Airbus SE (AIR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Airbus business update. It's very nice to see some familiar faces again. So it's been 4 years since the last Airbus Air Show, Paris Air Show. That was a good one. And we are all very excited to have here at this occasion. At this point, I would like to say hello to our guests connected on the Internet. It's great to have you there. Before we get started, I'd like to recall some practical information. Safety first, I spoke with the manager of the venue last night, and there are no fire alarm tests planned today. So in the unlikely event of a fire alarm, I would ask you to proceed to the emergency exit, which are behind you and to follow the Airbus staff and the security staff down to the meeting point. Some more information. Our time together will last 2 hours today. We'll have 3 speakers, and we have planned for 2 Q&A sessions, so that you have the opportunity to ask all your questions. Finally, and I know you are very acquainted with this. During this meeting, we will be making forward-looking statements. So I'd like to ask you to familiarize again with our safe harbor statement, which should be behind me. And now let's get started. Ladies and gentlemen, please welcome on stage the CEO of Airbus, Guillaume Faury.

Good morning, everyone. It's a great pleasure to be here this morning at the occasion of the Paris Air Show. As we are at the Paris Air Show, everything will be in French today. No problem? Okay. So 2 hours together, at Airbus at the moment, we have 2 main challenges. One is the ramp-up, and the other one is the decarbonization of aviation. So the purpose of this morning is really to spend time on the ramp-up. And we will obviously be taking questions on other parts of the business, Helicopters, Defence and Space, decarbonization, if you wish, but we really would like to spend time on what we do on the commercial aviation side of the business when it comes to the ramp-up. And two, I think that's the next slide, I know already what's going to come. And we have organized ourselves today to address that topic with dealing with demand and supply. For the demand side, it will be Christian Scherer, our Chief Commercial Officer, on what we have called SELL. And for the supply, I will be sharing the presentation with Juergen Westermeier, our Chief Procurement Officer. I will take the MAKE part, maybe suggesting I'm a doer. And Juergen will be briefing on the BUY part, he has a big check, the most expensive guy at Airbus, today, when it comes to spending money. Now more seriously, I think that will cover -- that will cover appropriately what we do. You will have the opportunity to ask questions to Christian, and before he goes back to the show, and I will be staying until the end and Juergen as well, so we can take all your questions. So that's basically what I wanted to say as an introduction. As you have seen, probably, we continue to sign contracts. We are in a situation where demand is significantly bigger than supply for some time. And it will be a lot about ramping of the production, that is the bottleneck probably for years to come, but I think it's appropriate to start with Christian, that we'll try to share with you as good as we can. Why is demand so strong, how we are addressing the demand with our products. And Christian, if you're ready, I would like to invite you on stage. Thank you, Christian.

