Airbus SE (AIR) Earnings Call Transcript & Summary

Good day, everyone, and thanks for holding. This is the Airbus Q1 2026 earnings release conference call, and you're welcome to it. I'm Laura, and I'll be your operator on this conference. Just so you're aware, throughout the presentation every participant 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 over to Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.

Thanks, Laura, and a really warm welcome to all of you who are with us today to dig into our Q1 2026 results. I'm in Amsterdam alongside our CEO, Guillaume Faury, and our CFO, Thomas Toepfer. They're here to walk through the figures and field your questions. This call is scheduled to run 1 hour, Q&A included, and a replay will be posted on our website. Today's presentation and the detailed financial statements are already up on Airbus' website. Before we begin, let me note that we'll be making some forward-looking statements today. I'd encourage you to have a look at the safe harbor statement in our presentation slides. It's important stuff, so please give it a quick read. With that, let's get things started. Guillaume, the floor is yours.

Thanks, JC, and good evening, everyone — or good morning, depending on where you're joining us from. We're here in Amsterdam, as JC mentioned, and Thomas and I will walk you through the Q1 2026 results. Back in February I told you the global environment was complex and dynamic, and what's happening in the Middle East shows that this has stayed true — and the situation keeps evolving quickly. Although deliveries aren't directly affected right now, we're closely watching possible fallout for air traffic and the world economy. Keeping our employees in the region safe — the people supporting our customers there — remains our top priority. In defense, the momentum is carrying on. Our focus is on consistent execution and raising output to meet global demand. On the commercial aircraft side, we handed over 114 aircraft in Q1. Even with that low delivery count, we're increasing production according to our plan for 2026 while managing a shortage of Pratt & Whitney engines. You can see this directly in our financials: EBIT adjusted came in at €0.3 billion, and free cash flow before customer financing was -€2.5 billion. Our guidance for the full year 2026 is unchanged. Let's now turn to the commercial environment, beginning with commercial aircraft.

At the start of 2026, passenger traffic grew and air cargo demand kept up its steady momentum. In the near term, we're watching what's happening in the Middle East and global air traffic, and our confidence in the industry's fundamentals remains intact. In this quarter, we booked 408 gross orders. For the A220, we booked 20 gross orders, and we keep seeing positive momentum. Turning to the A320 family, we booked 336 gross orders. That takes our backlog to 7,418 aircraft, with roughly 75% of them for the A321. Onto the widebodies: on the A330, we booked 17 gross orders. Lastly, on the A350, we booked 35 gross orders. I'm happy to share that our biggest freighter order ever has been placed by Atlas Air Worldwide, for 20 A350 freighters. That also makes them the largest customer for the type and the first in the US, pushing our total freighter backlog above 100 units. Net orders came to 398, including 10 cancellations. Our backlog in units rose to 9,037 aircraft as of the end of March 2026. Before I move to Helicopters, let me flag a key milestone in our growing services business. In fact, to better deliver digital services to our customers, we recently merged NAVBLUE, our flight operations specialist subsidiary, with our Skywise digital solutions activities, forming a new company called Skywise.

This will deliver complete digital solutions for aircraft operators. Turning now to Helicopters: during Q1 2026 we recorded 79 net orders, versus 100 in Q1 2025. We concluded strategic long-term framework agreements covering the H135, the H140, and the H145 helicopters with two major emergency medical services operators in Europe. At Verticon 2026, Airbus Corporate Helicopters unveiled the ACH140, the corporate variant of the H140. Airbus Corporate Helicopters named launch customers across three key regions: the US, Europe, and Brazil — our leading markets for private and business aviation. Market response to this new helicopter has been positive. Lastly, regarding unmanned air systems, Garuda Technologies in the US signed a contract for delivery of up to 18 Flexrotor uncrewed aerial systems. Overall, we keep seeing solid momentum across both civil and military markets, and we stay fully focused on delivering against expectations, including ramping up. Finally, on Defense and Space, we close Q1 with a very strong order intake of €5 billion, mostly on the air power side, reflecting customer demand for military aircraft and services. In addition, we keep reinforcing our position in the drone and anti-drone markets.

We're also seeing movement on the 3-tonne class UCCA — that's uncrewed collaborative combat aircraft — and likewise on Bird of Prey, our drone interceptor, which is meant to give armed forces an affordable way to counter UAS threats. When it comes to FCAS, discussions are continuing with the governments of France, Germany, and Spain so that a decision can be reached on how the project moves ahead. Here at Airbus, our view remains that Europe needs to build new combat air systems, and we keep playing a leading part in that work. Turning to Connected Intelligence, our cybersecurity roadmap is moving forward: we have signed deals to acquire Ultra Cyber Limited in the UK and Quarkslab in France. That gives our sovereign cyber capabilities a further boost and builds on the 2024 purchase of Infodas in Germany. Last, in Space Systems, order momentum continues to look good. Our contribution to the Artemis II lunar flyby mission makes us very proud. The ESM — the European Service Module, designed and built by Airbus — supplies the propulsion, power, and thermal control that are essential, which keeps this historic journey into deep space safe and successful. Thomas will now walk you through the financials. Thomas?

