Airbus SE (AIR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for holding. This is Airbus's Full Year 2024 Results Release Conference Call, and you're welcome to it. Sandra here, serving as operator for today's conference. Please be aware that throughout the presentation, everyone joining will be in listen-only mode, and this conference is being recorded. Once the presentation wraps up, there will be a chance for you to ask questions. Right now, I'd like to hand the conference to your hosts, Guillaume Faury, Thomas Toepfer, and Hélène Le Gorgeu. Please go ahead.

Thank you, Sandra. Good morning, ladies and gentlemen. You're joining the Airbus conference call covering the release of our Full Year 2024 results. Guillaume Faury, our CEO, and Thomas Toepfer, our CFO, will present the results and take your questions. We expect this call to run for approximately one hour and 15 minutes. That figure covers the Q&A, which we'll hold following the presentation. A webcast of this call is also available. You can reach it through our homepage by clicking the dedicated banner. A playback of this call will be accessible on our website, though no dedicated phone replay service exists. The supporting information package was published on our website earlier today. It contains the slides, which we will now take you through, as well as the financial statements. During this call, we will be making forward-looking statements. I invite you to refer to our Safe Harbor Statement that appears in the presentation slide, which applies to this call as well. Please read it carefully. And now, over to you, Guillaume.

Thank you, Hélène. Good morning, everyone, and thanks for being with us this morning for the call on our full year 2024 results. It's a pleasure to be here in Toulouse alongside Thomas and Hélène and to take you through what we delivered. During 2024, we saw yet another very strong order intake right across all businesses, which confirms the demand and the positive outlook for our industry and also for products and services. At the same time, we adapted to the environment in which we operate, concentrating on what matters most. We refocused our efforts so we could make progress on our priorities and secure our trajectory. On Defence and Space, we took further steps to transform the business and the organization. The extensive technical reviews of our space programs have now been completed. On Space Systems, we progressed on our three-step approach. We have fixed what I would call our foundation. We are executing our turnaround plan. Third, finally, we are evaluating strategic options. In that sense, we have started exploratory discussions with Thales and Leonardo, and I will comment on it later. On commercial aircraft ramp-up, we prioritized activities and allocated our resources accordingly. We are upskilling our teams, collaborating closely with our suppliers, while keeping a laser focus on quality and safety.

Basically, we're making headway in a setting that's still complicated and, as you can see for yourselves, shifting quickly. Against that backdrop, we handed over 766 Commercial Aircraft in 2024, 269 of them in the final quarter, which is an annual rise of +4% versus last year. That figure takes in the very first XLR deliveries, the A321XLR deliveries, opening up fresh opportunities for our customers. We met our updated guidance, and I see that as a genuine accomplishment given the conditions I just described. The teams' work makes me truly proud, and I also want to highlight how committed all our partners were in reaching that outcome. Turning now to how we performed financially in 2024, our EBIT adjusted came in at EUR 5.4 billion, which mirrors our Commercial Aircraft handovers and a solid showing at Helicopters. It likewise mirrors EUR 1.3 billion of charges across our space programs for the whole year, among them a EUR 0.3 billion charge booked in Q4, stemming from finishing the technical review, and Thomas will revisit that point afterward. Our free cash flow before customer financing reached EUR 4.5 billion, mirroring the robust performance across every business. These financial results, together with a net income of EUR 4.2 billion and our confidence in how we'll perform financially going forward, underpin our 2024 dividend proposal of EUR 2 per share plus a special dividend of EUR 1 per share.

Keeping all of that in view, let's examine 2024 more closely, beginning with where we stand commercially. So we'll turn now to the commercial landscape, starting with Commercial Aircraft. Travel demand stayed strong throughout 2024, and it kept surpassing prior records. Following the record-setting 2023, this year proved a successful one on the commercial side. Customers placed repeat orders for the same aircraft family, and a few of our product lines brought in new customers. During 2024 we booked 878 gross orders, 211 of which came in Q4. For the A220, we booked 17 gross orders and added four new operators. Turning to the A320 family, 637 gross orders were booked, including 180 in the fourth quarter, which lifted our backlog to 7,210 aircraft, of which more than 2/3 are for the A321. On the wide body side, we recorded 224 gross orders, which underlines the ongoing momentum behind our wide body family. Net orders came to 826 aircraft, including 52 cancellations, and our backlog in units rose to 8,658 aircraft at the end of December, reflecting a book-to-bill above one. At group level, our backlog in value grew to EUR 629 billion in 2024, chiefly reflecting the book-to-bill above one that I mentioned earlier across all divisions, along with the strengthening of the U.S.