Yes, good morning, ladies and gentlemen. Thanks for providing me with a short break from the frenzy of the show in Laborde. And I'm happy to share with you a little glimpse into the trenches of the commercial world. We are back in a live and kicking duopoly and things tend to stabilize. First and foremost, let me show you where traffic is. This is a metric that, of course, we're tracking like hot milk because it is fundamentally the health of our customers, the airlines. And the airlines themselves are looking at the revenue passenger kilometers and available seat kilometers that they are producing with our aircraft. You can see from this chart here that the domestic part of the traffic, what we call domestic and regional is inside geopolitical areas with homogeneous regulations. The domestic traffic is already, as of today, way past what it was pre-pandemic. On the international side, the transborder traffic or intercontinental traffic is still lagging behind the 2019 levels in some parts of the world. But overall, it is catching up. Overall, it is catching up fast. And I take the opportunity to mention that we actually devised a model when the pandemic hit to triangulate what we thought would happen with traffic. And I'm happy to say that our modeling proved remarkably accurate. If anything, it was a little bit on the conservative side. The one thing that stands out in this chart is that the international traffic in and out of the PRC, China is still very subdued. You can see here, it's about 40% of what it was pre-pandemic. And that is what's holding the global statistics back a little bit on the international side. Why? Because China was the last of the major geopolitical areas in the world to open up its borders back into free traffic. That is now largely the case and traffic is coming back into China. So oddly enough, you can see that North America and Europe, the traditionally more mature markets, where the quickest to recover. Asia, which is the new center of gravity of the world in terms of demography and economic development was the last one or is the last one to recover. But as it recovers traffic growth, which is largely correlated to economic growth and GDP growth, is back. And of course, that's really, really good news for us as the providers of the machine tools that the airlines use. Maybe one other observation. A lot of observers were wondering whether post-pandemic, the pattern, the structure of traffic would be the same in terms of high-yield business traffic and low-yield leisure traffic. It has changed a little bit, it seems, but it does not fundamentally change the revenue generation for the airlines or the yield. The mix has changed a little bit, by and large, a little bit less business traffic. Now that's not good. Because that's a strong contributor for the airlines. However, stronger than expected recovery of, let's call it, high-yield leisure traffic, which in volume more than compensates the some -- the little loss on the business side. So all-in-all, the airlines are actually pretty happy right now. And if you look at IATA's reports, they are very, very encouraging. Big growth, as I said, in Asia, primarily driven by China at about 5.3% growth that we expect. And India -- if we ever needed evidence of that this air show is one, India is going to be a huge engine of growth for our customers' business and therefore, our own business. And you saw the scores that were announced just at this air show to reflect that very clearly. Now what does that traffic mean for us directly in terms of demand for airplanes? As I mentioned before, without wanting to brag, our forecasting methodology has proven remarkably accurate. And is this me or can this be handled out back there? Thank you. So as we translate these traffic numbers into things that are relevant directly for our business airplane numbers, our latest market forecast has come up with the following forecast over the next 20 years. The forecast is that this world will need about 40,000 -- 41,000 new airplanes. By the way, you can see our competitor Boeing has come out with even a slightly more optimistic number. I don't call these numbers optimistic. I call them quite realistic because we, by now, have been able to prove our forecasting methodology as being remarkably reliable. You can see from this chart that the replacement part of the existing pool of airplanes, the odd 23,000 airplanes that are flying today, that part has, relatively speaking, increased. And why is that? Because we all are aware of the societal pressures and economic pressures towards more sustainable flying, meaning that the world fleet, particularly of older aircraft needs to be replaced faster with more fuel-efficient airplanes. I used the opportunity to remind us that 75% of the world fleet today is still composed of older generation aircraft, which can be replaced by our much more fuel-efficient airplanes, more fuel efficient to the tune of 20%, 25%, more fuel efficiency. So that compensates this slightly larger demand for replacement of old airplanes, compensates a slight decrease in our forecast of traffic growth -- of new growth, driven by slightly lower economic growth across the world. We're now tabling on something like, on average, 3.6% traffic growth whereas previously it may have been flirting with a 4% mark. So that's more than compensated by an acceleration of the replacement of airplanes. Also quite important and good news for my company, Airbus, is the fact that 80% of that demand for air transportation vehicles is going to be on the single-aisle side on the small- and medium-sized jets, our forecast focuses on airplanes, 100 seats and more. So 80% of that demand in units is for those aircraft where Airbus has a really, really outstanding and differentiated product offering. And 20% of it is on the wide-body aircraft. Also interesting is out of those typically 8,000 or so wide-bodies that we see over the next 20 years, a little less than 1,000 are going to be for freighters. Hence, the relevance of Airbus' decision 2 years ago to launch an A350 freighter, which is effectively the only brand new clean sheet design, new technology freighter in the offering on the market today. So as we look at this demand, how does our product portfolio respond to that demand? And that's where I dare say, I say this with a smile, of course, but it makes my job a very, very easy job to do, notwithstanding the very competitive nature of our duopoly. Our product portfolio is extremely relevant against the demand that we are seeing in the world, ranging all the way from the smallest member of our family, the A220, which is the former Bombardier C Series, which we have acquired an [ Airbusified. ] And that airplane has, since we acquired the program, had a very nice commercial kickoff and start. It's now on a solid climb trajectory with its 2 members of a family and ultimately probably a third member of the family to come in the future. The A320neo needless to say, that's our bread-and-butter product. It is, by far, the most successful airplane program ever in this market, mainly A320, but now also A321, the A321 being the stretched version of the A320 and becoming the bulk of the orders that we experience in this market segment. That, by the way, is a really important point because some maybe more candid observers in the industry is saying, well, why is Airbus offering A220s and A320s? Isn't one cannibalizing the other? The answer is, yes and no. But fundamentally, no, why? Because the average size of demand for the A320 family is migrating and has migrated up to the A321 and the A321, which is stretched version of the A320, is itself developing into more longer range applications with the so-called A321 LR and now XLR. So that market segment is moving up, and it pulls from underneath, it pulls the A220 size aircraft up to replace the smaller members of the A320 family. Sorry, that may be a little bit esoteric, but I just wanted to make that point because we're seeing a natural phenomenon of airplane sizes growing and therefore, making the A220 presence in the Airbus portfolio extremely relevant. As we migrate up, we have a big sister ship to the A321, that's the A330neo, that is an A330, which is the most sold wide-body aircraft. With still today, the A330 former generation, 1,200 airplanes flying now replaced by the neo, which is a new wing, new cabin and fundamentally new engines flying on the A330neo, offering a 15% efficiency step of the incumbent A330 as a complement to the A321 and what many people refer to the middle of the market. So Airbus is in the unique position to be able to offer to the airlines in the so-called middle of the market, a single-aisle A321 solution and a wide-body A330 solution with essentially the same seat costs or production cost for the airlines, but a differentiated volume between wide-body and single aisle to respond to the demand. A very unique proposition, and that's what makes the A330neo extremely relevant in this marketplace. You remember our competitor Boeing has been struggling and finally has abandoned this idea of the NMA, the new middle of the market aircraft because fundamentally, you can't address it with just one solution. We are in the fortunate position of having a dual solution, the single 321 now with long-range applications and the 330neo. And finally, the A350 on the upper end of our product family responding to that demand, we saw for 8,000 widebody airplanes over the next 20 years. The A350 is a wonderful product. It sits on top in terms of size and range. It sits nicely on top of our competitor 787 program. So we're able to command an advantage, a value advantage for the A350 in seating and in range. And when you think about these machine tools, the airplanes, what's their fundamental value? Their value is the integral, the integral of its payload capability, the number of seats and cargo and its range. That curve and the integral of that curve is the fundamental commercial value of an airplane, and the A350 sits there quite comfortably with a little bit more capacity than the 787s and a little bit more range, meaning the integral is greater, and it commands a premium in the market for that. We're also really, really satisfied with the performance of the airplane in service and our customers tell us it is a very, very wonderful product and a very reliable product going forward. So that's our product range with which we sit comfortably responding to the 20 year needs. There are no pressing needs at this point to change anything fundamentally on the chessboard of our product positioning. That's -- to that, perhaps for the bottom there of the chart has a few buzzwords you see services, train, operate, maintain, enhance, expand, just two words on that. Just last year, we brought in about 4.5 -- $4.4 billion, to be precise, of orders for services. So that's an expanding part of our top line revenues ranging across these various fields. The train operate maintain is pretty obvious. We train the personnel of the airlines, in particular, pilots. That's a very profitable business. We're enhancing their operational capability, et cetera, et cetera. We're providing component maintenance solutions for our customers along the buzzword power by the hour type of solutions. The last one, expand is interesting because it's a growing market segment in the digital area and in the connectivity area for cabins, where we are offering state-of-the-art and often leading solutions to the airlines to connect passengers in the cabin, create ancillary revenues through digital means in the cabin and of course, also the digital follow-up of their fleet predictive maintenance and other applications come to mind. So that's a growing market segment, now growing to about EUR 5 billion of revenues over time to contribute to our topline. With that, I transition to our performance, our commercial performance over the last few years, how quickly we forget what we went through in 2020. In March of 2020, Guillaume assembled the management group of the company and we went to war, which reduced our production rates drastically across the product line to respond to the skid marks on the road for -- from our customers who has essentially stopped flying. So that's reflected, obviously, in the commercial performance of the sales performance. You could see the drop there in 2020 of the net orders when our world came to a screeching halt. Nonetheless, we had a net order performance that you can see here on the left of 268 planes in orders in 2020 back up to a very solid book-to-bill greater than one performance last year. We call these net orders. Why? Because in terms of gross orders, the numbers are overwhelmingly greater than this, but we did use the opportunity, let me say, of the pandemic to what we call clean out our backlog to make sure that the backlog that we have today coming back into this growth market is as solid as [indiscernible] and we manage our backlog -- sorry about that. How is this? We manage our backlog on a permanent basis, and I dare say today, it is an extremely solid backlog that does not contain what some people might refer to as more flakey orders that perhaps characterize the backlog of others. In terms of deliveries, you can see the drop here as well. We did manage to deliver 566 airplanes in 2020 that put quite a bit of strain into the system. But overall, I'm happy to report that our customer relationships are as strong as ever and that is, I would say, reflected by -- well, you've seen the latest announcements, those are, I think, a little bit more than anecdotal. They reflect the strong commercial performance of Airbus in a marketplace that has fundamentally recovered its solidity. I'll finish -- perhaps on the right-hand side, you can see the geographical distribution. We're very nicely balanced. Here again, sorry, in a duopoly, we sometimes compare ourselves directly to our competitor. I would dare say that our geographical distribution of our backlog and our deliveries is more balanced than that of our competitor, and therefore, less dependent on some of the more mature or asymptotic growth markets like North America and Europe. In particular, we're very strong in Asia, and we all know that the, the world -- and our world is migrating east and our position in Asia is very, very strong. I'll conclude maybe with a word that's of interest to you on the financing of aircraft. We're talking about how many planes we sell, how many we deliver. But is there financing -- is other markets financing our assets? The answer is yes, you can see a nice distribution here between airline debt, traditional debt financing of aircraft where aircraft are simply mortgaged against debt that the airline raises. That's particularly true for the large legacy airlines on widebodies, airline cash, paying cash for airplanes is a non-negligible portion of our deliveries again. And then you see the leasing, the growing importance of leasing companies, both lessors that have ordered aircraft on speculation, that aircraft having been ordered on speculation by leasing companies that market these airplanes to the airlines directly or leasing companies doing so-called delivery financing of airline orders on delivery, the leasing company comes in purchases the aircraft and leases the aircraft back to the airline. You see a nice distribution here. Export credit is back, but you see, it is a backstop type of financing that only represents 4%. The good news is it's back, it's there and it's solid, but it is not a predominant form of financing today, and that's good news, meaning the markets are rushing to finance our aircraft. I stop here in the interest of time and of course, happy to make myself available with Guillaume for your questions. Thank you very much.

Thank you very much, Christian, and we will take benefit of the transition to equip you with a hand microphone as you all seem to have a slight issue.

Is it my [indiscernible]

No, I think it's the microphone. No worry. So it's time for our first Q&A session. And we have about 15 minutes with Christian. And I'm sure you will have many questions. I suggest we focus this first session on commercial topics to take benefit of Christian presence before he heads back to the Air Show. And a quick reminder of the rules, which you know as well very well. I would ask you to stand up to state your name and your company and to limit yourself to two questions, and this includes sub-questions as well. So let's get started. We have a question from Rob Stallard in the first row.

Christian, Rob Stallard from Vertical Research. I was wondering, you alluded to the A220 stretch and the cannibalization risk on the A320. What are you waiting for on the decision to launch an A220 stretch?

We're not really waiting that I wouldn't call it waiting. We are in a very steep ramp-up phase of the A220 program with its two current members, the 100 and predominantly the 300. And we need to achieve that ramp-up, that stability, respond to the market demand of that aircraft. There is no pressing need per se to stretch it. We're continuing to sell A320s very well. And therefore, it's not an acute -- it's not a pressing matter. It's a natural evolution that will come at one point. But today, we don't need it because our demand for the existing product exceeds our ability to supply it. So there shouldn't be any pressing need to throw money into a stretch.

