H160 for Gendarmerie Nationale, and two H145 for Sécurité Civile, and also the second demonstrator of the military drone that we developed for the French Navy. In Defence and Space, our order intake came in at EUR 5.6 billion. That's 32% more versus last year. This includes the contract for the development, supply, and integration of 115 Eurofighter ESCAN radars for the German and Spanish Eurofighter fleets. The contract to upgrade the training capabilities of the German Eurofighter pilots and the contract renewal to support the A400M French Air Force training center in Orléans. We continue to see opportunities in the field of Defence with our European governments. Europe feels the need to prepare for the sovereignty of the future, which includes the air and space power to protect its territory from the skies.

Airbus is going to be a big part of that, thanks to our footprint and size in Europe, along with our technologies and products. Dominik will walk you through our H1 financials. Dominik, the floor is yours.

Thanks, Guillaume, and good morning, everyone. I trust you're doing well and staying safe. The H1 financials make plain the effect tied directly to COVID-19. Revenue fell to EUR 18.9 billion, a 39% decline year-on-year, pushed by the tough market conditions hitting our commercial aircraft business, since we handed over roughly 50% fewer aircraft year-on-year. That was partly offset by the stronger U.S. dollar. Our H1 EBIT adjusted came in at -EUR 0.9 billion, mirroring the reduced commercial aircraft deliveries along with certain idle costs. We've carried out the steps needed to reshape our cost base for the new production levels, and those benefits are showing up as we roll out our plan. H1 EBIT adjusted also captures charges booked for impairments and write-offs after a thorough balance sheet review prompted by COVID-19. Our H1 earnings per share adjusted show a loss of EUR 1.01 per share, on an average of 783 million shares. Our H1 free cash flow before M&A and customer financing stood at -EUR 12.4 billion, including -EUR 4.4 billion in Q2. As Guillaume noted, our Q2 free cash flow mirrors the weaker cash generation from the unusually low delivery count, partly offset by our cash containment efforts.

Assuming nothing unexpected happens with COVID-19 and no new travel restrictions come into play, our goal is to avoid burning cash before M&A and customer financing during the second half of the year. Moving to the page that has further specifics about our profitability. For H1 2020, reported EBIT came in at -EUR 1.6 billion. EBIT adjustments amounted to -EUR 614 million in total, and that figure included -EUR 332 million tied to A380 program cost, with -EUR 299 million of that recorded in Q2. There was a -EUR 165 million impact from foreign exchange and balance sheet revaluation, of which -EUR 31 million fell in Q2. Other costs, including compliance costs, came to -EUR 117 million, of which -EUR 82 million were in Q2. Reported earnings per share include -EUR 429 million of financial results. That mainly reflects a net EUR 212 million negative tied to Dassault Aviation, along with the impairment of a loan to OneWeb booked in Q1 amounting to -EUR 136 million. The tax rate on the core business stands at around 27%. On net loss, the effective tax rate is 3%, affected by impairments in certain tax jurisdictions and on certain investments. The net loss that results is -EUR 1,919,000,000. Reported loss per share was -EUR 2.45.

When it comes to COVID-19, discussions with our social partners are moving forward. We expect a restructuring provision to be recognized once the necessary conditions are met. That amount should fall between EUR 1.2 billion and EUR 1.6 billion. Turning now to hedging. Our total U.S. dollar hedging portfolio is $87.8 billion, at an average hedge rate of 123. During H1 2020, we put in place EUR 2.4 billion of forwards, including EUR 2.1 billion in Q1. EUR 7 billion of hedges matured in H1 at a rate of 118, with the associated EBIT impact, and a further EUR 2.9 billion of Q2 hedges will be rolled in Q3. Beyond that, EUR 1.8 billion of hedges were disqualified in H1, with maturity dates mostly from 2022 and beyond, producing a negative impact on financial result of roughly EUR 0.1 billion. In Q2, we rolled $3.3 billion of hedges, mainly from Q2 to Q4 of 2020. To align our portfolio with the new delivery profile, we have been rolling existing hedges to deferred delivery dates while limiting the short-term impact on cash, and we did so in July as well. Let's now turn to how our cash evolved in the first half of 2020.