Turning to Helicopters, 2024 stands out as a remarkable year for Airbus Helicopters. Net orders came in at 450, versus 393 in 2023, and our book-to-bill was above one in both units and value, which shows how strong demand is for these platforms. We also landed a solid order intake on services. That includes the standout performance of what we call the Super Puma family, or the H225 family — in the fourth quarter we signed a contract with the Dutch Ministry of Defence covering 12 H225Ms. Momentum remains positive in the civil market and the military market alike, and our focus stays on locking in new business opportunities both in our home countries and in export markets. Moving to Defence and Space, order intake for 2024 was EUR 16.7 billion, 6% higher year-on-year, equivalent to a book-to-bill of roughly 1.4. That is a record order intake, and we have achieved it for the second year running, even as we became more selective in our biddings and more prudent on risk profiles. I am clearly very pleased about this. To my mind, it proves we hold the right products and services for the current environment and for our customers. The key orders booked in Q4 mirror strong momentum across every business line, and especially on what we refer to as the Air Power side.

When it comes to Eurofighter, we're pleased to point out that the Spanish government has signed the Halcon contract, covering the purchase of 25 Eurofighter aircraft that will be assembled, tested, and delivered at the Airbus Getafe site. Beyond that, Italy has also ordered as many as 24 Eurofighters. Through this contract, both nations will further grow the fleets they already operate. Turning to the A400M, Airbus Defence and Space concluded two strategic contracts with the Organisation for Joint Armament Co-operation, OCCAR. One is the Global Support Services contract, known as GSS3, delivering a complete set of services tailored to requirements, while the other is the Block Upgrade 0 contract, representing the first enhancement of the A400M's operational capabilities beyond what the original launch contract covered. In space, Eutelsat awarded us a contract in December to build the extension of its OneWeb Low Earth Orbit LEO constellation. Let me restate our plan here. As I mentioned earlier, we have now finished the technical reviews. We keep carrying out our turnaround plan, particularly through the organization and the workforce adaptation. In addition, we have begun what I would describe as exploratory discussions with Thales and Leonardo. These talks, preliminary and non-binding at this point, are meant to evaluate various scenarios for consolidating and reinforcing the European space sector and delivering value to this industry's main stakeholders.

And at this point, Thomas is going to walk you through the financials. Thomas.

Thanks, Guillaume. Good morning, everyone, and thank you for being on the call. I'm on page six of the presentation now, and I'll walk you through how we performed financially. As you can see, revenues for full year 2024 rose to EUR 69.2 billion, an increase of 6% year-on-year, mainly reflecting the number of deliveries of Commercial Aircraft and Helicopters, along with higher volume in our Air Power business. On R&D, as you can see on the right-hand side of the page, expenses stood at EUR 3.3 billion in 2024, stable compared to 2023. Indeed, two factors offset the slight increase we had initially anticipated. First, the LEAD initiative — which, I repeat, is not a cost-cutting program, but which aims at prioritizing activities and projects to focus on what matters — that also resulted in a slightly lower R&D expense for the year. Secondly, the earlier capitalization of our development costs in our Commercial Aircraft business, which we initiated in the third quarter in order to align with accounting standards, also resulted in lower R&D expenses, with, of course, the opposite effect on our CapEx. And you remember that I mentioned that effect already in Q3.

Looking ahead now, R&D spending should rise only slightly in 2025, in line with the LEAD prioritization initiative, as you already saw in Q4. Turning to EBIT adjusted, our full year 2024 EBIT adjusted fell to EUR 5.4 billion from EUR 5.8 billion in 2023. So let's begin by looking at 2023. As you may recall, 2023 gained from the progress we achieved on our compliance topics, which then enabled us to release provisions totaling EUR 0.1 billion in Commercial Aircraft. However, 2023 figures also included revised assumptions on certain long-term contracts in our space business, which produced a charge of EUR 0.6 billion. Then, in 2024, the positive effect of higher Commercial Aircraft deliveries was partly offset by investments made to prepare for the future, particularly the excess workforce, along with a somewhat less favorable hedge rate. Underlying performance also drew support from the solid results of our Helicopters division. In Q4, as planned, we finished the in-depth technical review of our space programs, notably one major program that still needed to be fully assessed. That led to a charge of EUR 0.3 billion in the last quarter, coming mainly from updated key assumptions.