So we have a second question from Doug on the second row.

Doug Harned, Bernstein. Christian, you've gotten this spectacular order from Indigo 500 airplanes. When you think about these large orders, really two things on them, these extend over very long periods. How do you think about escalation over those long time frames? And the timing of pre-delivery things as you go forward with those large orders.

Yes. Thanks for the question. How do we think about them, well we are, went on escalation. It is obviously a topic that is one that's hotly debated with the airlines. But it is fair to say that airlines understand that escalation isn't a commercial gimmick. It responds to inflation to some extent. And inflation is, it's like ebbing in tide. It's the tide ebbing and flooding for everyone. So we end up in negotiated agreements with our long-term customers to absorb escalation of aircraft prices. And given the demand supply forces in the market today, we're actually able to negotiate escalation clauses with airlines that give us comfort that we're not unduly exposed to inflationary pressures. In a nutshell, roughly speaking, that risk is adequately shared, if you like, by the buyer and the provider of aircraft. And we try to match it with provisions that Juergen will protect on the buy side of what we do. On pre-delivery payments, the beauty is that we're sold out, sorry to use such a colloquial term on single-aisle airplanes until very late this decade. And so people like Indigo are realizing that they better secure positions now for their massive fleets to replace and grow. And in order to do so, they are prepared out to secure that order stream. Now you mentioned Indigo, I think there's another statement there beyond the two points you raised, escalation in business, the fact that the Indian market, as I alluded to, is -- it's an amazing potential. The propensity to travel. An Indian traveler takes -- an Indian inhabitant takes 0.1 trips -- air trips per year, 0.1. In a mature market, people and individual travels 3 times a year. Now think about the most populous country with the highest economic growth and a growing middle class, that market is going to feed a lot of players in our industry, and we'd like to be the first one there for a long time, barring unforeseen events. And that's why we have chosen to take a very strong position with the 2 established main players that are going to reap the benefits of that growth, Air India on the one hand, on the full service side and Indigo on the, let's call it, low cost side. And if you look at our presence in both of those franchises that are now signaling to the market, we are here to stay. Our position in both of them is extremely strong. And so I'm very, very happy with the position we took. It makes a lot of sense.

We had a question from David on the third row, and then I will move to that side and so you can.

David Perry from JPMorgan. I've got two questions on pricing, please. One is the order environment is strong. So could you just comment a little bit on pricing on new campaigns. The second one is, all of the engine companies are now talking about increasing the prices on their LTSAs because of the performance of their engines. I just wondered whether Airbus had any influence over those pricing discussions, especially when it's a sole-source engine?

Yes, two really good questions. Pricing, I will say we are satisfied with our pricing performance. I'll give you one example that I derive modestly some satisfaction from. The A320 and A321 pricing, that's the bulk of our volume has held steady, not only through the pandemic, it's actually increased slightly, particularly on the A321 over the last 2 years. And that's satisfying why? One, when we have half the world collapsing around us, holding on to price proves the value, the relevance of your product. And two, let's not forget that we had a competitor who was grounded, okay, you might say that's good. For us, relatively speaking, it's actually not good for the industry. But when that -- when the MAX -- the Boeing MAX came back online, there was a fire sale going on at Boeing. And despite that, our A320 and A321 pricing has held steady and even has slightly increased. We are back in a very fierce competitive environment. So I will not hide and pretend that it isn't fierce competition out there. But in that fierce competition, I am satisfied, and I hope Guillaume is as well with our pricing performance. And as I mentioned before on the widebody side, when you look at 787 and A350, the A350 actually commands a decent premium against the 787. Even though here again, our competitor has 787 production issues and grounded airplanes, which result in inventory -- unsold inventory that is being liquidated out there on the market, which tends to have a downward pressure on pricing, which we have avoided getting dragged into. It is competitive. It's pretty fierce, particularly on the widebodies. I will confess to that, but our relative price performance is strong. On the engine side, that's a really good question. And I will admit that we are learning to deal with the single-source engine situations. We're learning to market our products side-by-side with the engine manufacturer. It is true that the engine manufacturers who have been bitten by the fact that they have developed extremely fuel-efficient engines at the expense perhaps of the maintenance cost that these fuel-efficient engines require. And therefore, because the engine business model is one where the engine manufactures offers power by the hour fixed maintenance cost contracts to the airlines. It puts a lot of pressure on the engine manufacturer when their engine is actually not as reliable or durable as it should be. And that forces the engine guys to adjust their pricing upwards. Luckily, our airplanes don't suffer from the same issue. Our airplanes bring productivity gains, efficiency gains without increased maintenance costs. So to some extent, we, the airframe, don't have to deal with that with that issue. But in the second part of your question is, we are learning to market engine and airframe on single source programs together, and we're taking dispositions. Juergen is very busy adjusting our motto is our branding with the engine manufacturers for us to be able to do that. But we don't have that maintenance cost issue to deal with that the engine companies have to deal with. And that good news, it speaks to the maturity of our products. Does that answer the question?

[indiscernible]

Yes. We're gaining influence on that because it affects the valuation of our product. But -- so we are now marketing very, very closely together with Rolls-Royce, a proposition that includes airframe and engine. The airlines will evaluate these things on an NPV basis. So we are having -- we are gaining influence on that. However, what I would say is the same phenomenon is true on all aircraft. And defacto, well, 777, which is really not doing very well, but the 777 is a single-source product, 737 is a single-source product. And the 787, defacto is becoming a very GE dominated product. And therefore, you see the same dynamic on both sides of the competition.

Thank you. So we had a question on this side of the room from Ken at the third row, please? On this side.

Ken Herbert with RBC. I wanted to ask you about the widebody portfolio. In 3 to 4 years, the 777X, at some point, will be entering service. Your competitor will have 2 relatively new strong products in that marketplace. How confident are you that the 350 with an aged A330neo is sufficient in that marketplace? Or how do you think about the portfolio and how it might have to evolve on the widebody side.

Okay, I don't see any near evolution of the portfolio on the wide-body side, to be honest. And why is that? Because I think we are well positioned. The A330, as I said, is addressing the more of the middle of the market. It's a wonderful complement to the A321, which it's -- has -- is a very differentiated product. On the A350, the A350-1000 was the large aircraft, the most flown large aircraft through the pandemic, showing that it's by far the most efficient long-range intercontinental airplane available today. You mentioned the 777 coming in, the 777 will be a slightly larger airplane if and when it comes to market, but it's a much older airplane. There's a killer argument and sorry to drag you into the colloquial this month, they are the commercial trenches. At every takeoff, if you fly across the Pacific Ocean, every take-off of a 777 will take-off with 35 tonnes more empty weight than 350,000. Now it takes a lot of yield for the few extra seats that, that airplane has to compensate for the fuel burn of 35 tonnes of dead metal. And that's -- it's a bit candid. I agree, but that's how we market the A350-1000. So the risk and airlines have been bitten before the risk of flying a bigger, heavier airplane granted with a few more seats, that risk is more than offset by the certitude, by the hedging, if you like, flying in a more efficient A350 even though it has 20 less seats. Sometimes it's 10 less, sometimes it's 30. And against the 787, as I mentioned before, 787 is a good product, fair enough. It's a modern product of equivalent technology, let's say, is the A350, but it's slightly smaller, but in a segment, which is much closer to the middle of the guass curve of distribution. So there in that segment, we are in a good position because the A350 is slightly larger and flies further than the 787. So we're in a good position. 787 has a head start. It came to market earlier, so it has penetrated more customers. And that's why we're saying our mission now with the A350, which we believe is a superior product by the way, powered by far, the best wide-body engine today, which is the Rolls-Royce Trent engine by far the best wide-body engine that A350 is very well positioned to give us the ambition and to justify our ambition to gain market share on the wide-body segment as well.

We have time for our last question from Daniela on the first row. Please, the microphone on the first row here.

