Airbus SE (AIR) Earnings Call Transcript & Summary

Good day, everyone, and thanks for holding. This is Sharon, and I’ll be your operator for the Airbus Q1 2023 Results Release conference call. I’d like to point out that throughout the presentation, everyone will be muted and able to listen only, and this call is being recorded. Once the presentation wraps up, there will be time for questions. Right now, I’ll hand things over to your hosts, Guillaume Faury, Xavier Tardy, and Hélène Le Gorgeu. Please go ahead.

Thanks, Sharon. Good evening, everyone. You're joining the Airbus Q1 2023 Results Release conference call. Guillaume Faury, our CEO, and Xavier Tardy, our interim CFO, will present our results and take your questions. We expect this call to run about an hour. That includes Q&A, which we'll hold after the presentation. The call is being webcast as well. You can reach it from our homepage by clicking the dedicated banner. A playback will be available on our website. No dedicated phone replay service is offered. The supporting information package went up on our website earlier today. It contains the slides we'll now walk you through, plus the financial statement. During this call, we'll be making forward-looking statements. Please refer to our safe harbor statement, which appears in the presentation slide and applies to this call too. Do read it carefully. Guillaume, over to you.

Thanks, Hélène. Good day, everyone, and thank you for being with us for the Q1 2023 results call. It's a pleasure to be here in Amsterdam alongside Xavier, serving as our interim Chief Financial Officer until Thomas Toepfer comes on board in September, and Hélène, our Head of Investor Relations, whom you know well and just heard from. We'll now take you through the results. Less than three months ago, on our full-year results call, we pointed to strong demand across all parts of our business, especially for commercial aircraft. We also noted that we anticipated continuing to operate in a challenging environment. That has proven true in Q1. On the one hand, customers keep showing strong appetite for our product portfolio, as the recent Air India announcement illustrates. We are watching the geopolitical situation, which remains complex, along with turbulence in the banking sector. As for the supply chain, we still see persistent strains throughout the sector in numerous areas, including labor, raw materials, engines, and a variety of buyer furnished equipment, such as seats. I'd like to remind you here that the delivery profile is planned to be backloaded this year.

During Q1, we handed over 127 aircraft, which was roughly aligned with what we had planned. That, along with solid results from our helicopter division, is reflected in EBIT Adjusted of EUR 4.8 billion. Free cash flow before M&M customer financing came in at minus EUR 0.9 billion, in line with the inventory we had to build as we carry out our ramp up, and in line with delivery volumes. As we said when we reported full year 2022 results, our target is to deliver around 720 aircraft in 2023. Our guidance for full year 2023 stays as it was. Now let's turn to the commercial environment. In the first quarter, global air traffic kept improving, helped by faster growth in domestic and regional markets, which are now trending near and at times above prior levels, while international traffic is still being paced by China's reopening. Incidentally, I was happy to be in China a few weeks back — my first time there since 2019 — and the strong momentum and energy I saw impressed me a great deal. Airlines are now getting ready for a busy summer season ahead, as the present level of advance bookings shows, even with inflationary pressures and higher fuel prices.

Demand continues to be strong for our new generation aircraft, and customers remain actively involved in fleet planning as they look to fill the skyline in the years ahead. Let me remind you of our orders and backlog in Q1. We booked 156 gross orders in total and recorded 14 cancellations. Net orders came in positive at 142 aircraft, and our backlog in units stood at 7,254 across at the end of March 2023, including 6,075 A320 family aircraft. Turning to helicopters, in Q1 2023 we booked 39 net orders versus the 56 in Q1 2022. The bookings in 2023 were well spread across programs. We are honored that GDAT, one of our Chinese customers, decided last month to bolster their fleet with 50 civil H160s. This contract is the largest single order for the program on the civil and parapublic market. This order is not yet reflected in our order book as of the end of March 2023. In addition, we continue to see positive momentum in home countries for both civil and military markets. Finally, in defense and space, the conflict in Ukraine has highlighted the essential role that defense and space plays for society and the importance for European nations to support their security and defense industry.