That takes the total charges for the full year up to EUR 1.3 billion, and that clearly is the main factor behind the drop in our EBIT adjusted versus the prior year. This charge mirrors the broad, deep effort the team has put in, program by program, which produced revised assumptions and, as a result, reduced our risk profile going forward in a business that stays inherently complex and faces greater competition. Let me remind you here that this charge covers past, present, and future profitability as well, so only part of it actually pertains to the current period. So 2/3 is probably the right order of magnitude to normalize in your models. I'll turn now to delivering on our plan within a simpler organization, with end-to-end accountability and by leveraging technology reuse. Turning to Defence and Space, we are making headway in talks with our social partners regarding the division reorganization and workforce adaptation, and a restructuring provision is expected to be recognized once the necessary conditions are met, with the amount expected to be around EUR 0.2 billion. Now to the EBIT adjustments, which were slightly negative in the full year 2024, they included, as you can see on the page, a EUR +101 million impact from the dollar working capital mismatch and balance sheet revaluation, of which EUR 247 million came in Q4.

Within that figure was a EUR -121 million item tied to the A400M, and EUR -118 million of it landed in Q4. There was also a EUR +51 million gain on Airbus OneWeb Satellites, connected to buying out the remaining 50% of the joint venture, which we had already booked in the first quarter. On top of that, a EUR -40 million charge came from the recently announced shutdown of the Airbus Beluga Transport business. And lastly, EUR -41 million in other costs, covering compliance and M&A, with EUR -31 million of that in Q4. All of this brings our full year EBIT reported for 2024 to EUR 5.3 billion. As the page also shows, over on the right-hand side, the financial result came in at a EUR +121 million, mainly reflecting revaluation of certain equity investments and movements in the U.S. dollar, partly offset by the interest result and revaluation of financial instruments. Turning to tax, the rate on our core business remains at roughly 27%. Regarding the French surtax, we stand by our earlier estimate of an impact of approximately EUR 300 million, though we now anticipate it will hit in 2025, on both the P&L and the cash flow.

For 2024, our effective tax rate comes in at 25%, and that figure reflects the tax impact from revaluing certain equity investments, along with updates on deferred tax positions and tax risks. As a result, net income works out to EUR 4.2 billion, and reported earnings per share were EUR 5.36. Full-year 2024 adjusted EPS was EUR 5.05, calculated on an average of 790 million shares. Given this outcome and our confidence in future financial performance, we will propose a 2024 dividend of EUR 2 per share along with a special dividend of EUR 1 per share, which we see as the most suitable way to strengthen our commitment at this moment. Turning to U.S. dollar exposure coverage — I'm on page eight of the presentation — during 2024, $ 23.2 billion of forwards matured, with the related EBIT impact and euro conversions realized at a blended rate of $1.21, versus $1.20 in 2023. In financial year 2024, we also put in place $14.3 billion of new coverage at a blended rate of $1.11. Consequently, our total U.S. dollar coverage portfolio in U.S. dollars is $82.8 billion, at an average blended rate of $1.21, compared with $91.7 billion at $1.23 at the close of 2023.

And so, as you can see, given the market conditions, we chose to reduce our U.S. dollar coverage by approximately $9 billion during 2024. I should also mention that our portfolio is being adjusted right now through some rollovers to reflect the 2025 delivery target as well as the delivery profile, which we expect to be back-loaded. Now let's take a closer look at free cash flow — I'm on page nine of the presentation. Free cash flow before customer financing came in at EUR 4.5 billion in 2024, mainly reflecting the delivery level and the commercial momentum across all our businesses, which produced a healthy PDP inflow, while the planned inventory build-up reflects the ramp-up across the programs. The A400M continued to weigh negatively on our free cash flow, and full year 2024 CapEx was EUR -3.7 billion, which obviously reflects investments in enhancing and upgrading our industrial system as well as the change in development cost capitalization that I mentioned earlier. To support our ramp-up, we expect CapEx to increase slightly in 2025. Free cash flow was EUR 4.5 billion as well, with a very minor impact from customer financing, and in that context, the aircraft financing environment, in our view, remains strong and competitive, and we currently expect sufficient liquidity from diverse sources to finance the 2025 deliveries. To round it up, our net cash position stood at EUR 11.8 billion as of the end of December, also supported by the dollar's strengthening towards year-end, and our total liquidity is now at around EUR 35 billion.

