Airbus SE (AIR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Airbus nine month 2025 earnings release conference call. I am Sharon, the operator for this conference. Please note that for the duration of the presentation, all participants will be in a listen only mode and the conference is being recorded. After the presentation there'll be an opportunity to ask questions. At this time I would like to turn the conference over to your hosts, Guillaume Faury, Thomas Toepfer and Hélène Le Gorgeu. Please go ahead.

Thanks, Sharon, and good evening everyone. This is the conference call for Airbus's nine months 2025 earnings release. Guillaume Faury, our CEO, and Thomas Toepfer, our CFO, will present our results and take your questions. We expect this call to run for about an hour. That includes Q&A, which we'll hold after the presentation. This call is being webcast as well. You can access it through our homepage by clicking the dedicated banner. A playback of this call will be available on our website, though there is no dedicated phone replay service. The supporting information package was published on our website earlier today. It contains the slides we will now walk you through, along with the financial statement. 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. Now over to Guillaume.

Thanks, Hélène, and good day everyone. Appreciate your time in joining today's call covering our results for the first nine months of 2025. Thomas and I are in Amsterdam to take you through the numbers. The conditions we operate in stay complicated and fast-moving. Handling robust demand alongside the same supply chain pressures we've been facing — those haven't gone away — continues to call for relentless operational discipline and agility, especially given shifting trade policies. We're glad to see the U.S. EU Trade Agreement, which since the beginning of September has brought back a stable, tariff-free setting for trade in aircraft and parts. That's an essential step enabling our worldwide industry to proceed with the predictability required to invest and innovate. Even so, the geopolitical landscape, still unsettled, remains something we watch closely at all times. Against that backdrop, we're executing our plan to hit the A320 family production goal of rate 75 per month by setting up 10 A321 capable final assembly lines spanning four sites worldwide. Adding a second line recently in the United States, along with the second line in China, represents a key milestone for our global industrial growth strategy and strengthens our overall business resilience too. We're ramping up operations and growing capacity as we continue the commercial aircraft ramp up.

Our commitment to European Defence is equally strong, and we remain focused on providing more competitive and innovative products and services through our 2 divisions, and we observe growing momentum regarding European strategic autonomy. Significant progress has been achieved toward consolidating our space activities alongside Leonardo and Thales, with the goal of establishing a leading European company. I will address this shortly. During Q3, we delivered 201 commercial aircraft, and since the engine situation is showing signs of recovery, the number of gliders now stands at 32 as of the end of September. That brings our year to date deliveries to 507 aircraft, compared with 497 last year. Deliveries remain back end loaded as we navigate the engine situation. A strong year end rally lies ahead of us and our teams are in the sprint. Our EBIT Adjusted was EUR 4.1 billion as of nine months 2025. This reflects the commercial aircraft deliveries and the solid performance at both Airbus Defence and Space and Airbus Helicopters. Our free cash flow before customer financing came in at -EUR 0.9 billion. It notably reflects the inventory buildup that supports the Q4 deliveries and the ramp up on that basis.

We're keeping our 2025 guidance intact, and that now reflects the tariffs currently in force — we'll return to that point later. Turning to space, we've taken a significant strategic step. We're delighted about the recently announced signing of a Memorandum of Understanding, an MoU, with Leonardo and Thales aimed at creating a new European space player in 2027. As you may remember, I said clearly last year that our priority had to be fixing the foundations and bringing profitability back. That turnaround plan is now fully underway, and the early results please us. At the same time, we've been exploring strategic options for building scale and boosting competitiveness against global players. The aim of the new company is to unite and strengthen space capabilities by bringing together the three respective activities in satellite and space systems, manufacturing, and space services. This MoU represents a collective industry commitment to reinforcing the European space sector. Coming next, we will launch the social consultation process with our social partners, prepare the carve-out of the space businesses, and tackle regulatory requirements. It's a busy road ahead, and we're wholly dedicated to this major and exciting project. Let's turn now to our commercial environments, beginning with commercial aircraft.

Passenger numbers kept climbing, and demand for air cargo stayed resilient as well. Across the nine months of 2025, we recorded 610 gross orders, 116 of which came in Q3. For the A220, gross orders totaled 40, and on the A320 family we logged 371 gross orders. That takes our backlog to 7,105, roughly 75% of which is for the A321 — and the 7,105 figure, of course, covers only the A320 family. Turning to widebodies, we booked 90 gross orders on the A330, which confirms how strong demand is for these versatile products. Lastly, the A350 brought in 109 gross orders, underscoring the ongoing commercial momentum of what has become the market's reference. Net orders came to 514 aircraft, among them 96 cancellations that were mostly expected and already reflected in how we value our backlog. At the close of September, our total backlog in units was 8,665 aircraft, as of December 2024. On Helicopters, net orders for the nine months of 2025 reached 306, versus 308 during the same period of 2024. Quite comparable, and nicely distributed across the portfolio. Momentum remains positive, especially in military markets, and we stay focused on locking in new business opportunities both in our home countries and in export markets.