Q1 2023 kicked off with a solid order intake of EUR 2.5 billion. The strong services order momentum mirrors how extensively our military aircraft are used throughout the portfolio. An order also came in for one more MRTT, which has been proving its capabilities as a military oil tanker ever since it joined the NATO fleet in 2020. Over in space systems, our Q1 orders underscore the strength of our products, even against a difficult backdrop. We booked recently what is called slice two of the order for the European Service Module — the ESMs four, five, and six of the Orion spacecraft. ESM forms an integral part of the Artemis mission and is powering humankind's return to the moon. In April, an Ariane five successfully launched the Airbus design and built Jupiter Icy Moons Explorer, or JUICE, on its eight-year journey to Jupiter. That shows what the best of Europe can deliver when it comes together. By the way, this means only one Ariane five launch remains before transitioning to Ariane six. Before moving to financials, let me give you a quick update on two strategic future programs. On FCAS Demonstrator phase Ib, the signature of which was celebrated last Friday by the defense ministers of France, Germany, and Spain.

The FCAS Demonstrator phase Ib is underway at this point, setting the stage for the in-flight demonstration phases. On the Eurodrone program, we keep moving forward and methodically laying the groundwork that will support the preliminary design review — known as PDR — during the second half of this year. At this point, Xavier will walk you through our financials. Xavier, over to you.

Thanks, Guillaume. Good morning, everyone. In Q1 2023, our revenues came in at EUR 11.8 billion, a slight decline, driven primarily by fewer commercial aircraft deliveries, which was partly compensated by a larger contribution from our helicopters division. Our Q1 2023 EBIT Adjusted fell to EUR 0.8 billion, down from EUR 1.3 billion in Q1 2022. Q1 2022 had included a net positive impact of EUR 0.2 billion from non-recurring items tied to retirement obligations and to international sanctions against Russia. The year-over-year drop in EBIT Adjusted also mirrors the reduced commercial aircraft deliveries, a hedge rate that was slightly less favorable than in Q1 2022, and investments made to prepare for the future. Turning to R&D, our expenses for Q1 2023 were EUR 0.7 billion, compared with EUR 0.6 billion in Q1 2022. For the full year, we still expect R&D to rise slightly versus last year. Q1 EPS Adjusted came in at EUR 0.72, based on an average of 788 million shares. Q1 free cash flow before M&A and customer financing was negative EUR 0.9 billion, largely reflecting deliveries and the inventory buildup required as we carry out our ramp-up. Moving to the next slide on profitability: Q1 2023 EBIT Reported was positive EUR 0.5 billion.

EBIT adjustments net to a negative EUR 0.4 billion in total. That figure includes a -EUR 360 million hit from FX mismatch and balance sheet revaluation, which mostly mirrors the mechanical effect of the gap between transaction date and delivery date, along with -EUR 9 million tied to the Aerostructures transformation and -EUR 14 million of other costs, compliance costs among them. Reported EPS contains +EUR 149 million of financial results. That largely shows the positive effect of revaluing certain equity investments, partly offset by a negative effect from revaluation of financial instruments and the net interest result. On the core business, tax rates remain at roughly 27%. Net income carries an effective tax rate of 19%, which includes the tax effect on the revaluation of certain equity investments. Net income comes out at EUR 0.5 billion, with reported earnings per share of EUR 0.59. Turning now to how our USD exposure is covered: during Q1 2023, $3.7 billion of forwards matured, bringing an associated EBIT impact, and euro conversions were realized at a blended rate of $1.22, compared with $1.21 in Q1 2022. We also put in place $2.8 billion of new coverage during Q1 2023, at a blended rate of $1.10. Consequently, our overall USD coverage portfolio in U.S.