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

Thanks, Thomas. That was a great shot of the H225M, by the way. So let's begin with Commercial Aircraft on page 11. In 2024, as we've mentioned, we handed over 766 aircraft to 86 customers. Now, looking at how things stand by aircraft family, on the so-called narrow-body side, we delivered 75 A220s along with 602 A320 aircraft, and of those, 361 were A321s, which works out to 60% of deliveries for the family — so 60% of the family's deliveries were A321s. On the A320, we're still ramping up toward a rate of 75 A320 family aircraft per month in 2027, no change there. We're very pleased that our newest aircraft, the A321XLR, has entered into service. The first A321XLR went to Iberia in October, followed by two more to Aer Lingus. The A321XLR delivers unique capabilities when it comes to range, economics, and environmental efficiency. Great product. We delivered 89 wide bodies, consisting of 32 A330s and 57 A350s, including first deliveries to new operators. On the A330, we are now stabilizing at a monthly production rate of around four per month. Specific supply chain challenges, notably with Spirit AeroSystems, are currently putting pressure on the ramp-up of both the A350 and the A220. On the A350, we continue to target the rate 12 in 2028, so again, no change here, and we are adjusting the entry into service of the freighter variant, which is now expected in the second half of 2027, and here, it's a change, and on the freighter, the first flight test aircraft will enter the final assembly line this year.

Regarding the A220, we're still on track to reach a monthly production rate of 14 aircraft in 2026 — so essentially, our ramp-up path is moving forward. Some particular supply chain problems remain, though. Engine pressures for narrow-bodies continue, especially with CFM, and that's already hitting us as we start to see the so-called gliders — planes that are fully assembled but sitting there waiting for their engines. The upshot will be a low delivery figure for Q1. We saw this coming back in 2023, and Q1 will come in below last year's level. We anticipate the situation lasting through the summer, then normalizing during the second half of the year. Turning to cabin and equipment, the issue is structural, driven by the recovery in air traffic and demand from customers for upgrades. On Aerostructures, as mentioned before, supply chain difficulties are likewise weighing on our activities. As for Spirit AeroSystems, we'll share more detail on the acquisition currently underway later. Let's now turn to the financials for our Commercial Aircraft business. Revenues rose 6% year on year, largely reflecting a higher delivery count. EBIT adjusted climbed to EUR 5.1 billion from EUR 4.8 in 2023, as the gain from more deliveries was partly offset by investments aimed at preparing for the future, including some specialized workforce.

Turning to Helicopters: during 2024 we handed over 361 rotorcraft — a figure 15 higher than 2023's total. Revenue rose 8% to EUR 7.9 billion, driven by those greater deliveries, strong results across the programs and expansion in services. Consequently, EBIT adjusted climbed to EUR 818 million, with profit margins at 10.3%, matching our target of durable profitability even as we stay dedicated to disciplined execution and ongoing enhancements. Now let's wrap up the review with Defence and Space. Revenues there grew 5% year on year during 2024, reaching EUR 12.1 billion, chiefly powered by the Air Power business. EBIT adjusted mirrors the EUR 1.3 billion in space charges that Thomas outlined. At this point I want to remind everyone that 2023 likewise carried EUR 4.6 billion of charges. Both sets of impacts stemmed primarily from revising our estimates at completion — the EAC assumptions — for the space programs. I'd like to reinforce Thomas's earlier remarks. Now that the thorough technical review is finished, our attention shifts to meeting our commitments within the space business, a business that stays intricate. On A400M, seven aircraft were delivered by us in 2024, among them the first unit for Kazakhstan — an export customer and the ninth nation to fly the aircraft.