Daniela from Goldman Sachs. Just following up actually on the widebody and tying it with comments you said earlier that the whole market overall, both categories is very undersupplied, demand is higher than supply. I wonder if you could distinguish I guess, in the near term, that's very narrow-body skewed comment. How much is the oversupplying widebody versus the undersupplying narrow-body and when you see that turning and widebody becoming undersupplied perhaps?

Yes. Thanks. We see very strong growth in demand for widebodies. And to some extent, because the volumes on the widebodies are smaller and the production rates are smaller, the transition from oversupply to undersupply is going to be perhaps even more violent. I say this carefully, but it could be more violent even than on the single aisles. I don't think we're quite there yet. The widebody demand is certainly coming. I mean, just this Air Show is a proof of that and the discussions we're having with our customers. So as expected, the demand has exceeded supply on the single aisles faster coming out of the pandemic. And now we're seeing the same phenomenon happening on the widebody. So I would not be surprised if we were in a similar demand supply environment with demand exceeding supply on the widebodies in a year or 2 from now. But I say this carefully, we're not quite there yet, but there's a lot of demand building up and a lot of big campaigns happening as we speak.

Thank you very much, Christian. Thank you, ladies and gentlemen. We will have another set of Q&A after the next two presentations. So thank you, Christian. Thank you for being with us today. We know you are busy.

Back to the trenches. Thank you.

So Christian has told you about the demand, about the sale. Time is now to move to the second part of our agenda, and we want to address with you this morning how do we serve the demand that Christian talked about, how do we make it happen? And we have 2 guests for you this morning. One you know well, Guillaume will explain you how we are transforming our industrial system. How do we make it? And he will be joined by another speaker, who will tell you about how we manage our supply chain in this challenging environment. Ladies and gentlemen, please welcome on stage the Chief Procurement Officer of Airbus, Juergen Westermeier. Juergen, this stage, may I hand over to you for the MAKE.