Thanks a lot, Guillaume. Good morning, everyone, and thanks for being on the call. I'm on page 6 of the presentation now, and I'll walk you through how we performed financially. As you can see there, revenues for Q1 2026 fell to €12.7 billion, a decline of 7% year-on-year, which mainly mirrors fewer commercial aircraft deliveries during the quarter as well as the depreciation of the US dollar, though this was partly offset by a bigger contribution from our Defense and Space division. On R&D, as shown on the right-hand side, our expenses rose slightly compared with Q1 2025 and came in at €0.7 billion. Let me remind you that we expect R&D expenses to go up in 2026, in particular to support the acceleration of the defense portfolio. Turning to the next page, on EBIT adjusted, our Q1 2026 EBIT adjusted dropped to €0.3 billion from €0.6 billion in Q1 2025, reflecting fewer commercial aircraft deliveries as well as a 2 cents deterioration in the hedge rate, but it also reflects a strong performance in Defense and Space. Now to the EBIT adjustments, which were negative €76 million in Q1 2026 — you'll find them on the upper right-hand side — and they included a negative €42 million impact from the dollar working capital mismatch and balance sheet revaluation, mainly reflecting the mechanical impact stemming from the difference between transaction date and delivery date.

Next, there was a negative €32 million tied to integrating the work packages acquired from the former Spirit AeroSystems. And finally, €2 million of negative other costs, M&A among them. All together, that brings Q1 2026 EBIT to positive €0.2 billion. On the right-hand side you can also see that our financial result came in at positive €466 million, which mostly mirrors the revaluation of some equity investments. On the core business, the tax rate remains at roughly 27%. The effective tax rate for the quarter, though, is 20%, which includes the tax effects from revaluing certain equity investments, partly offset by the French surtax impact. Looking at 2026 overall, we anticipate the French surtax will be broadly comparable to 2025, which as you remember came to approximately €0.2 billion. Net income comes out at €0.6 billion, with earnings per share of 74 cents, while our Q1 2026 adjusted EPS was 33 euro cents, calculated on an average of 787 million shares. Moving now to page 8 and our coverage of US dollar exposure. During Q1 2026, $3.4 billion in forwards reached maturity, and the related EBIT impact and euro conversions were realized at a blended rate of $1.21, compared with $1.19 in Q1 2025.

During Q1 2026, we put in place $5 billion of new coverage spanning a 5-year horizon, using a combination of instruments that includes collars. The blended rate of $1.24 on this quarter's additions mirrors, in particular, the least favorable rate attached to the collars, which carry weight mostly toward the outer years of our hedge horizon. Because of that, our total US dollar coverage portfolio in US dollars sits at $77.4 billion, at an average blended rate of $1.22, versus $75.8 billion at a rate of $1.22 at the close of 2025. As we noted in the full-year 2025 disclosure, this quarter we adjusted our portfolio by carrying out some rollovers to reflect the delivery target and phasing for 2026, which we expect to be back-end loaded. Moving now to a closer look at free cash flow on page 9. Free cash flow before customer financing came in at -€2.5 billion in Q1 2026. That outflow chiefly mirrors the low level of commercial deliveries, which drives a further inventory increase on top of the one already planned for the ramp-up. Our Q1 2026 capex was -€0.6 billion, as the page shows, and it supports our ramp-up along with the successful integration of the former Spirit AeroSystems work packages.

To accomplish that, we anticipate capex will keep rising in 2026. Free cash flow came in at -€2.4 billion, and that includes customer financing of positive €0.1 billion. In Q1 2026, we still observe a financing landscape that is diverse and competitive, and right now we believe there is enough market liquidity to fund our 2026 deliveries. Finally, as you can see, net cash position was €9.8 billion as of the end of March, and liquidity stays very strong, above €30 billion. With that, I’ll hand it back to Guillaume.

Thank you, Thomas. Beginning with commercial aircraft, we handed over 114 planes to 46 customers during Q1. If we break that down by aircraft family, on the A220 we delivered 19 aircraft. That ramp-up continues, and our target of a rate of 14 aircraft a month in 2028 stays the same, so there's no change there. On the A320, we delivered 81 aircraft, and 55 of those were A321s, which works out to 68% of deliveries for the A320 family. As I mentioned, this low delivery count stems from what we call a desynchronization between production and delivery. The first factor here is the panel quality issue that you're familiar with. On that front, things are moving along well, and we confirm the operational impact is limited and will fall mainly across H1 of this year. Second, we ran into an administrative delay that affected the delivery of nearly 20 aircraft to Chinese customers. The root cause of that issue is behind us, and the related deliveries have picked back up, so that's something we're now putting behind us. All in all, Pratt & Whitney remains the key pacer of our A320 ramp-up trajectory and of deliveries for this year and for next year, with an impact on both '26 and '27. So as a result, I'd say no change for the A320.