The figure is at $93 billion, carrying an average blended rate of $1.24, versus $93.9 billion at $1.24 as of the close of 2022. During the full year disclosure, as we announced, we made adjustments to our portfolio via rollovers so it would mirror both the revised ramp-up path and our delivery goal for 2023. Now let's turn to a closer examination of free cash flow. Free cash flow before M&A and customer financing came in at -EUR 0.9 billion in Q1, since our attention stays fixed on ramp-up. That outflow stemmed primarily from the working capital movement and is largely a reflection of a mechanical inventory build, arising from carrying out our ramp-up plan and from fewer wide-body deliveries. The A400M kept dragging on our Free Cash Flow before M&A, though to a lesser degree than during Q1 2022. CapEx in Q1 2023 totaled roughly -EUR 0.5 billion, against -EUR 0.3 billion in Q1 2022. We anticipate CapEx will rise somewhat in 2023, in support of our industrial ramp-up. Free cash flow came to minus EUR 0.9 billion, with almost no effect from M&A and customer financing. The aircraft financing landscape is still solid, and financial markets hold ample liquidity for our products. Still, such a low level of customer financing activity may prove unsustainable.

By the close of March, net cash came to EUR 8.4 billion, and liquidity is still over EUR 30 billion. Over to you, Guillaume.

Thanks, Xavier. That's very clear. Moving on to commercial aircraft. During Q1 2023, we handed over 127 aircraft to 54 customers. Deliveries got off to a slow start at the beginning of the year, but we delivered 61 aircraft in March. Looking at how Q1 2023 broke down by aircraft family, on the A220 we delivered 10 aircraft, and we're continuing to ramp up to reach rate 14 by the middle of the decade. On the A320, we delivered 106 aircraft, 59 of which were A321s. That included the first A321 from our FAL in China — the first FAL, of course, not yet the second one. We're continuing to ramp up towards a production rate of 65 aircraft by the end of 2024 and 75 in 2026. No change there. A few weeks ago, I was happy to announce our decision to add a second FAL in Tianjin. That will raise our global A320 family industrial capacity to as many as 10 final assembly lines, supporting Airbus in reaching its commitment to produce 75 aircraft per month. On the XLR, the flight test program is progressing towards entry into service, which is expected to take place in Q2 2024. No change. On widebody, we delivered 11 aircraft in Q1, of which six were A330s and five were A350s.

As we said before, our targets are rate four on the A330 in 2024 and rate nine on the A350 come the end of 2025. On the A350 freighter, the first components came off the line recently at Airbus Atlantic in Nantes. We've hit the initial milestones, and we're now making a small adjustment to the industrial planning for that variant, so entry into service is now moving into early 2026. Just a slight change. Turning now to Airbus commercial's financials for Q1. Revenues fell -5% year-on-year, largely a reflection of fewer deliveries, partly offset by the stronger U.S. dollar. EBIT Adjusted came down to EUR 0.6 billion from EUR 1.1 billion in Q1 2022, reflecting, as I mentioned, the lower deliveries, a hedge rate slightly less favorable than in Q1 2022, and investments to prepare for the future. Q1 2022 had included positive impacts from retirement obligations, partly offset by the impact of international sanctions against Russia. Moving on to helicopters. Excuse me. In Q1 2023 we delivered 71 helicopters, which is 32 more than in the first quarter of 2022. The light segment mainly drove this. Deliveries include the 500th NH90, handed over by NHIndustries to the French Army Aviation. Revenues rose 26% year-on-year to EUR 1.6 billion, mainly reflecting solid performance across programs, favorable mix effects, and a good start to Q1 for services.

So because of that strong performance, EBIT Adjusted rose to EUR 156 million. And here too, keep in mind that Q1 2022 contained net positive non-recurring elements. Let's finish reviewing Q1 with Defense and Space. Revenues fell 6% year-on-year, largely due to lower volume in military air systems and space systems. That decline shows up in EBIT Adjusted. Once more, Q1 2022 also had net positive non-recurring elements. On the A400M, one aircraft was delivered by us in Q1 2023. Development work continues as we move toward the revised capability roadmap. Retrofit activities are moving ahead in close alignment with the customers. Risk remains regarding qualification of technical capabilities and the related costs on aircraft operational reliability, on cost reduction, and on securing overall volume in line with the revised baseline. Looking ahead, let me remind you of the guidance we issued in February. As the basis for its 2023 guidance, the company assumes no further disruptions to the world economy, air traffic, the supply chain, the company's internal operations, and its ability to deliver products and services. The company's guidance is before M&A. On that basis, the company targets around 720 commercial aircraft deliveries in 2023 and EBIT Adjusted of around EUR 6 billion and free cash flow before M&A and customer financing of around EUR 3 billion.