Cash generated by our operations on a gross basis came to EUR 0.3 billion, which is largely a reflection of our adjusted EBIT. During Q1 2020, we made the penalty payment of EUR 3.6 billion. Working capital, once penalties are excluded, rose by EUR 8.3 billion, and the main drivers there were inventory build as well as a reduction in trade liabilities. That mirrors lower incoming supply and work in progress during Q2, along with a higher count of stored aircraft as we transitioned toward the new production rates. Inventory at the close of June contains roughly 145 aircraft we were unable to deliver. Our goal is for production and deliveries to converge in Q3. Positive phasing impacts are benefiting PDPs. A400M kept dragging on our free cash flow before M&A, though to a lesser degree than in 2019. Capital expenditures, at approximately EUR 0.9 billion, held steady compared with H1 2019. For the full year, we continue to anticipate CapEx of about EUR 1.9 billion. Reported free cash flow stood at -EUR 12.9 billion. Customer financing in fact added roughly +EUR 67 million, while M&A activities came in at -EUR 0.5 billion, chiefly tied to the purchase of Bombardier's remaining stake in ACLP for approximately $0.5 billion. Now let's turn to our liquidity position at the end of June.

Just to remind everyone, back in early March we obtained lasting access to funding, primarily via a credit facility of EUR 15 billion. We've also made further moves to give our financing better long-term visibility, and we issued euro-denominated bonds whose cash proceeds are accounted for in Q2. In April, we issued EUR 2.5 billion in bonds with tenures of five, eight, and 12 years, partially turning out the EUR 15 billion credit facility down to EUR 12.5 billion at attractive rates. In June, we issued a further EUR 3.5 billion in bonds with tenures of six, 10, and 20 years. Part of those proceeds went toward cutting the credit facility further, so that it came to EUR 9.5 billion as of the end of June. We kept securing extra funding sources by upsizing the commercial paper programs in Q2. Overall, we've made our financing more robust still and lengthened the maturities of our funding sources. This strong liquidity will support us as we keep navigating the crisis and put us in position for growth once things improve. Now, back to Guillaume.

Thanks, Dominik. That's clear. Moving to commercial aircraft. Overall results. During H1, we handed over 196 aircraft to 57 customers, which is a drop of 193 aircraft compared with a year earlier. In H1 we delivered roughly half of the H1 figure from last year. As Dominik mentioned, we have about 145 finished aircraft that we were unable to deliver because of the situation. Our priority is to deliver aircraft that are industrially engaged, to support stable production output, while taking into account airlines' short-term priorities and replacement needs. Where do we stand on each program? Beginning with the A220, we delivered 11 aircraft to three customers. The FAL, the final assembly line in Mirabel, should progressively return to pre-COVID-19 levels at rate 4, and the new FAL in Mobile opened in May as planned. On the A320, we delivered 167 aircraft, 157 of which 151 neos. On wide-body, we delivered 28 aircraft, of which 23 A350s and five A330s. Now, let's look at Airbus commercial financials in H1. Revenues mainly reflect lower deliveries with the 193 aircraft, less year-on-year, of which -137 A320 family. EBIT adjusted mainly reflects these lower deliveries and lower cost efficiency, I have to say. It also includes EUR 4.9 billion of COVID-19-related charges, of which EUR 4.1 billion in R&D.