An Airbus final assembly line is going to be set up in India for building H125 helicopters together with Tata Advanced Systems, with the goal of seizing the full potential of the civil, para, public, and military markets across South Asia. To wrap up, let me point out that we've consolidated our offering of small and medium tactical uncrewed aerial systems, UAS, the drones, into one comprehensive portfolio run by the Airbus Helicopters Division. The purpose here is to deliver a focused market approach for defense and security customers and to give customers cutting-edge capabilities for surveillance, intelligence, and operational flexibility. Lastly, in Defence and Space, order intake comes to EUR 6.8 billion for the nine months on air power. That notably reflects an order from the Royal Thai Air Force for a next-generation Airbus A330 MRTT+. This advanced aircraft is an evolution of the combat-proven A330 MRTT, bringing in innovations from the A330neo along with upgraded military capabilities, in particular the new engine of the NEO that is now on the MRTT+. Still on air power, let me highlight the recent contract with Germany for the acquisition of 20 Eurofighter aircraft to be produced at our final assembly line in Nanjing and to be delivered to the German Air Force starting from 2031.

Order intake gets booked only after every contractual condition has been satisfied, which means it hasn’t been captured in Q3 yet. Demand for the Eurofighter is likewise robust in export markets beyond the Eurofighter partner nations, and this week’s pledge by Turkey to buy 20 units showed that as well. On Eurodrone, the program is advancing: earlier this month we wrapped up the CDR, the critical design review, successfully. That formally closes the design stage and opens the path toward prototypes, production, and ground testing before the first flight on FCAS. We stay convinced that Europe requires its future combatant system so it can address its security challenges and keep building the critical skills and know-how in this domain. Considering how much effort and investment this takes, we are convinced — I am convinced — of the value of a collaborative approach, and we plan to take a leading role in getting it done, one way or another. Broadly, regarding the defense side of our Airbus Defence and Space and Helicopters businesses, we hope to ride a growing momentum and we expect that to carry on for the foreseeable future.

Thanks, Thomas. Thomas is now going to walk you through our financials.

Guillaume, and hello everyone. I'm on page seven of the presentation now, and as Guillaume mentioned, I'll walk you through our financial performance. On the chart, you can see that revenues for the first nine months of 2025 rose to EUR 47.4 billion, an increase of 7% year-on-year. That mainly reflects a bigger contribution from our divisions, stronger services volumes across our businesses, and a higher level of deliveries, partly offset by the depreciation of the U.S. dollar. On the right-hand side, you can see that R&D expenses came in at EUR 2.1 billion for the first nine months of the year, which is lower than in the nine months of 2024. We keep benefiting from the prioritization of our activities. For the full year, we now expect R&D expenses in 2025 to be slightly lower than in 2024. Now let's turn to EBIT Adjusted on page 8. As you can see, EBIT Adjusted for the nine months of 2025 went up to EUR 4.1 billion, from EUR 2.8 billion in the nine months of 2024. Let me remind you that during the nine months of last year, we booked EUR 989 million of charges in our space business, and obviously those did not recur as of the nine months of this year.

Increased commercial aircraft deliveries bring with them a mix that is less favorable, and that is compensated for by a more favorable hedge rate plus reduced R&D expenses, and it also shows stronger performance across both divisions. Allow me to clarify just what the currently applicable tariffs will do. Right now our expectation is that this will come to somewhere between EUR 100 million and EUR 200 million across the full year, though the vast majority of that will land in Q4. As the right hand side of the page shows, EBIT Adjustments came to a net -EUR 0.8 billion. Let me take you through the items: included is a -EUR 577 million impact stemming from the dollar working capital mismatch and the balance sheet revaluation, chiefly reflecting the mechanical effect of the gap between transaction date and delivery date, with -EUR 186 million of that arising in Q3. Second, there is -EUR 105 million tied to the Airbus Defence and Space restructuring, which we booked back in Q1, and there is -EUR 88 million tied to stabilization of certain Spirit AeroSystems work packages, with EUR 31 million of that booked in Q3, and lastly -EUR 11 million of other items, compliance costs and Moda among them.