Thank you, Helene. So I think Christian has put some ingredients on the demand side. We have a backlog that is now, I guess, with what has happened in the last days between 7,500 planes and 8,000. I have not made the detailed calculation, but that must be the order of magnitude, delivering 720 planes this year that makes more than 10 years of backlog. And this is something we have committed to be delivering to our customers as we commit on delivery dates. The delivery dates rely on assumptions of deliveries. And for this, we have assumed that we would ramp up the delivery capacity to be able to deliver that backlog as soon as we can and in consistency with expectations of the airlines. Actually, what we have factored in, in the deliveries that we have committed to is to ramp-up back to the rates -- on the single eye to ramp-up it back to the rate 65 that we had before COVID or just before COVID as a first step and then going up to rate 75 by end of 2025 now. So that's the plan. We have a similar ambition on the A220, where we plan to ramp-up to rate 14 by the mid of the decade and also on the widebodies. What Christian said earlier on the building up of the demand is something that we've been seeing coming now for a year or so, maybe slightly more, that is building up and to be able to be competitive on the market with acceptable delivery dates. We have already decided and communicated earlier that we would ramp-up from rate 3, when we were last year to rate 4 by end of '24 on the A330. So we are on the ramp-up A330. And going from rate 6 to rate 9 per month on the A350 by end of 2025. So it's a ramp-up game on the 220, on the 320, on the 330 and on the 350. So it's all about delivery, okay? The financial performance of the company will be the result of the competitiveness and the volumes. And it is actually a volume game. That's something that we've been seeing coming over the years. And when I took over the company, and I first joined in Airbus Commercial in 2018, then becoming the CEO of the Group in 2019, it was quite obvious that we came from a history of Airbus, where the success was through the ability to find unique solutions to unique problems, was an ability to develop very sophisticated products fulfilling a very demanding specification. But that was at the end, I would call it, high-tech craftsmanship and planes were taken care of one-by-one. But we've been so successful over the years that we have to go to industry. So it's all about industrialization, delivering the volumes, the pace, the rates and the flow of production, still an environment where we deal with very complex and very sophisticated products. So if I take the first slide to try to illustrate the challenges that we see ahead of us, it's about volumes, it's about capacity. It's about building the capacity, but building the capacity in an environment where we introduce ourselves that unique solution to unique problems, meaning by this customization of the planes. So I'm going to the flexibility partner. We need the flexibility to be able to address the disturbances we are introducing ourselves through the customization but also through the new times. Hence because we've seen things happening in the market, we want to be able to make decisions to introduce changes and that those changes don't slow down the capacity, the volumes. So we need the flexibility of the production system on the one hand. But we need as well the resilience. That's probably what we have learned from the last decade. Of course, COVID-19 has been a great source of need for resilience, but we see that we operate in a VUCA world, volatile, unpredictable, complex and ambiguous. And that is the rest of the world, the geopolitical tensions, issues on logistics and raw materials impact on some suppliers. So we need to build the resilience. And that's what we have been doing over the last years. And I will try to spend a bit of time with you to explain how we are building the ability to deliver that capacity I would say, quite independently from the environment and fulfilling our ambitions, our obligations to bring diversity, changes, evolutions, new types, new programs into the equation. And if I say a few words about the flexibility, today, we are changing the mix between the 320 and the 321. We're entering into service the LR. We are preparing to entering into service of the XLR. We are building and developing the A350 freighter that we will enter into service. That's the third type in the assembly line. So that's the kind of modifications or changes that we need to be able to do, still maintaining the capacity on growing the capacity. And obviously, I will commit to it at the end. It's a lot also about human resources, people to operate that production system. So next slide. We came from a situation where program management was in charge of taking contracts contributing to the offers -- offering the right product with the sales department, signing a contract and then taking the contract and delivering the product at the end. And as the product was a sophisticated product in small numbers, historically, program management was in charge of the final assembly line. That was the place where this product was taken care of. But that was sort of limiting the ability to grow and to ramp-up in terms of speed. And we had final assembly line disconnected from the rest of the operations and the production flow of parts. So we had a lot of issues in planning, in orchestrating between final assembly line, the assembly of the product and all the production system and the supply. So in 2019, we decided to do like many other industries to put the final assembly line, which is the assembly of the product with the flow of production from buying to producing components, main components, assembly, subsections, equipped subsections and then assembling the product and delivering the products. Today, we are in an organization where program management for all products, including for the 220 that we had generated from Bombardier. The program management is in charge of doing the right things, orchestrating the activities of the rest of the organization and relying on operations to deal with production and assembly of the products in one consistent flow. So program management is in charge of making sure that we do the right things and operations in charge of doing the things right. Okay? And we have specialized operations. Now Airbus is an aircraft manufacturer. So we need to remain to be excellent in the way we do the assembly of the product. For that purpose, and I will go to the next slide, we have decided to change the way we split the company. We organize the company between Airbus assembling planes and subsidiaries inside the group. So in the -- as a MAKE, as a core part of Airbus organization that take care of delivering main component assemblies that are mature and that are fully equipped and prepared. So the job that has to be done at Airbus is really centered and focused on assembling the plane and delivering the plane at the right pace and in the right quality. So 3 years ago, we were relying on Airbus, where we were doing main component assembly and final assembly line, and we had Stelia and Premium AEROTEC that were arms-length company, with whom we were doing transactions in a BUY mode that we're in charge of producing the components. You might remember that this was structured 15 years ago when Boeing decided to outsource that equivalent part, and that was Spirit that was sold. So coming from make to buy, Airbus organized in a rather similar way to have the optionality to either do the same or not. Long story short, we decided 4 years ago that Aerostructure are core, but Aerostructures will bear a lot of innovation that it's all about the physical infrastructure, but also the digital infrastructure and to deploy a digital infrastructure that is common for the whole plane, we wanted to own Aerostructures. And we have decided to go for a model where we are in make so we consider aerostructures are core, but we still organize in a way that we have dedicated companies and organization to take care of it. So they specialize in delivering a main component assembly to Airbus and focusing Airbus on assembling planes and delivery. So we have tried to combine the best of both worlds, but we are absolutely convinced that first, aerostructures are core and a lot of competitiveness of the company, especially in times of ramp-up, in times of where we need flexibility and resilience that those big parts that are complex that ease the plane itself need to remain on Airbus. But it needs to be competitive and in its competitive environment and that we need to deploy physical infrastructure and digital infrastructure across the board at Airbus, including in the Aerostructures business. On top, this has been designed to prepare for the next generation of planes, as the aerostructures will embed much more integrated functions, and we need to be able to design aerostructures and produce and manufacture as we make as a core part as so much value will be on those part of the plan. So I think that's basically what I wanted to share with you. So we have a system that is no longer relying on buying from STELIA and Premium AEROTEC. It's a core make. It's one integrated organization with integrated digital systems, and we have a flow of activity that is much smoother, completely integrated and for planning purposes, for introducing modification, evolution, new types. That's something that is much easier to do. Now if I move to the next slide, it's a volume game. So it's not only about organizing the flow in an efficient way with program managing, orchestrating what we do, operations doing -- running the operations, we need also to increase the capability of the organization to produce. If I focus on the Airbus parts, I mean, assembling planes, we come from a situation, I would say, before COVID where for the A320 that is on the upper part of that slide, we had 8 assembly lines, 1 in Mobile, 1 in Tianjin subscale, only 1 FAL quite remote from the rest of the production system. And we had 4 assembly lines in Hamburg that were, I call them, A321 assembly lines in the sense of being capable of A320 and A321. And we had in Toulouse 2 A320 assembly lines. So no flexibility into those specialized on A320, very old assembly lines. If we look at the 2025 production system, and we have launched and started the investment or finished investment for all of those parts. We will find ourselves with 10 assembly lines. No site will be subscale, as we'll have 2 FAL in Mobile, 2 FAL in Tianjin. Those FALs will all be A321 FALs. We will still rely on the 4 A321 FALs in Hamburg. But on top, we will have integrated the A321XLR pre-FAL to avoid disturbing the flow of the standard A321s in Hamburg. So we have sized the capacity of the pre-FAL in such a way that we don't disturb A321 with A321XLR. And in Toulouse, we are currently building 2 brand new FALs that will be A321 FALs, and that will replace the old A320 FALs that we will wind down. So we will find ourselves in 2025, 2026 with 10 assembly lines, all A321 capable and with 3 main sites, U.S., Europe, China, with U.S. and China being at scale because when we have 2 assembly lines, we have the rates that justify a lot of activities being done on site, and that's more regionalizing the production system. That will also offer flexibility in the sense of ability to allocate more or less planes by block, U.S., Europe, China, resilience to geopolitical issues. And we will have a production system that will be capable in the surge mode for some period of time to be significantly ahead of 75 to ensure that we will have 75 on a steady basis, even when we have disturbances and issues coming so we will have increased the resilience. So at the end of the day, that we'll provide for the A320, a fantastic production system to do the rate 75 for a decade or 2 decades, if we need in a very robust way. Volume game. We need to have the production system that supports that volume game in an efficient way. On the A220, we're ramping up from rate 4, 5 to 14. That's why we decided to put together a second FAL in Mobile, same place as the 2 A320 FALs. So here again, we have scale in Mobile, and we start to have a fantastic production system in Mobile, starting from nothing 10 years ago. So that's really a big success of the development in the U.S. And so we have 2 FALs, and we have organized ourselves on the A220 in a similar way than what we do for other Airbus products. So we have built a pre-FAL to be able to build modules and then distribute those modules either to Mirabel in Canada or to Mobile to have the same efficiency and the same way of working as what we have for the other products as it has demonstrated to be very successful. And on the widebodies, you remember that we have only 1 FAL per product. Actually, we had before COVID the A380 FAL. We have discontinued the production of the A380. I think it was a lucky decision to do this a year ahead of COVID because we would have been in a much tougher place with the running final assembly line of the A380 during COVID so that was lucky. And we maintained the FAL of the 330 and the 350 at lower rates, but still the production system we have after COVID or 2025, but ramping up to production rates that are very comparable with what we had pre-COVID because we were close to rate 10 on the 350 just before COVID. We will be back to rate 9 by '25 -- end of '25 and again coming to rate 4 on the A330. That's the final assembly line part. We have organized Airbus Atlantic on the more French side, the front part of the plane and Airbus Aerostructures for the rear part of the plan. We have also optimized and we keep optimizing on that part of the equation. That's going more into complexities. But for instance, you might have in mind that we have decided to close one site in the South of Spain [indiscernible] activities and streamlined activities in Getafe, so the other site that is in the same place. And we have similar activities on some of the other sites where we changed significantly the work packages to specialize on aerostructure sites, which have to provide and deliver competitiveness in that field. I will move to the next slide because I want to insist on one aspect. The production system, historically, was about physical infrastructure. That's no longer the case. It's all about the physical and digital infrastructure. Data has to flow with the physical -- the parts and the subsystems and the systems and the main component assemblies and the final plane, data have to fall exactly in the same way. And we want to have one set of data, one source of truth. We are more and more building digital twins of the products and the production system. So we were completely convinced a couple of years ago when we took those decisions that we are implementing now that being successful with what we call DDMS, digital design, manufacturing and services, had to be expanded also on the manufacturing of the main component assemblies, so in the Airbus Atlantic and Aerostructures. And that's what we are doing. We would not be able to do this if these companies, these organizations were not Airbus organizations and by having integrated that system. That's what we are doing today. We are deploying our digital infrastructure, our digital backbone all across Airbus for commercial airplane in a similar and streamlined way. And this is a source of efficiency for the current production -- product range -- for the current product range, but absolutely essential to build and to design the next generation of products where the product and the production systems will be completely integrated, designed at the same time in a digital way. And that's what will enable automation, robotization, speed of going up and going down to a magnitude that is unknown today in aerospace, but it is similar in terms of concepts of what we see in the current industry today and what we saw in the microelectronics decades ago. So the digital part is more complex and less easy to describe and to explain and goes into complexity, but it is in our perspective, absolutely essential for the performance, the competitiveness and reaching the volumes moving forward. So that's what we do, and we are very happy to do it. And maybe one more point. The A320 plane has been designed with 2D historically, has been moved in 2D digital, now we are transferring all drawings and data into 3D systems into DDMS that will also enable us to do more changes, easier changes on the A320, A321 moving forward. You might remember that we've been beaten quite hard in 2019 with the introduction of ACF on the A321. We were very late in the introduction of that modification. I think everything in 3D moving forward will enable similar changes in much smoother and efficient way. Last but not least, it's all about the people that will operate that production system. And actually, things are really changing. First, we had a lot of people because we're ramping up. And second, we need people with different skills and that continue to develop themselves during their career going from blue collars and white collars and having a high level of expertise, know-how in mechanical engineering, in physics, those kind of things where they need to go to same plus digital because they operate digital systems, more and more contributing to configuration management, dealing with problems, quality management and moving forward as well as automation and robotization more and more at the station for the information part or for the physical part of what they do. You know that we are hiring a significant number of people. Actually, we have hired last year 13,000 people, and we are -- we have the ambition to do the same, 13,000 people again this year. Actually, we are oversized in terms of number of people, but that's something we do eyes open. We want to be ahead of the curve when it comes to recruiting, training, enabling the production system and being ready to do the ramp-up, again, taking the lessons from 2017, 2018 and 2019, where we were constantly behind the curve in our ability to ramp up the production system. And that's something that we try to do differently or we do differently now. We also -- when it comes to development and training and competencies of people, relying more and more on our own training academies. And we have one in Hamburg. We have one in Toulouse. I've been spending a bit of time in Toulouse in [ Les Ailes ] Airbus. That's quite amazing to see how we can attract people, train them and prepare them to be very efficient as soon as they join the organization. And we have also one similar initiatives in the U.S. that we have to confess, I know by far less, but is said to be also very interesting and attracting people in Alabama in a very successful way. So we are very serious about that side of the equation because we really realize that those more modern products and production systems, I could say, also support systems require a high level of competencies of skills that is the one that this young generation of digital natives and very smart and fast people will be enabling moving forward. And luckily, I see that I'm just at the end of my time. So this is what I wanted to share with you. It's a fast and quick highlight of how we have organized ourselves to deliver on that ramp-up on the next side. And then under your control. I hand over directly to Juergen that will brief you on the buy side that is 70% of what we do in terms of value compared to the make roughly. And I guess we'll be taking the questions after Juergen's briefing. Juergen, do you want to come here?