Turning to helicopters. During the first half of 2020, we handed over 104 helicopters altogether, versus 143 during the same stretch of 2019. Revenue held steady, which mirrors the reduced deliveries, partly made up for by stronger services. Adjusted EBIT mirrors a favorable mix, chiefly in military and increased services, partly offset by fewer deliveries. The five-bladed H145 — a great helicopter — and the H160, another great helicopter, were recently certified by the EASA. Certification from the FAA is also anticipated for them later this year. Moving now to Defence and Space. Revenue took a hit from reduced volume and mix, especially in Space, which is heavily affected by the COVID-19 lockdowns, and quarantines, and COVID-19, creating delays across some programs. Adjusted EBIT mirrors the COVID-19 impact, primarily in Space, partly offset by cost-cutting measures. For the A400M, 3 aircraft were handed over in H1. During H1, we also secured certification for Batch 6 featuring automatic low-level flight capability and the simultaneous paratrooper dispatch — the famous one. That marks a major milestone toward reaching A400M full development. Retrofit work is advancing in close coordination with customers, and we revised our restructuring plan so it also captures the coronavirus pandemic's effect on the Defence and Space division.

So what matters most to us right now? Broadly speaking, we see aviation as a long-term business, and that view hasn't changed. We're confident of this, and what we see confirms it. Word we're getting is that our product portfolio is the right one. Starting from Q1, we've made solid headway on keeping our employees safe and healthy — safeguarding their health and safety — and on adjusting our production, and that work is now finished, along with securing liquidity and laying out a plan to resize the business. Cash will stay our focus in this climate, and provided there's no major divergence in the COVID-19 recovery from what we've planned, and no unexpected new escalation or major new travel restrictions, our ambition is to avoid burning cash before M&A customer financing during the second half of 2020. Keep in mind that conditions remain uncertain and are still shifting, and we stay humble about that. During Q2, inside a single quarter, we reshaped our industrial systems for the new conditions, and we're moving toward a new financial balance. That leaves us strongly positioned for the market's recovery, since we believe a recovery is coming. The question isn't whether it happens — only when. We're ready for your questions.

I appreciate that.

Ladies and gentlemen, we're going to start the question-and-answer portion now. To ask a question, you can press 01 on your touch-tone phone. Should you want to drop out of the queue, press 02. We ask that participants use handsets only when posing a question. Our first question comes from Benjamin Heelan at Bank of America. Sir, your line is open now. Please go ahead.

Morning, Guillaume, Dominik, and Thorsten — good to hear from you, and I hope all of you are doing well. I've got a couple of questions. You provided the stored inventory figure of 145 aircraft as of the end of the first half of the year. Do you have any comments on where you expect that number to land by the end of the year? Second, regarding cash flow, you mentioned that you don't expect any cash flow drag in the second half of the year. Looking ahead to 2021, do you believe the business could produce positive cash flow at these currently lower production levels? Thank you.

I'll take the chance and pass things over to you, Dominik.

Alright.

Hey, Ben. Good to hear from you. Yes, we're doing well, and we hope you're doing well too.

Okay, thank you. Regarding stored inventory, you've noticed we haven't voiced any delivery expectations for the second half, and as a result, since we've now implemented a new production rate, that also means we don't wish to set a higher expectation for finished aircraft inventory at year-end. On the cash flow front, it is indeed the goal we've given ourselves—the objective of not consuming cash in the second half of the year before M&A and customer financing. I'd rather not speculate about next year; obviously, curbing cash burn is a key priority, and ensuring that under a new financial balance we aren't bleeding cash is a key priority.

Alright, that's great — thanks very much.

Our next question comes from Celine Fornaro at UBS. Your line is open now, madam. Please go ahead.

Yes. Good morning, Guillaume, Dominik, and Thorsten. Thank you for taking my question. I hope all of you are nice and doing well. For my first question, Guillaume, could you give us a bit more detail beyond some of the headlines where you mentioned that progress in July is going well regarding aircraft delivery? What visibility do you have for August, which by the way used to be a quiet month? How will it go this year, which is all a bit different? My second question concerns the continued investment in digitalization that you are making for the company. You have kept up this investment that began at least a year ago. When should we expect these costs to increase less than top line, basically? Should we see this benefiting potentially margins and cash flow as well from 2021, 2022? Thank you.