Guidance is unchanged. Now let me recap the priorities, which likewise have stayed the same since the call on our full year results. First, obviously, is our delivery goal of 720 commercial aircraft. All of us stay focused on raising output throughout every one of our commercial aircraft programs, working closely with our suppliers, so we can satisfy strong customer demand for single-aisle aircraft and the rising need for new, fuel-efficient wide bodies. At the same time, we are carrying on the company's long-term transformation toward sustainable aerospace, with a clear emphasis on digitalization and decarbonization. Regarding digitalization, I'd like to point to something from our defense business: the first in-flight autonomous guidance and control of a drone from an Airbus A310 MRTT above Spain — a major milestone. On decarbonization, we stayed very active during Q1. Highlights include SBTi's validation of our near-term targets for cutting Scope 1, 2, and 3 emissions. The maiden flight of the Disruptive Lab helicopter demonstrator, which aims at a 50% reduction of emissions. The first flight of an A321 with both engines running on 100% of SAF, sustainable aviation fuel. Our investment, alongside customer and partner Qantas, in a biofuel production facility in Queensland, Australia. When it comes to sustainable aviation fuels, SAF, we are encouraged by the momentum we see around the world, and that includes governments enacting supportive legislation.

In Europe, we have Fit for 55 and ReFuelEU, and in the U.S., there's the IRA — the Inflation Reduction Act. Just recently, we signed an MoU with the China National Aviation Fuel Group, CNAF, which is the Chinese airport fuel provider, for cooperation on SAF development. We anticipate this will be another significant contribution toward reaching 10% penetration globally — 10% penetration of SAF globally by 2030 — and naturally, to grow after that. That covers my opening remarks for today. I'm certain you have questions regarding this quarter. As I mentioned, overall Q1 execution has come in consistent with our 2023 plans. Hélène, back to you. Thank you.

Thanks, Guillaume. We’ll begin the Q&A portion now. When you ask a question, please say who you are and which company you’re with. Kindly keep it to 2 questions at once, including any sub-questions. And, as always, do remember to speak plainly and at a slower pace so that everyone on the call—especially us—can follow what you’re asking. Sharon, would you please go ahead and walk the participants through how this will work.

Thanks. We’re moving into the Q&A portion now. If you'd like to pose a question, just hit star one one on your phone’s keypad. Kindly keep it to just 2 questions. First question. Give me a second. It seems the initial questioner has dropped off — he's no longer connected. I'll move on to the following one. One moment. Our first question is from Daniela Costa at Goldman Sachs. Go right ahead. Your line is open.

Hello, and good afternoon. Thank you for taking my questions. I'll use the option to ask two. The first one is just on the fact that we've seen a lot of news flow about deliveries and supply chain delays. And you've mentioned before, obviously, that it was back-end loaded. I just wanted to get a view on what's noise and what's reality. When you say back-end loaded now, is it more back-end loaded than you meant when we spoke about the full year? What exactly are the pressure points at the moment? Is it more engines? Is it more internal ramp-up? If you could elaborate on that. The second question is more on capital allocation, and obviously, free cash flow in 1Q is a little bit better than the street expected. You're not doing in VDN. I think you've also made some tweaks to the net debt definition a few months back, and you would probably now be, I think, on the old definition, at more than EUR 10 billion cash, which you said was the threshold for the buyback. What prevents you from launching the buyback at this point?

Has your thinking shifted at all when it comes to capital allocation? Those are the 2 questions I had. Thanks so much.