During 2024, we carried out one more revision to the contract estimate at completion, and we booked a net charge of EUR 121 million. That mainly reflects updated assumptions about the new contract amendment with the launch nations as well as risks in production planning. Given the uncertainty around the level of aircraft orders, the company keeps evaluating what the potential impact could be on the program's manufacturing activities, and risks concerning qualification of technical capabilities and the related costs remain stable, with no major variation versus 2023, and yes, before we move to the 2025 guidance, Thomas will give you more color on Spirit AeroSystems.

Yes, glad to address that. I'm looking at page 14 of the deck, so regarding Spirit AeroSystems — as we discussed on our H1 call, we signed a binding term sheet agreement. What I'd describe as a defensive step, taken to protect both immediate operations and the long-term future of major Airbus work packages, and it gave greater certainty as well to employees and to the supply chain that supports Airbus activities. Since signing that term sheet, we've moved forward with due diligence while evaluating the best ways of integrating every production site into our operating model. Given how many stakeholders are involved, finalizing the transaction needs more time, so consequently — and as our understanding of the operational situation grows deeper — the financial outlook is tougher than we originally expected. Indeed, supporting the A350 and the A220 ramp-up will require investment to boost production capabilities and drive operational efficiency. So with that, let me say a few words on the expected financial impact, based on preliminary assumptions. If we assume a closing date around mid-year, the 2025 impact on EBIT adjusted should be approximately neutral.

On the reported EBIT side, the effect will probably be a positive one in the mid-triple digits, largely because of the deal compensation we're set to receive from Spirit AeroSystems. Then, the net cash effect should come out roughly neutral as well, since that compensation will offset the negative free cash flow impact before customer financing. Moving to 2026 and 2027, we're expecting a negative impact on adjusted EBIT in the low triple digits, and on free cash flow before customer financing a negative impact of up to the mid-triple digits each year. Our teams are putting in hard work to deliver this project, which is plainly one of our key priorities for 2025. With that, Guillaume will now walk you through our guidance.

Thanks, Thomas. Moving to page 16 — for the 2025 guidance to hold, the company is assuming there will be no further disruptions affecting global trade or the world economy, air traffic, the supply chain, the company's internal operations, or its capacity to deliver products and services. To be specific, potential new tariffs on the company's business are not factored into this guidance. As Thomas just explained, the 2025 guidance incorporates the integration of certain Spirit AeroSystems work packages, based on preliminary estimates and closing assumptions as of 1 July. On that basis, the company is targeting roughly 820 Commercial Aircraft deliveries in 2025, EBIT adjusted of approximately EUR 7 billion, and free cash flow before customer financing of about EUR 4.5 billion. Our key priorities on slide 17 will wrap things up. We are committed to serving customers in 2025 while keeping our strong commercial position across all businesses, which is a source of strength and stability. In doing so, we'll stay focused on the Commercial Aircraft ramp-up and the Defence and Space transformation. On the ramp-up, our aim is to improve our ability to deliver on time and with quality. We will keep shaping our industrial systems, notably through the integration of Spirit AeroSystems, and managing a deep and interdependent supply chain in a complex and ever-fast-changing environment.

To put it plainly, in 2025 we'll need to perform at our very best. Regarding the Defence and Space transformation, we'll continue carrying out our turnaround plan and pursue workforce adaptation in close cooperation with our social partners, while examining various scenarios to create scale in the space business. These priorities serve as enablers for profitable growth and for our ambition to lead the development of sustainable aerospace. Climate change is one critical challenge facing humanity, and globally, 2024 was the warmest year on record. At Airbus, our aim is to decarbonize aviation over the long term. So we will keep enhancing the environmental performance of our products and operations, and also act as a catalyst in developing sustainable aviation fuels. On hydrogen, we hold the ambition of bringing a commercially viable, fully electric, hydrogen-powered Commercial Aircraft into service. That is not changing. We consider fuel cell technology the most promising way to fulfill this ambition. Scaling up the hydrogen ecosystem is challenging and, unfortunately, is moving at a slower pace than we previously anticipated. Bringing fuel cell technologies to a commercially viable product at scale will likewise take more time.