Thanks, Celine, for those questions. Yes, things are going well. Hope the same is true on your side. Well, I won't be providing the July deliveries today. First, since we're not at the end of July, and as you know, we prefer to be backloaded. Actually, we don't prefer it, but we're accustomed to being backloaded. Yes, as I said, we continue ramping up, so you could expect July to come in stronger than June. As for August, yes, August is always a quieter month. I would have liked 2020 to be different in that respect, but I think it won't be very different. August will probably be much quieter, not only because of Airbus, because we've organized very differently this year, but also due to customer constraints and probably as well less appetite to travel in this global environment and in this context. We're on a recovery, and Dominik said it, we converge production and deliveries in Q3. That's the objective we have, and it gives an indication that we believe we're on the right trajectory. Digital is serving many different objectives. The so-called DDMS program that we keep working on very actively has supported the ramp-up of the ACF in 2019.

In the final quarter of 2019, we hit our targets, and that was a solid win. That explains how we managed to hand over that quantity of aircraft during the closing months of 2019. On the A320 family, our production rate has been really strong — the ACF in 2020. If you want to talk about 2020, that sounds a little cynical, but that's just how it is. As I mentioned earlier, we're extremely pleased with how production is performing right now, even with all the complexity from every change we've had to implement. That's an advantage, and I believe the reason we can still deliver planes at these figures — clearly far below our expectations, yet still meaningful in this context — is that production remains on track. Digital also supports the long-term view, meaning the next generation of aircraft and the creation of new systems. This isn't aimed at short-term savings on R&T or R&D. It's much more about designing and building aircraft for the next generation — modern planes and production systems with far different efficiency regarding the program's overall performance, plus time saved in development and resources.

You shouldn't count on seeing savings from this project in the near term. Rather, it's an investment we're making over the next 4 to 5 years. These investments are game-changing—somewhat similar to what we're doing with environmental technologies or green technologies—and they have the potential to genuinely transform what aviation will look like over the next decade.

On the fixed cost versus revenue question as well, perhaps. Clearly, we are putting a lot of effort right now into reducing fixed costs, and to be candid, at present we have absolutely no plan at all to raise fixed costs in 2021.

Thanks, Dominik and Guillaume.

We’ll now take the next question, coming from Tristan Sanson at Exane BNP Paribas. Your line is open — please go ahead.

Morning, everyone. This is Tristan calling from Exane. I appreciate you taking my questions. To start, I'd like to follow up on what Ben asked regarding the aircraft currently held on the balance sheet — the 145 that you referenced. Could you speak to how quickly those aircraft will be delivered? Essentially, I'm trying to get a sense of the length of time you're willing to hold onto a produced aircraft as part of negotiations with your customer airlines. Would you be prepared to keep one for a year or two, or should we be thinking about a considerably shorter window? My second question is, regardless of what that figure turns out to be, could you give us some indication of the timeline for reaching a normalized level of profitability on the A320 per aircraft under the new volume environment? When do you expect to eliminate excess cost — and I'm not looking for a specific number, but a timing by which you think you could get there would be very useful for us. Thank you.

Thanks for that question. I'll handle the one about deliveries, and the second is too tough for me, so I'll pass it to Dominik. On a more serious note. Yes, 145 planes. That ought to be among the high points we plan to improve going forward in this convergence we referenced earlier, with the goal of cutting considerably the count of undelivered aircraft by the end of 2020. As Dominik said earlier, we don't wish to guide on that figure. There is too much uncertainty, and there remain a number of airlines with whom we keep tailoring the situation to their needs and to their own circumstances going forward. It ought to come down considerably. How long do they remain? Most of them remain a few months. There are instances where we are preparing ourselves for a longer stretch of time, where they remain with us. These are a small number of instances involving a very critical situation with airlines. We have various approaches to maintaining the aircraft depending on whether they remain for a short stretch of time, and there are specific maintenance programs to keep them 100% ready to fly and available short-term, along with other schemes that we are not using, or with few exceptions today, to place them in long-term storage.