So for the first nine months of 2025, our reported EBIT comes to positive EUR 3.4 billion, and the financial result was positive EUR 374 million. That figure mostly mirrors the revaluation of some equity investments along with the revaluation of financial instruments, partly offset by how the U.S. dollar moved. On the core business, the tax rate remains near 27%. The effective tax rate, though, sits at 32.4%, which includes the tax impact from revaluing certain equity investments plus a net impairment of deferred tax assets. We continue to anticipate that the French surtax will have an impact of roughly EUR 300 million in 2025, affecting both P&L and cash. During the nine months of this year, we booked the portion tied to 2024 along with the portion that corresponds to the first nine months of this year. Net income as a result is EUR 2.6 billion, with reported earnings per share of EUR 3.34, as the chart shows. Adjusted EPS for the nine months of 2025 came in at 3, on an average of 790 million shares. With that, let's move to page nine and examine our coverage of U.S. dollar exposure. In line with what we mentioned in our business update, we started putting in place a limited number of zero cost collars — precisely $2.1 billion during the quarter — within our hedge portfolio.

That $2.1 billion figure refers to dollars, clearly not euros. The goal behind this approach is to tackle the longer-term horizon while keeping volatility at an acceptable level, and potentially to capture favorable movement in the U.S. dollar, while simultaneously obtaining protection should the dollar weaken materially. To be clear, our intention is not to replace our forwards; instead, we want to complement our coverage using a limited quantity of collars, and as noted, at this stage the collars will stay at roughly a single-digit percentage of the total. Once collars are integrated, the blended rate now incorporates the least favorable rate among our collars, which therefore gives you a protected, or conservative, view. Having said all that, as the page shows, during the nine months of 2025, $14.8 billion of forwards matured, with the related EBIT impact and euro conversions realized at a blended rate of $1.18, versus $1.21 in the nine months of 2024. We also put in place $12.7 billion of new coverage at a blended rate of $1.18. Consequently, our total U.S. dollar coverage portfolio, in U.S. dollar terms, stands at $80.7 billion with an average blended weight of $1.21, compared with $82.8 billion at $1.21 at the close of 2024.

Turning to page 10, let's examine free cash flow. Before customer financing, free cash flow came in at -$0.9 billion across the first nine months of the year. The chart shows this outflow stemmed primarily from the working capital change, and it clearly mirrors the inventory build we planned in order to support ramping up throughout our businesses. A favorable phasing effect from cash receipts and payments on the A400M is also included. That aircraft weighed slightly negative on free cash flow during the nine months of 2025, since deliveries of it are loaded toward the back end. Even so, our expectation remains that it will be broadly neutral where free cash flow is concerned for the full year 2025. The chart also shows a nine month CapEx figure of -EUR 2.3 billion, and we still anticipate that number rising in 2025 to underpin our industrial ramp up, such that free cash flow was -EUR 0.8 billion, which includes customer financing of +EUR 0.1 billion. One thing we can state is that the environment for aircraft financing stays strong and competitive, and we anticipate ample liquidity to finance our 2025 deliveries.

By the close of September, our net cash position was EUR 7 billion, which also takes into account the dividend payment and the weaker dollar environment. I want to emphasize that liquidity is still very strong, at roughly EUR 30 billion. As you may have seen, Moody's raised our credit rating in September to A1 with a stable outlook, and in our view this underscores both our consistently solid credit management and the strength of our balance sheet. With that, I'll hand it back to Guillaume.

Thanks, Thomas. That's very clear. So let's begin with commercial aircraft. During the first nine months of 2025, we handed over 507 aircraft to 79 customers. Breaking that down by aircraft family, in narrowbodies we delivered 62 A220s along with 392 A320s. Of those 392 A320 family aircraft, 250 were A321s, which works out to 64% of A320 family deliveries. We're really pleased that Air New Guinea has received its first A220, making it the 25th operator of the aircraft worldwide, and it's now flying with carriers across five continents. The A320 family hit a major milestone by becoming the most delivered airliner in history. There's some pride there, as you can see, and we keep ramping up toward a rate of 75 A320 family aircraft per month in 2027. That's unchanged from our previous assumptions. On the A220, the present balance between supply and demand has resulted in an adjustment to the ramp-up trajectory and the ramp-up that lies ahead. We now aim to hit rate 12 in 2026, which allows time for integrating the Spirit AeroSystems work packages, mainly the wings, and for the progressive introduction of engine durability improvements for our customers. That means more work to reach breakeven, and our team is actually on it.