Here's what we've picked up from our work over the past years. A product that's commercially viable is now anticipated to arrive after 2035 rather than sooner, and we'll put that extra time toward advancing how the fuel cell propulsion performs along with the liquid hydrogen system technologies. With all of that considered, we're heading into 2025 with focus, determination, and plenty of positive energy. We're ready now to take your questions.

We're going to begin the question-and-answer portion now. When you ask a question, kindly state your name and your company. Keep it to 2 questions per turn, sub-questions included. And as always, please speak distinctly and at a slower pace so that everyone on the call, especially you yourself, can follow what's being asked. So, Sandra, please go ahead and walk the participants through the procedure.

We’re moving into the Q&A portion now. If you’d like to pose a question, just press star one one on your phone’s keypad. Our first question comes from Benjamin Heelan at Bank of America. Go right ahead, sir.

Morning, everyone. Hope you’re all doing well. Thanks for asking. Could you share a bit more about Spirit and the difficulties in the second half of the year, and maybe sketch out what’s actually going on? What are the issues? What are they having trouble with? Is it labor? Is it capacity? Just a little more detail on that. Thank you.

What are the challenges? I see two things. Let me begin with Spirit's operations. As you know well, Boeing experienced a major strike, and that clearly impacted Spirit too, since Boeing is one of its biggest customers. This caused further disruption to the company's work, which doesn't help with the work packages we're looking to acquire. So additional support became necessary to keep Spirit on a stable footing, operationally as well as financially. Second, as we dig deeper into those work packages, we now have a clearer view of the investment required to bring Spirit up to a level where it can fully back the ramp-up we're planning for the A350 and the A220, and our assumptions now incorporate that updated knowledge. Finally, as you can see, reaching a final signature and then closing the contract does take some time. I'd say we're making good progress. But naturally, with more than two parties at the table and a transaction that's quite complex by nature, it simply took a while.

That said, I'd repeat that we're on a solid path and making solid headway here, and so we've built into our guidance an assumption—one I consider quite realistic—that we'll reach a closing by the middle of the year.

Alright, thanks. And I suppose I have another question for Guillaume. Guillaume, you’ve mentioned space and the talks you’re having right now with Thales and Leonardo. What actually — what would a good outcome look like for you from these negotiations? What are you hoping to get done? Is it about building a European champion that Airbus can be part of? Or is it about you consolidating the other assets? Could you give us a bit of color? In a good scenario, what do you see coming out of these negotiations? Thank you.

Morning, Ben. Quite an early start for you. What we're looking to do is gain scale and speed by consolidating the business. The businesses we're in are ones where scale matters. These are businesses where technologies move very quickly, so you need to invest. And in order to invest, you need the scale to have a reasonable impact on the recurring cost. You also need scale on the production side. So we're in a situation where some U.S. players are disrupting the ecosystem, are going at scale on new technologies on constellation. In Europe we have Airbus, but also looking at Thales Alenia Space and Telespazio, we have technologies, in some cases even better ones, but we're missing the scale that we need to be competitive in this new environment. So we want to create the scale. We want Airbus to have a stake in a large company. We would be happy if the end result looks like something along the lines of the MBDA model, where we have a significant share with others in a business that can prosper, that can grow, that can invest, and that can be successful on a global scale. Now we're looking at different scenarios, and we're not at a point where we can fully answer the questions of what it will look like.

So again, what are we after? We're after scale and speed in this business. We want to take advantage of the technologies and the competencies that we have. And to do that, we have to be able to compete globally, and global competition right now truly involves far more dollars and far more speed than at any time before.

I'll keep this really brief. Could Ariane potentially play a role in that?

Could you repeat that?

Could Ariane potentially also be involved in those discussions?

What we're continuing to pursue in order to reach a different outcome centers on satellites and satellite services. This is extremely urgent.

Thanks.

Thanks. Our following question comes from Tristan Sanson at BNP Paribas. You have the floor.

Yes, good morning to all of you, and thanks for taking my question. My first question concerns raw materials. Guillaume, could you give us a brief perspective on how you view the raw material supply situation in 2025, and how you believe that will support the ramp-up plan in the years ahead? The second question is a quick one, but can you confirm that on Spirit, regarding the financial side of the Spirit deal, the revision of the cash cost tied to integrating the assets comes to roughly EUR 1 billion across a period of three years? Is that the right magnitude? Thank you very much.