Dear ladies and gentlemen, today, I would like to explain to you about the Airbus -- I would like to update you about the Airbus supply chain and the way we manage it in the context of our ramp-up. But let me start by giving you some key figures and background information and Guillaume already said, at Airbus, we procure around 70% to 80% of our value creation. We have more than 3,000 first tier supplier sites and more than 10,000 N-tier suppliers. Altogether, they are sending the tremendous number of more than 2 million parts every day to our production sites and our final assembly lines all over the world. So you can truly say it is a global and interconnected system, which was nearly stopped during COVID-19. Just to give you some pragmatic illustration. The aerospace industry reduced the collective workforce by around 18%, 1-8, while the global manufacturing average was only around 5%. This triggered a shift of the workforce to other industries. My U.S. suppliers told me during crisis, they normally lay off people. And after the crisis, they rehire. Normally, they get back out of -- 8 out of 10. These days, they are lucky if they get back 2 out of 10. So the biggest challenge in our industry is getting back workforce. And as our industry, it's more manual than others, this also requires more training. So on top of this already challenging situation, the industry experienced an Omicron wave, the Ukraine war, logistic problems, semiconductor shortages, rising global tensions and finally, a significant inflation combined with higher interest rates. Just as one example, for the magnitude of the issues, at some point, you could see the congestions in front of major harbors on satellite images. And as this was not bad enough, a ship got stuck in the Suez Canal and was blocking the Suez Canal. So unsurprisingly, getting this multilayer system back to speed in such VUCA environment, was not a given. And it impacted us, especially in 2022, just as it impacted the whole industry. But this is not the first time. We are dealing with challenging supply chain situations. And I want to illustrate how we manage these. But let me first start with our guiding principles. We anticipate as much as possible. So we have time to mitigate. We protect production and prevent disruptions. And if the disruptions are pure, be prepared to respond and professionally mitigate them. And as always, use every opportunity to continuously improve the way we manage our supply chain and make it even more resilient. I will explain what we are doing to manage the supply chain following these guiding principles. So let me start with anticipate. A cornerstone of our ramp-up enablement is our ramp-up questionnaire. We analyzed the challenges our supply chain was facing in previous ramp-ups. And with this, we created a comprehensive questionnaire to assess the ramp-up, readiness of our supply chain for future rate steps. For example, we are evaluating the investment plan, the recruiting and the training plan or the demand slowdown. And if we discover new challenges, which are not yet covered, we update the questionnaire and integrate these assessments for further rate steps. This forward-looking approach gives us time to mitigate the identified ramp-up risks. A proven tool we have is the supplier financial watchtower, which we optimized during the successive waves of COVID-19. Within the watchtower, we are monitoring the financial health of our supply chain with the objective to identify potential future issues. If required, we deep dive into a specific situation to understand if we really have a short-term risk. If confirmed, we then develop a mitigation plan. This can range from a short-term support with payment terms, a complete restructuring or an action to move to a different supplier. It is a key part of our supply chain strategy that we want to have suppliers who are competitive in all relevant areas. Coming to digital tools and data analytics like artificial intelligence. These are areas of focus, allowing us to be more predictive. I want to illustrate this with the example of missing parts. Missing parts is a solid metric to measure the disruption the supply chain is bringing into our production. So reducing the number of missing parts is a key enabler for a stable production and the successful ramp-up. With data analytics and artificial intelligence, we are now able to identify with a high level of confidence, potential missing parts 5 weeks in advance. This then gives us enough time to prevent them. Now coming to protect and prevent. We need to bring more than 10,000 suppliers up to speed. And this in a synchronized manner, the best way we are convinced to achieve this is an early and strategic communication of our future production rates to our suppliers. And already, back in May 2021, we gave visibility until the end of 2024. And in October 2022, we even communicated up to the end of 2025. So everybody knew early on what we expected and therefore, could timely start to prepare the ramp-up and prevent disruptions. I would also like to mention our buffer policy, which is another protection measure against production with disruptions. We analyzed the parts we source for the single aisle and identified key and regular parts. If you miss a key part, this can have a major consequences on the production up to a full lne stop. Regular parts normally can be installed at a later point in time, even if it is still a disruption against the nominal flow. We decided 2 years ago to have at least 4 weeks buffer stock for regular parts and 6 weeks buffer stock for key parts. This again protects in the crisis and gives adequate time to mitigate. Clearly, it is a challenge to build up buffers for parts which are already in shortage. But especially in the last months, we were able to create the targeted buffer stock for many parts. Another important enabler is the availability of production materials. Our industry uses, for example, a significant amount of aluminum. To ensure this, we developed the ConBid process. Here, we consolidate on a yearly basis, the aluminum demand of our supply chain for the next 24 months. Following this, Airbus places and secures this demand on the market for our suppliers. Hence, we are able to ensure that they have a guaranteed supply of aluminum. Quality. Here let me introduce the advanced product quality planning, in short APQP. It is a standard brought from the automotive industry, which I am personally promoting a lot since joining Airbus and already witnessing the benefits. I want to explain this within the context of our end-to-end dynamic containment. This mechanism gets triggered by a quality escape. Let's take a simple example. We have a damaged cabin part, which is aesthetically not acceptable. The first step is to install a quality wall at the supplier, which shall protect us from nonquality inflow. So the supplier will test the parts for damage and then sort out all faulty parts. The second step is to analyze the production process as we do not want to create quality by testing and sorting out faulty parts but by producing quality at the first time right. So in this case, the root cause turned out to be a damaged tool. And therefore, we replaced the tool and also checked for other damaged tools. In other words, we do not stop at the symptoms, but look for the root cause to prevent potential quality issues for all the parts. And if I may push the analogy a bit further, we take the opportunity to do a full checkup while we are on the supplier side. So we used the crisis to sustainably improve the situation overall. And I can tell you, our KPIs show now that it works. And we were able to increase our average fulfillment rate compared to last year. But what if a crisis happens. And in this volatile environment, you can be sure something will happen. So now let's see how we, at Airbu's respond and mitigate. The most important situation -- the most important thing is to be quick and control the situation and really limit the impact. Here, every hour counts. The procurement organization with its 3,000 employees has a global footprint. We had regional procurement offices all over the world aligned with the geographical distribution of our suppliers. And also, we have teams at the sites of our key suppliers. This allows us to act immediately and not wait, for example, until someone from Europe gets to Asia. Additionally, I have a team of around 100 supplier development managers. You could describe them as my special forces. They are highly qualified, have tremendous on-the-ground experience and have above all proven their ability to successfully manage crisis. Another way to be quick and efficient is to have a predefined governance and tools ready. So we are not losing time trying to work out the team set up, the reporting structure, the methods and tools, but you can instead right away focus on mitigating the situation. I also want to mention the importance of task force. This is an agile internal setup designed to address the crisis in a focused way. I will illustrate this point a little later by giving you specific details on our electronic and our steel task force. To manage a severe crisis, we have what we call joint improvement plan, in short of JIP. Joint means a senior executive, most of the time, the CEO of the first-tier supplier, together with a senior executive on our side are leading the JIP. The JIP is a governance framework to mitigate the crisis and in parallel to transform the ways of working of the supplier to avoid new crises arising in the future. So our philosophy is not just to have a quick fix, but rather sustainably improve and prevent future issues of hearing. Now I will present you 3 concrete examples. If you ask me, what was the most critical crisis we had to handle in 2022. I would say electronic component shortages. And in our case, microprocessor shortages. These microprocessors are needed for computers. If you don't have the main computer, you cannot power up the aircraft and therefore, fully stop the line. This is the worst case scenario for parts, which are cheap and weigh down our supply chain. Just to illustrate, we buy the computers from our first-tier system supplier. They buy our board with microchips equipped from a board manufacturer. The board manufacturer buys the chips from a distributor and the distributor buys them from the microchip manufacturer. So weigh down. And normally, we at Airbus do not have direct contact with the chip manufacturer. And the chip manufacturer actually does not know what the end product is. So what did we do? We built a level play field. We started by establishing a semiconductor task force. The first assignment was to create a transparent mapping of which microchips are being used where. In parallel, we established a direct connection with the chip manufacturers up to the level of CEO to CEO. We made them aware that their chips are crucial for our aircraft production. They were all very supportive. With this direct contact, we managed to secure more microchips, a shortage, which would otherwise have massively affected us. But the chip is not a computer, and you saw all the pipelines. The chip needs to build inter-computer, and we already have delays. So we established a chip with our first-tier suppliers to compress lead times as much as possible. This can involve working 24/7 on critical processes, but we additionally focused on optimizing the flow, and we were successful in increasing the output to catch up on delays. As these chips, they're used by different suppliers in different products for us, the task force additionally did an arbitration to debottleneck and minimize the number of affected aircraft. And as a final step, we jointly changed our ways of working with the system suppliers. We decided, as I said, the parts are rather cheap to buy a 3-month buffer stock for all key references and store them in front of the board manufacturer. Today, we created this buffer stock for most of the references. So with these 3 months of buffer and the general improved situation, we are protected against most of the microchip disruptions we witnessed last year. This being said, the semiconductor situation is still tense, and our task force is continuing to work on ensuring on-time deliveries. Engines. You might remember that we discussed with our engine manufacturers, is the demand real? Is the rate 75 really needed? I can tell you that as they are getting the same requests from airlines as we are, we are all on the same page. And the need for rate 75 is confirmed and undisputed. The next step then was how do we ramp up production. Here, we saw major issues with CFM in 2022 that led to the producing of gliders. But with a successful chip, we were able to overcome this, and we are not experiencing issues today. With Pratt & Whitney, we are also running a chip. But due to MRO and issues in service support to the GTF, they are, I quote them "hand to mouth right now given some of the constraints." So this is a situation we monitor very closely, and we are working in close collaboration with them. Aerospace steel task force. Last year, we realized the availability of aerospace steel might also be an issue for our ramp-up. Why is this the case? There are only 3 main companies that we look to in the market. And the first one is insolvency. The second one has a significant output issue also due to the availability of skilled workforce. And a big risk in a situation like this is if the consumer start knowing steel is scarce, everybody then tries to build a personal buffer stock. I think we all experienced this during COVID times with empty pasta shells in the grocery stores. In theory, there is enough, but you have a distribution problem. So what did we do? We established a steel task force. We used our experience from the aluminum ConBid to identify the steel demand of our supply chain. Second, we used the experience we gained in a semiconductor crisis and actively stepped in arbitrating demand within our supply chain. And finally, with a joint improvement plan, we further increased the output of the affected producer. All this protected our ramp-up. So to conclude, we are still facing a VUCA environment, volatility, uncertainty, complexity and ambiguity and issues, especially in the ramp-up will occur. But I am convinced that we have an efficient and effective setup, and we are doing everything possible to ensure the ramp-up. So today, I focused my speech on how we manage our supply chain to secure our production ramp-up in a challenging environment. But this is definitely not all what procurement is about, we are also engaging with our suppliers to continuously improve competitiveness and progress on our collective sustainability journey. So thank you very much. I'm looking forward to answering your questions.