That isn't the case for the overwhelming majority of our aircraft. Those aircraft — the overwhelming majority of our aircraft — are being stored for the moment when they will be handed over. We've cut production for most of our customers. We have built aircraft, and we will prioritize delivering the aircraft that have already been built to those customers. In many cases — in fact, at this point, most cases — we have agreements in place with airlines. There's a new delivery schedule, and it's simply stretched over a longer period to accommodate their situation. Now, with a normalized situation on profit for the A320, Dominik?

Obviously, when you cut rates that sharply — by over a third — profitability takes a hit, since a portion of the cost base is fixed. The bulk of the 15,000 headcount reduction we're targeting in the active workforce — and keep in mind there are also temporary workers on top of that — will show up over the course of next year. Next year, we still won't have the full-year benefit of these cost-cutting measures. That only arrives in 2022, and by that point we should have offset a substantial part of it. Remember, we also have to keep our ability to snap back. We need the right balance between truly addressing the overmanning and excess cost in the fixed cost base, while also preserving the option value to snap back if and when the market recovers. We also need rate increases to return us to previous profitability levels.

That is quite clear. Many thanks for the answers you gave.

Andrew Humphrey from Morgan Stanley has the next question. Your line is open now. Go ahead, please.

Hi, everybody. Thanks for asking questions. I hope you're all doing well. My first question is really a follow-up to that last point. You obviously had your biggest rival earlier this week discussing a long-term production rate that rises steadily from 31 aircraft per month on the main narrow-body platform. Dominik, you pointed out that Airbus may need to bring production back faster than that. Clearly, depending on when we think the industry returns to 2019 traffic levels, that could occur sooner or later. I'd like to hear your view on whether the slight push-out we're seeing regarding when traffic might return to that level depends more on a more negative view of medium-term demand, or whether, honestly, you're also taking into account how long it will take industrially to get back to prior production levels. I suppose the second thing I'd ask about is just FX. Dominik, you mentioned a fairly substantial number of hedges rolled forward toward Q4. Could you explain a bit more about what flexibility you have to roll those forward into 2021 or 2022 if some of those deliveries slip into later periods?

Thank you for those questions. Let me try to take the first one. Back in early April, we cut our production rates. Take the A320 — that's the majority of it — we brought it from 60 a month down to 40 a month. Roughly 3 to 4 months later, we're still at 40. After all the effort we've put into analyzing the market and the potential recovery, and when it arrives — what I call the top-down approach — plus the bottom-up work done with all our airline customers, plane by plane, we believe 40 remains the correct balance between demand and supply. We're holding it for the second half of 2020 and as we go into 2021. The question is, there could be minor adjustments around that 40. That isn't the big issue. I think the key question is when we think about ramping up again. When do we want to start getting back to higher rates — 50, then 60, and potentially more — when the market recovers. That's really the work we're doing today, trying to anticipate as much and as well as we can the re-ramp-up, the snap back that Dominik mentioned earlier. It won't happen before mid of 2021.

For the single aisle, there's a very good chance that will have occurred during 2022. What we're attempting to gauge, as accurately as we can, is the point within that window at which we'll begin ramping up again — so we can give our supply chain the heads-up, place orders, and let the supply chain carry out the ramp-up without being too late once it arrives. It's about striking the right balance: not being naive or overly optimistic about what's happening with COVID-19 — and we believe we aren't — but equally not being too pessimistic, or at least being ready to capture the benefits of the situation when it recovers, and we believe it will recover. Looking at the long-term perspectives, once COVID is behind us, we again see very strong market demand, and in some cases even bigger, because of this one, two, three, four, five years of drought that we've observed with COVID-19. That's where we stand. I don't know exactly what others said, but we are at rate 40 for the A320. That fits with our current understanding of the market situation.

What I’m getting at is how Airbus relates to our own customers, and that’s looked at in a very granular way. It aligns with the environment we see for the next 18 months, and we believe there will be a moment when the ramp-up returns, and for the single aisle that ought to be around 2022.

Hedging?