Yes, thank you, Daniela. Regarding the operating environment and supply chain conditions, as expected—and unfortunately, as we already mentioned earlier today, sorry, earlier during the full year 2022 results in February—there are many supply problems here and there. You can see it in the reports. In fact, some of those problems persist, and we keep encountering the same types of issues. I listed them briefly during my opening remarks. It isn't more backloaded for 2023 than what we indicated two months ago when we issued the guidance. There's an imbalance between the first half and the second half of the year. We will have—we expect a very strong September, October, November, December ahead. I would say there's no change on that front. Production and deliveries are backloaded. We knew that, and that is what we're dealing with. Probably somewhat more problems on the engine side, as we see the combined challenges for engine makers in supplying Airbus for new plane production and delivery, but also the pressure coming from in-service operations, since customers are flying a great deal and we've seen a big increase in flight hours flown and flight cycles in the market, which therefore puts pressure on support and services for engine parts and MRO parts for engines.

On capital allocation, I have to say your remark caught me a little off guard. We aren't sitting at EUR 10 billion in net cash. What we've stated is that a potential shift in how we allocate capital would be a topic for discussion at the point we get past that threshold. That, I believe, was the phrasing we used about reaching that level. We haven't reached it. So that isn't something to discuss today.

Understood. Many thanks.

I appreciate that.

Much appreciated. We’re ready for the following question now. The next one is from Ben Heelan at Bank of America. The line is yours.

Yeah. Hi, everyone. Thanks for the questions. First, Guillaume, I wanted to ask you about the A350, since A350 deliveries have been very, very weak through the 1st quarter. It looks like they're gonna be weak again in April. Is there something going on with the deliveries here that we need to be aware of? When do you think we will start to see A350 in particular improving? Then following on from Daniela's question on supply chain, I wanted to ask about... 'cause when we see and hear from other suppliers through Q1, I mean, a lot of the suppliers have said that they see things getting a bit better, they see things getting easier. We saw engine deliveries of LEAP and GTF improving quite a lot as well. It feels as though it's getting easier, but yet the deliveries continue to be weak. Is there something going on in the delivery centers at Airbus that needs resolving? Thank you.

Perhaps I'll begin with your second point. Well, yes—all of our suppliers do need to deliver on schedule and make things better so that we ourselves can deliver on schedule. Back in February, I stated that we would build up inventory, and by that I mean the margin on production, on storage, and on the temporal inventories of parts and components, so as to be safer and to secure our 2023 deliveries. That is exactly what we're doing. It brings with it a higher working capital—industrial working capital—which is putting pressure on our free cash flow. But there is no particular problem or discrepancy relative to what we had anticipated in the production profile at Airbus versus the plan from the start of this year. It's a weak Q1, but it's a Q1 that aligns with what we had planned for 2023, and so it remains very much consistent with the outlook for 2023, and therefore we keep the guidance on the number of deliveries. That holds true for the A350 as well, and you're correct in saying that Q1 has been weak for A350 deliveries. Q2 will be weak too. The A350 will be backloaded, with a very strong H2 and Q4 expected for the A350. That's the overall background we are facing.

What I can tell you is that the production ramp-up needed to support deliveries at a later stage — and therefore to support the guidance — is proceeding on track. So that's why we're keeping the guidance as it is, and we believe we're on trajectory relative to how the plan is being executed.

All right, that's excellent. I appreciate the additional detail.

Thanks. Now we'll take the following question. Our next one is from Tristan Sanson at BNP Paribas. You have the floor.

Yes. Good evening, everyone. Tristan here from BNP Exane. Thank you for taking my questions. My first one concerns the PW one thousand engine on the A320neo. I'd like to know how you're handling, both industrially and commercially, the worries that are circulating at the moment regarding that engine's time on wing — that would be more helpful. Second question: you've said several times that during Q1 you were investing to prepare for the future. Could you be a bit more specific, qualitatively as well as quantitatively, about what those expenditures consist of? Is it things like training and recruitment ahead of the wide-body ramp up? Is it tooling? Are we talking about EUR 100 million, EUR 200 million, EUR 300 million? That would be quite helpful.