Thank you very much, Juergen. Thank you, Guillaume. So it's now time to start our second Q&A session. Same room as earlier, standup, name and company and no more than 2 questions at a time to make sure everybody has the chance to raise a question. So let's start it. We have a question on the third row, Milene.

Milene Kerner from Barclays. Can you talk, please, about your ability to protect yourself from production disruption coming from BFE cabin products, please.

Thank you. This is a very good question as this is a different relationship. The airline has a direct contract with the cabin suppliers, and we are closely collaborating in enabling the flow. And what we are doing here is -- and there we are also improving our processes, improving our systems. We are collaborating more to already in an early phase, analyze the supplier, the capability of the supplier to really produce the equipment and then in a very close collaboration, ramping up, ensuring the production, and we are also using the tools we are having. If there is a crisis, if there's a problem, I have on-site people. I have people like my supplier development managers who are going there to solve the problems, and we are also doing joint improvement plans. So it is the same method and tools we are using. It is just a little bit more complex as you have a third party in this relationship.

And maybe on my side, a few additional words that it's more of a widebody issued and single aisle. We're starting the ramp up on the widebody, and we already see issues with BFEs. So it shows that this is a critical topic. The contractual relationship with airlines comes with specific terms and conditions. Would they -- would the customer be in default in providing the BFEs on time that protects us to a large extent. And this being said, we're always trying to find constructive solutions with our customers to find a solution that fits with their needs because at the end, I need to operate the plan in service. But that creates complexity. The BFE situation in the industry is creating complexity for the manufacturer, especially in times of shortages like what we see today.

We have a question on the right.

It's Ian Douglas-Pennant with UBS. We've heard a lot about how you're increasing buffer inventories here. Your supply chain might be less able to do that, given they don't have the enormous balance sheet that you have. How are you supporting them in being able to build up inventories, does that take a form of price increases? Does that take the form of capital injections either directly or through indirect vehicles? And the second question I have is how do you regain the trust of the supply chain? You talked about how you can communicate with them with long-term targets. We've got 2021, we got last year, we didn't deliver. We didn't take the targets that you gave. And how do you regain that trust?

So trust, I think trust is a really important part in our business as you need to invest. And as said, we were extremely transparent right from the start with our major suppliers. We communicated in a widespread manner what are our production rates, as I said already in 2021 and up to 2025. And this is a feedback I get in direct discussions with the supplier that they really appreciated this transparency and this helps them to prepare. You saw we shifted a little bit last year, and I explained to all these multi-crisis, why this was necessary, but we are on the trajectory and this gives a lot of trust.

Maybe that's a key question, as you said, Juergen. Last year, we missed the target by a lot. But actually, the very vast majority of suppliers have done the job. And we took the decision for 2023 to target a production rate that we believed and still believe is very likely to be reached to regain that trust. And on the way -- and we did it yesterday under your leadership, Juergen, updating the suppliers. We did it at the show on where we are, where are the critical parts in the supply chain? And why they are right to continue to believe that this year will deliver on performance. So this 2023 year is an important one, and we want to do for 2024 and 2025, what we have done for 2023 which means stretching the supply chain to be able to ramp up as much as we can, but not to the point to risk having a handful of suppliers derailing the plan and being a problem for the rest of the supply chain. So it's regaining trust by having explained very clearly and transparently as Juergen said, what has happened last year, and it was a very complex environment, but also by demonstrating that in 2023, on each and every product, we are on our plan very transparently where are the issues, how we solve them. And short briefing you had with Juergen is something that he's sharing very transparently with the supply chain so they can trust that what we do is -- what they see is consistent with what we say and what is happening consistent with what we had planned. But it's an important year in that perspective. Now on the support of the suppliers, you want to say a few words, Juergen?

It's also a point of trust. Yes, you need to prefinance the ramp-up so that we are clear with our ramp-up targets and achieve them. This gives normally trust in the financial institutions. We have firm horizons for at least 6 months, we give you protection to -- you can also tell your banks that the ramp-up is real. So to get the cash flow, get the money. And we're also looking at this very carefully with our first-tier suppliers who are like us, having also means to support the supply chain. If there are issues, they are rather down with the smaller suppliers in the [indiscernible] chains. So it's an issue we have -- it's a point we are working closely -- looking closely.