During the nine months, we handed over 53 widebody aircraft — specifically 20 A330s and 33 A350s. As for the A330, we're presently holding steady at a production rate of 4 per month, which we introduced earlier. Our aim now is to get to rate 5 by 2029 so we can satisfy customer demand for the A330. Regarding the A350, nothing has changed. We're still targeting rate 12 in 2028. Turning to the A350 freighter, I'm happy to report that assembly has begun on the first flight test aircraft in Toulouse, and that aircraft is scheduled to fly next year. To sum up, our production continues according to plan. The difficulties we've faced this year remain the same — particularly with cabins, and for the A320, the ongoing pressure on engines, which left us with 32 gliders as of the end of September. The engine picture is beginning to improve, and we're still collaborating closely with the engine makers so we can meet our 2025 commitments. Let's now turn to the financials for our commercial aircraft business. Revenue grew 3% compared with a year earlier, largely driven by a greater number of deliveries along with growth in services. EBIT Adjusted came in at EUR 3.33 billion for the nine months, supported by favorable hedge rates and somewhat reduced R&D expenses.

Now, that rise in deliveries carries with it an unfavorable mix. Turning to Helicopters: across the nine months, we handed over 218 helicopters — 28 more than at the nine months of 2024. Revenue was up around 16% to EUR 5.7 billion, which reflects a solid showing from programs and services growth. EBIT Adjusted rose to EUR 495 million, reflecting growth in services as well as higher deliveries. As I said earlier, let's wrap up our review with Defence and Space. Revenue grew 17% year-on-year to EUR 8.9 billion, driven by higher volumes across all business lines. EBIT Adjusted came in at EUR 420 million, supported by higher volumes and improved profitability, in line with the divisional mid term trajectory. On the A400M program, we are holding positive and forward-looking discussions with the launch nations and OCCAR. This was notably marked by the agreement reached in June with OCCAR to advance seven deliveries for France and Spain and to further increase the visibility we have on the production for the program. Given uncertainties regarding the level of aircraft orders, Airbus continues to assess the potential impact on the program's manufacturing activities. Risks on the qualification of technical capabilities and associated costs remain stable. Now on to our guidance, which, as you have seen, is maintained.

With its 2025 guidance as the foundation, 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. Currently applicable tariffs are now reflected in the guidance. The guidance additionally reflects the effect of integrating certain Spirit AeroSystems work packages, based on preliminary estimates and an assumed closing in the fourth quarter of 2025. On that basis, for 2025 the company is targeting roughly 820 commercial aircraft deliveries and an EBIT Adjusted of approximately EUR 7 billion. We're not yet there, and free cash flow before customer financing of approximately EUR 4.5 billion. Just to clarify what I said about EBIT, we are targeting an EBIT Adjusted of approximately EUR 7 billion. The expected effect of integrating certain Spirit AeroSystems work packages on the company's guidance remains broadly consistent with earlier estimates. Maybe, Thomas, you'd like to add more precision on some of those elements?

Yes, allow me to add a few clarifications and specifics to your points, Guillaume. To start with tariffs, as I mentioned before, our expectation is that this will come in somewhere between $102 million and $200 million across the full year. The bulk of that overall figure will be booked in Q4. Next, regarding Spirit AeroSystems, by broadly in line we mean that the closing is now anticipated to happen before the year is out, and every party involved is dedicating all the effort required to the closing process. Operational readiness for day one remains on track. Naturally, this is later than we had expected at the start of this year, when we issued the guidance. Because we did not own the business during this delay, no negative operational result entered our free cash flow, so moving the closing into Q4 brings a partial benefit to free cash flow. Conversely, as you have also noticed in our financial statements, we extended credit lines to Spirit, and those are booked beneath the free cash flow line. Taken together, this stays broadly neutral with respect to the company's net cash position.

Assuming nothing else changes, if you'd like, you can build that modest free cash flow positive adjustment—somewhere in the low triple digit range—into your models, though clearly the magnitude isn't big enough that it prompted us to revise the guidance. With that said, I'll hand it back to Guillaume.

Thanks, Thomas, for those clarifications. I'll wrap up by going over our main priorities, which remain the same. We are still completely dedicated to carrying out the following phases of our commercial aircraft production ramp-up alongside our suppliers. There are two parts to our focus: tackling the specific supply chain pressures that are still with us — especially on narrow body engines, where durability continues to be a headwind, and on cabin — while at the same time getting ready to integrate the key Spirit AeroSystems work packages. As we concentrate on our production targets, we are also bringing to maturity the essential technologies that will shape the successor to the A320 family, consistent with our goal of pioneering the next generation of commercial aircraft. Turning to Airbus Defence and Space, we are making headway on our transformation and helping to build a European space leader. On European Defence, the industry is plainly on the move. We are taking on this challenge by drawing on the combined know-how of our Defence and Space and Helicopters divisions to drive scale and cooperation across Europe. Now let's move to your questions in the Q&A.