Okay, let's begin with the Pratt & Whitney matter on the A320, as you mentioned. I believe we also have some concerns regarding the A220, and in fact, time on wing for particular types of operations is coming in below what was anticipated, which — combined with the supply chain picture and worldwide supply tensions — results in a shortage of spare parts or delays in getting them, along with the MRO, and consequently some AOGs occurring. That is primarily something to be handled between the engine maker and the airline, since the contracts sit with those two parties. Naturally, as the aircraft manufacturer, we are watching that situation very closely and coordinating a number of cases involving our customers and Pratt & Whitney in order to reduce the impact of such a situation. That is something currently being handled mainly by Pratt & Whitney. Regarding investment for the future, well, that's quite a broad question, since we are putting money into both R&D and CapEx for the future. I think your question refers to the CapEx and perhaps the recent announcement of line two in China, which sort of helps answer what you're asking.

So really, what we're doing is constructing the future production setup for the A220 and the A320 — that includes the 10 FALs, all of which will be A321 capable — plus the ramp-up to as many as 84 for the A330neo and up to 89 on the A350. That, I'd say, is essentially what we're referring to when we talk about investing in the future on the production side and in the ramp-up. On the technology front — though this is mostly everything we've already walked you through — it feeds the steady increase in our R&D expenses, which comes mainly from the new programs, the XLR and the A350 Freighter. Then, more broadly, our work to decarbonize and digitalize the product and the production system, and on the digitalization side also the support and services activities. All of that investment in the future is what produces this gradual rise in costs and expenses, to try to sum it up, since it's quite a wide-ranging question you posed regarding the many billions we spend each year getting ready for what's ahead.

Yeah, just to be clear, I wasn't talking about CapEx there — I meant OpEx, since that future-preparation investment gets cited as one thing putting pressure on EBIT Adjusted in Q1. I think your explanation should stand on its own.

So that's the rise in R&D, I believe. It isn't linear across the year, and it differs from one year to another. I can't recall — Xavier, perhaps you have that number — but my sense is that this year we began somewhat quicker, or with greater expenses in Q1 versus last year.

Yes. Actually, our spending is EUR 100 million higher compared with Q1 2022.

Alright.

Right.

That is the kind of thing we mean when we talk about putting money into the future.

Yes.

Research and development.

Research and development.

Thanks.

Thanks. We'll move on to the next question now. Our next question is from Olivier Brochet at Redburn. Your line is open — please go ahead.

Yes. Good evening, and thanks for taking my questions. If I may, I have two. First, could you expand a little on how much of a headwind inflation was in Q1 across the three different businesses? Second, regarding the Qatar settlement: was it a cash out in Q1, or will that only happen with the first A350 deliveries you make to them? Thank you.

Okay, let me begin with Q1 inflation. We're seeing very low double-digit figures. Inflation is running in the very low to mid-double-digit range. As for Qatar, that settlement is confidential. I won't comment on the Qatar settlement.

Not even regarding timing?

So it was signed earlier this year.

I appreciate that.

It's in the past now, and moving ahead we do it as partners.

Thanks.

Thanks a lot. We'll move on to the following question now. Our next one is from Doug Harned of Bernstein. Go right ahead — your line is open.

Good evening, and thanks. On the first question, you’re describing strong demand, which is obviously a very positive thing, but at this stage can you say how far out you are sold out? And what options do you have for customers who want to place orders for aircraft deliveries in earlier years? Second, you’ve previously said that once you reach delivery rates similar to what we saw in 2019, you could return to Airbus commercial margins like those in 2019. First, does that still hold? Then, as you move past this and later go to 75 a month, how do you expect margins to develop beyond that point?

Okay, regarding your first question: actually, we currently have a backlog exceeding 7,000 aircraft. If you're asking about the A320 — the plane with the highest demand — our order book is effectively full through 2029. A customer who comes to us right now requesting a new plane cannot receive one before 2029. The optimal path to reach that point is to ramp up production, and that depends on the ramp-up itself. This is exactly why the ramp-up matters so much to us: it lets us deliver on time to customers who have already ordered, and it prevents the date of the first available aircraft from slipping even further into the future. That said, we keep accepting orders, including for the A320 family, and a very significant number of them, since this plane is, as I mentioned, a leading product in its market segment. The situation differs for the A220, the A330neo and the A350. On those, we have more availability in the shorter term, but even so, we are also quite well booked on those products. As for your question about Airbus margins, I can confirm that we hold to the perspective of returning to 2019 profitability once we return to the 2019 number of deliveries.