And I will conclude, if I may, with one counter that I think is important. 2022 was the beginning of the re-ramp up. And everybody went on human resources big time. The power of OEM to attract new employees, talent is much stronger, generally speaking, than smaller companies. And we have actually competed with each other. That has been detrimental for smaller companies. So we took the lessons from that and are very openly communicating with the suppliers and the supply chain to make sure that we're all moving forward at a pace that is compatible with hiring and training all along the supply chain. Very close here, there are other questions I understand.

We have a question from Tristan who raised his hand earlier.

Tristan Sanson with BNP Paribas Exane. Two questions. The first one, you described the supply chain challenges that you face in 2022 and described the methods to address them. I'm not sure you want to detail today the exact challenges you're facing for '23, but I wanted to know what are the priorities for derisking that you see into 2024. What can be the blocking factors that you can anticipate today? And the second question is a follow-up on the staffing effort that you're doing today. Can you give a bit more color on how long is going to try to bring these new employees to full efficiency? And when do you expect a full adequacy of your staffing with your volumes?

Do you want to take the potential critical aspects in '24?

So 2024 we will see still supply chain issue. But in general, the situation is getting better, but we are still placed with a few critical suppliers. What I want to work on, what I will work with my team on is we are coming to a more normal ramp-up challenges. And I want to increase what you already started very successful with our IT tools to have transparency about missing parts being more predictive, being deeper down in the supply chain to really anticipate even more and being clearer to prevent further disruptions.

One of the challenges that was mentioned by Juergen is the Pratt & Whitney situation with the support of the in-service. That's clearly an issue for '23, but it's very likely to continue to be an issue in '24. So we are working very closely with Pratt to see how to deal with this for the 220 and the 320. On the staffing, as I said earlier, we took the decision last year in spite of having slowed down the ramp-up. We took the decision to keep hiring at the initial pace we have targeted to be clearly ahead of the curve in terms of staff at Airbus. That's the situation today. We are actually overstaffed compared to the current rates of production. That's been very helpful to support suppliers, have task force. We were be able to deal with some situations that [ were older ] situation, we wanted to improve. So we are overstaffed actually, Tristan. And that's something we do on purpose because we don't want to fall to the other side of the equation, which is being late because when you start to be late, it becomes very difficult to catch up. I don't see areas today where we are critical in terms of resources. Training is long, actually, it takes 2 to 3 years to train people. In some sites, in some regions, we have by far less people in the market, less offer on the job market, which means we also have to go for a longer training, and we even went to the point 1.5 years ago to extend [indiscernible] to education on cybersecurity with a first class of 24 people because we were short of data analysis and cybersecurity experts, and we thought well, we have to develop a specific training because this is something that is here to last. So that's the kind of things we're doing. But I'd like to highlight again that we have clear shortages of labor in the supply chain, sometimes low in the supply chain, mainly in the U.S. But at Airbus today, at Airbus Commercial, we feel like we are appropriately equipped, onboarding people, training them, again, sufficiently compared to the place where we are in the ramp-up.

We'll take a last question...

That has a cost by the way, but we think that that's worth it.

So we'll take our last question at the back, Olivier.

Olivier Brochet with Redburn. I will have 2. First one on the engines. Do you have commitments from the engine makers for '25, '26 already? Or is it something that we need to wait for a few more months, quarters? Second question, Aerostructures are now core -- have been core for some time. Are you satisfied with the capabilities that you have internally? Or is it something that you will need to reinforce either organically or through M&A?

So with the engine makers, we are in very close collaboration also with the teams of Christian to make a prediction what is the market going? Where is the market going? And there, we are highly aligned on what is happening. We have already firm commitments for 2024. We have corridors where we agree on what is needed in 2025. And we also project this further out to fully make sure that we are prepared to fulfill the demand. And so the closer we are coming we are firming up the commitments, getting details, but also making collaboratively sure that we are starting, if there's a need for long-term investments this on a timely manner.

And we will close the commitment for '25 before end of this year typically.

Yes.

Okay. On the core -- on the aerostructure, it's more a side-by-side answer to the question because sites are specialized. Generally speaking, we have a bit more difficulties to attract people in aerostructures than we have for final assembly line job that has been quite satisfactory over the past 2 years in bringing back people in training. The fact that we're transforming the production system with a clear vision that Airbus Atlantic and Airbus Aerostructure is make -- is core, we'll stay in Airbus, we'll benefit from the same investment in terms of DDMS contributes a lot to the attractiveness of the site of the activity. And I don't hear about recruitment problems now of a different nature. So that gives a clear path to the future. And it's also fair to say that the companies were recruiting under the brand name of STELLA or Premium AEROTEC. The Airbus brand name is a much more powerful employer brand, and therefore, it helps attracting people. Thank you very much.

This closes our Q&A session, and we are nearing the end of our meeting today. Guillaume, before we say goodbye to our guests, may I hand over to you for some closing words.

Yes. Well, I will be short. First, I'd like to thank you for your presence and attendance. As you have understood, we wanted really to focus our time today on the ramp up, which we believe is a very important part of the equity story of the Airbus, and what the customers expect from us, but also what you investors or analysts like to understand from what we are doing, but also what the supply chain is to understand. There was a very good question on the trust. We need our suppliers to come with us to invest, to hire, to train, to develop technologies for the future. And they need to feel that they are in an environment with Airbus that is safe and that what they expect from us is [indiscernible] we faced last year. There were very good reasons. We failed also because of the supply chain, but we are really committed to making this happening this year so far, so good. We have a very strong demand. The products are amazing products in a market that is a growing market. Christian tried to highlight the main characteristics. I believe this is here to last. We see that the global market forecast calls for sort of 40,000 planes to be sold in the next 20 years. That's been quite stable over the time. And when travel to China, to India, to Southeast Asia, but also to other parts of the world, Middle East, the demand, the appetite for flight is still growing. That leads to the big question of sustainability of that industry. That's why the second big pillar is the decarbonization and that's really a big part of my attention and the attention of the management as well. We have the plan as well. This plan has been endorsed by IPO end of last year. Now it's all about execution. It will come with investment in technologies, then in new products, working with the ecosystem when it comes to growing the SAF industry. And beyond this, looking at other forms of SAF like hydrogen to go to a place where we will not put 1 gram of carbon in the air because I'm deeply convinced that we are just at the beginning of aviation. That's the ultimate way of flying or traveling on the planet, no infrastructure on the ground, no infrastructure in the air, it is the air. And if it is decarbonized, that will be very sustainable in itself. So we are very committed, I see [ Julie ] smiling on the first row. As well on our decarbonization plans, we think they fit with each other. And the ramp-up is creating the value, the wealth to do these investments to create as well a long-term future that is very successful. So we think that those 2 parts of the equation, they really fit with each other and really work well together. This being said, I can only encourage you to take a coffee and then go to the show. It's an incredible show this year. As you might know, I'm also the Chairman of GIFAS, which is the French Association of Aerospace, and we are organizing the show, and we are very happy with the way the public has responded and the professionals. There are a lot of planes and helicopters and systems on the static as well in the air. I think it's a very good way to understand the momentum, the enthusiasm that is the positive energy that is in the sector at the moment in the last 2 days. I've been really amazed by the mood on the show. And I think that speaks also very highly of the big momentum around the world for aviation. This being said, I'd like to thank Christian that has left. Juergen, thanks very much. Juergen is doing a very structured and articulated work with procurement and thank you very much because that's really super important those days. So I hope it was useful for you this morning, and I thank you very much for your question and attendance. Thank you very much, everyone.

Thank you, Juergen. Thank you, Guillaume. I will let you head to the air show. So you are not delayed. A couple of practical information for our guests in Paris. If you need a taxi to go to the airport or somewhere else, the concierge and the reception will be able to support you downstairs. We say goodbye to our connected guests over the Internet. Thank you for being with us. Next roadshow season is after Q2, end of July, beginning of August, and we will be very happy to meet you at this occasion. And in the meantime, as always, do not hesitate to reach out to us. Enjoy the airshow. Enjoy Paris if you stay and have a safe journey home. Thanks very much.