Thank you, Guillaume, and thank you, Thomas. Our Q&A session begins now. Kindly state your name and the company you represent. At one time, please ask no more than two questions, and that count covers sub-questions as well. As always, we ask that you speak distinctly and at a measured pace so that every participant, especially those using self, can follow what you ask. Sharon, please proceed and walk the participants through how this will work.

Thanks, Hélène. At this point we'll open it up for questions. If you'd like to ask one, just press star one one on your phone's keypad — that's star one one to ask a question. We'll take our first question now. It comes from Benjamin Heelan at Bank of America. Please go ahead.

Ben, we’re not getting any audio from you.

Is this coming through okay now?

Yes.

Yeah, my apologies for that. The first question concerned the margin. In Q3, the margin strikes me as fairly favorable. Would you mind walking us through a few of the drivers? From where I sit, the mix in commercial appears quite strong. Any thoughts on that would be useful. Thanks.

Ben, I believe we're going over the same ground a bit when we state that a single quarter's margin shouldn't be overestimated or overinterpreted. What I'd say is that the margin in commercial was, let's put it this way, positive. That doesn't automatically stem from the mix. In fact, the mix wasn't particularly helping us in Q3; it was driven more by, shall we say, cost discipline on SG&A and R&D, where the lead program we've launched is now truly delivering its full effect. We're quite pleased with, I'd say, the efficiency the company has demonstrated throughout the year and especially in Q3. The actions we've taken are not, let's say, short-term in nature; instead, we expect that we can actually maintain them along our trajectory. Second, I'd say that in Defence and Space, every division is performing well. There are two things driving this. First, our improvement program for Space is genuinely producing good effects, and we're very pleased with the results we're seeing — not just regarding the measures they're taking, but the first outcome, which is somewhat better than we had anticipated. Second, as Guillaume mentioned, there's good momentum in defense overall, where we see not only solid order intake but also, let's say, solid margins across the first nine months of the year.

Rather than singling out the mix, I’d emphasize certain self-help steps and operational discipline that are providing support.

All right, thanks. And a quick follow-up on that. I realize you're not going to hand us a delivery figure for 2026 today, but could you share any building blocks that would give us a rough sense of the direction we ought to be looking at for next year on the commercial delivery side? Thank you.

I'd say there's nothing more today beyond what you already know regarding the A320 ramp-up trajectory. The A330 and the A350 have changed, as you've seen in what we're targeting for next year on the A220, where we aim to hit rate 12 rather than rate 14. Nothing new on that horizon apart from this slight adjustment on the A220, and we'll be targeting rate 5 for the A330 a bit later. That's essentially a lot of stability in the ramp-up trajectory compared with what we shared earlier in the year.

Alright, thanks a lot. I appreciate that.

Thanks. We’ll take the next question from David Perry at JPMorgan. Please go ahead.

Yes. Hello, and good evening, Guillaume and Thomas. I have two brief questions, both about the tariff effect, Thomas. If the entire amount lands in Q4, should we annualize that effect as we look ahead? Regarding space, could you clarify precisely what is being included? Unless I'm wrong, I believe you're including somewhat more than only the manufacturing business. Perhaps I've misunderstood that, and perhaps you could add any other remarks about whether this transaction will meaningfully affect the ADS margin going forward, and whether you are making any equalization payments or receiving any. Thank you.

Regarding those two questions, on the tariff effect, let me restate my earlier point. For the entire year, the impact will land somewhere between EUR 100 million and EUR 200 million. So why does most of it hit in Q4? The material we needed has already been shipped into the U.S. We keep it as work in progress, which means the tariff impact gets recorded only at the point when that material is actually built into the aircraft and the aircraft is sold. So, to answer your question, the Q4 effect should not be annualized. It is a one-off impact for this year, since a great deal of the effects from before September 1 are presently sitting in our WIP and will only come through once the aircraft is delivered. That is how the mechanic works. On your second question, if I understood it correctly, you mean Bromo. What are we bringing into that corporation? Two businesses, essentially our space services business, which today sits mainly in CI, and our space systems business, which is also a subdivision of Defence and Space. Clearly, the launcher business has nothing to do with it, as it is entirely separate, but we are bringing in both services and space systems.

So, does this deal significantly affect Airbus's margin going forward?

So look, we do anticipate mid triple digit synergies once we're 5 years past closing the deal. In the medium term, I'd say it should be clearly accretive to margin. At that point we'll hold a 35% stake in a business that's more efficient and more profitable than what we have now. And let's be honest, over the very short term, I wouldn't build a big impact into the models you probably have.