Let me remind you that at that point we had 863 aircraft, which was top of mind. I can also remind you that we delivered 661 last year, and this year's guidance is 720. As you can see, plenty of work remains and there's still a long path ahead before we get back to the 2019 figures. Sadly, that is one consequence of this highly complex and difficult supply environment that grew out of COVID. As for how margins evolve once we're back at 863 planes, well, I won't comment on that here and it would take more time. We have provided, or we are providing, building blocks on how the company's profitability is built. Combined with the trajectory on production rates, that gives you the opportunity to build over time what the development of Airbus profitability would look like. I'm sure the IR team, Hélène and the team, will be very happy to guide you through this on a private call.

Thanks a lot. Appreciate it.

Thanks. We're moving on to the next question now. Our next question is from Phil Buller at Berenberg. You're up. Your line's open.

Hello. Appreciate you taking the question. What I'm attempting to do here is square the remarks regarding the unchanged guidance for this year within the midterm ramp with what a number of your big suppliers — Spirit among them, as of roughly an hour ago — are indicating, namely that you've lately cut orders placed with them on the A320 program from 660 down to 580, or so I believe they stated. So how should we, how should we think about the cadence toward rate 65 and rate 75 at a time when you're lowering rates with suppliers? Because I hear you saying those are unchanged. Yet when I look at consensus, it appears the market is assuming you'll deliver 850 aircraft next year — so nearing those 2019 levels — and roughly 980 come 2025. What I'm keen to grasp is whether you regard those modeling assumptions as roughly in the right ballpark or maybe too optimistic — and clearly not owing to your own wish or to demand, but given what you've discovered about your suppliers' capacity to ramp in practice, since what you're reportedly asking of them near term could create a further ramp-up challenge for them down the road when they pursue those higher rates. That's the first question.

Alright, I'll take a shot at that one. You've probably seen the Spirit data on how many deliveries they made. Keep in mind that last year we were meant to hand over 720 aircraft, but in the end only 661 were delivered. We had clearly intended to increase output in 2023 versus 2022. Given that 2022 stood at 720, that should have produced a much larger figure in 2023. Sadly, we finished at 660. We've reset the production plan, which gives us guidance of 720 once more for this year. Naturally, we need to align supply plans with most of our suppliers — if not every one of them — to account for the slower ramp-up relative to what we originally intended at the start of last year. You can see this in several remarks from the suppliers. Rebaselining in this way makes the ramp-up easier, and we completed that work between the end of last year and the start of this year. Nothing has changed relative to our guidance. What you've picked up from Spirit and from others — based on what I've seen and heard and what my team has commented on — simply mirrors the steps we've taken to support delivery of the 720 aircraft this year.

I believe that matters. Regarding where rates go from here, as I said in my opening remarks, there's no change to hitting a rate of 65 by the end of 2024, if my memory serves, and a rate of 75 in 2026. That remains the same. You're free to form your own assumptions about the path and how we arrive there. We don't get specific about rates quarter by quarter or even half year by half year, as you saw in 2023. There's an imbalance between H one and H two, and that can happen at times. It's not especially comfortable this year, but it is what it is.

No, I get it. Thanks a lot. I suppose the fact is that the suppliers are having a hard time delivering what you need. I was wondering whether a near-term downward adjustment might make that steep ramp tougher for some of those suppliers later on, as we look past rate 65 — but you've answered that pretty well, I'm sure. Then just one more question, just a comment in the prepared remarks about the aircraft financing environment that I think you called solid. But I believe it was mentioned that the low level of customer financing might not be sustainable. I was hoping you could elaborate a little on what that means exactly in practice, please. Thank you.

Xavier or Hélène, does anyone want to weigh in on this? Perhaps the main point is that things look very healthy right now. That covers the first part of my remarks. The second part is that we are observing pressure when it comes to financing generally, and within the banking and financing system. We do not anticipate conditions staying as favorable as they are at present, yet there is no particular signal or specific report to pass along, other than that, just like all of you, we notice the market situation growing somewhat more strained. That, I think, essentially captures what we intend to convey. Hélène, would you like to add anything?