Thomas will take the second question — honestly, I’m not certain I grasped it completely myself. As for the first one, raw materials: that has certainly been a source of concern and difficulty over recent years, particularly following COVID and the conflict in Ukraine. By now, though, things have settled down, and raw materials don’t appear among the critical bottlenecks I’d flag for 2025.

Yeah. So regarding Spirit, I realize the financial effect might be a bit tricky to convey. The way things stand, we'll get compensation for taking on the work packages, but that won't show up in our free cash flow—it will only appear in our net cash position. Still, it will offset the negative free cash flow in 2025. So if you look at our net cash position, the overall cash impact in 2025 will be neutral. But as we showed on the slide, we do expect additional cash needs in 2026 and 2027, with a negative impact of up to a mid-triple-digit amount per year in each of those two years. So I think, going back to your point, that could add up to something under a billion for the timeframe we indicated.

That's quite clear. Thanks, Thomas. Appreciate it.

Thanks. Our next question is from David Perry at JPMorgan. Go ahead.

Hello, yes. Good morning, Guillaume and Thomas. I was hoping you could give us some help on the delivery guidance. I understand you're saying roughly 820, but let's take 820 as the figure. That works out to 54 additional aircraft. Could you walk us through how that splits across the different models? I mean, A350 deliveries actually fell in 2024. So should we expect them to rise again in 2025? And what does that mean for growth on the A320 specifically? Thank you.

Good morning, David. Splitting things out by model isn't something we favor, since that flexibility gets used throughout the year to hit the guidance, and there are always ups and downs plus challenges here and there, and we rely on the volume not being too far off when we issue a guidance at the start of the year. Now, the sole indication I can offer is that we're having difficulty with the ramp-up on the A350 and the A220 against the backdrop of one stronger bottleneck, which is Spirit AeroSystems, and that's the reason we're talking so much about Spirit AeroSystems, so our trajectory, our ramp-up trajectory on those two programs is significantly impacted in 2025 by these difficulties.

Okay, and do you expect those two models to actually see higher deliveries?

David, I’m not going to address that question today, but the ramp-up is under pressure.

Alright. That's everything I had to ask about today. Thanks. I appreciate it.

Appreciate it, David.

Thanks. Our next question comes from Ross Law at Morgan Stanley. Please go ahead.

Good morning, everyone, and thanks for taking my questions. The first one concerns engines. What precisely is causing supply to be lower in each case? Is it purely a matter of allocation between OE and aftermarket, or is something else happening with the engine suppliers? Then, on the special dividend, it will cost you roughly EUR 800 million in total, yet net cash stood at EUR 11.8 billion, which is about EUR 1.8 billion above the EUR 10 billion threshold. So why wasn't the special dividend a bit larger? Are you in effect setting aside extra cash for something specific? Thanks.

Thanks for those questions — I'll pass it over to Thomas now. On engines, yes, that's an important one as well. I'd say I have no particular comments regarding the wide bodies, and from Rolls-Royce we're getting what we need for 2025 and beyond. For our narrow bodies, there are challenges when it comes to engines. With Pratt & Whitney's GTF, we remain constrained by the fallout from the metal powder problems two years back, and by the path that was reset through two rounds of negotiation with them — in 2023, if I remember correctly. They are on that path, but we understood this would mean fewer engines for new aircraft, so that we can support the in-service fleet as well as reasonably possible, given that a large number of aircraft are on the ground due to their engines being in the recall campaign tied to this technical issue, or production issue. So this is low, but I'd describe it as more or less as planned — or perhaps even more unplanned. What's very different is CFM: at the back end of 2024, CFM ran into several issues — production issues, and one also connected to damage at one of its supplier's plants in Florida following the hurricane that occurred.

They ended up facing a really critical supply situation with certain parts, and that hit both the aircraft for the aircraft manufacturer and support for the fleet. That was the cause of a great deal of arm twisting among the stakeholders at the end of last year over engine allocation. CFM helped us during the last month to deliver aircraft to our customers, but we knew some hardware would be missing in the beginning of this year, and that is affecting us as well as our customers. So we are in that situation, and a sort of normalization is planned for around mid-year. That is what we tried to explain on the call earlier. So we have different situations for different aircraft.