By the close of next year, 2027, we anticipate hitting a monthly rate of 70 to 75 aircraft, then holding steady at rate 75 from that point on. Turning now to widebodies, we handed over 14 aircraft: 3 A330s along with 11 A350s. Regarding the A330, nothing has changed — we aim to get to rate 5 in 2029 so we can satisfy customer demand. For the A350, again no change, and we keep targeting rate 12 in 2028. As for the A350 freighter, ground testing remains on schedule, which sets up the first test flight for later this year. Let's now turn to the financials of our commercial aircraft business. Revenues fell 11% year-on-year, largely a reflection of fewer deliveries and the depreciation of the US dollar. EBIT adjusted dropped to €0.1 billion, down from €0.5 billion in Q1 '25, pushed by the lower deliveries and a less favorable hedge rate. Shifting to Helicopters, during Q1 of this year we delivered 56 helicopters, which is five more than in the first quarter of 2025. Revenues were flat at €1.6 billion, reflecting a less favorable delivery mix in the first quarter. Consequently, EBIT adjusted came in at €65 million, reflecting a solid performance from programs offset by higher R&D expenses.

That wraps up the review of Defense and Space, where revenue rose 7% versus a year earlier to €2.8 billion, mainly on greater volumes in Air Power. In particular, this mirrors 2 A400M deliveries during the first quarter, among them one export A400M headed to Indonesia. EBIT came to €130 million as a result, helped by improved profitability in every business unit. Turning now to guidance, it stays the same, and as the foundation for its 2026 guidance, the company presumes no further disruptions affecting global trade or the world economy, air traffic, the supply chain, its internal operations, and its capacity to deliver products and services. The company's 2026 guidance comes before M&A and factors in the impact of tariffs currently in effect. On that basis, for 2026 the company aims to reach roughly 870 commercial aircraft deliveries, an EBIT adjusted of about €7.5 billion, and free cash flow before customer financing of approximately €4.5 billion. As for our key priorities, they are unchanged from last year. We stay focused on ramping up across every one of our programs: ramp-up, ramp-up, ramp-up. Thanks to our strong portfolio of products and services, we are entirely committed to serving our commercial customers and our military customers alike. We keep leaning on our core pillars, which underpin everything we do as a company: safety, quality, integrity, compliance, and security.

On the geopolitical side, our worldwide presence, varied backlog, and operational resilience are things we can count on as well. And lastly, we keep producing profitable growth as we push forward on our main priorities. At this point, we're ready to take your questions.

Thanks, Guillaume and Thomas. Before we open up the Q&A, I'd like to lay out a few ground rules. First, kindly state your name and your firm before asking anything. Second, we ask that you stick to 2 questions so the queue stays fair for everybody. Last, a small request for those speaking: please keep a steady pace and speak clearly. That truly helps us and all those listening in to capture your question fully. Now, Laura, would you please walk our participants through the Q&A procedure?

Thank you. We’re moving into the question-and-answer portion now. To ask a question, press #5 on your phone keypad. Our first question comes from Ross Law at Morgan Stanley. Please go ahead.

Good afternoon, everyone. Thank you so much for taking my question. I have a couple of things. First, you're mentioning a shortage of Pratt & Whitney engines. I just want to verify: is that shortage relative to the original agreements, or is it relative to the reduced number they proposed to you for this year? Second, regarding working capital, inventories rose by more than $5 billion sequentially during the quarter. At present, how many aircraft do you have completely assembled with engines installed, but simply waiting on the panel fix? Thank you.

Thomas, would you like to field those?

Sure, maybe I’ll begin by addressing your final question, Ross. We did indeed build €5 billion in inventory. That’s considerably higher than the buildup in the prior year — nearly €1.5 billion more of a buildup, if you will. That clearly accounts for how free cash flow developed. The main factor behind it is largely what Guillaume noted in his remarks: we faced an administrative delay, and almost 20 aircraft were unable to be delivered to China. That matter has been resolved, and deliveries restarted after the quarter ended, but that’s the primary reason inventory is so elevated. It also gives you a sense of the scale of aircraft that were essentially completed and ready but could not be handed over because of an administrative issue we had to settle.

Is Pratt & Whitney having an engine shortage — do you want me to handle that, or will you?

On the Pratt & Whitney point specifically, Ross — no, nothing has shifted. The shortage remains exactly the same one we discussed during our full-year call. What it comes down to is a gap versus what we've asked them to provide. As for what they've communicated regarding deliveries for 2026, that hasn't moved since then, so that's what we've used as the foundation for our guidance, and as I mentioned, there's no change there — we're on track.

We’ll take a question now from David Perry at J.P. Morgan. David, please go ahead.

Yes, hello Guillaume and Thomas, I hope both of you are doing well. I have two questions if that's alright. First, may I just build on what was said regarding China deliveries, because I think we're all watching Cirium and we saw a fairly nice bounce in deliveries over the last few days, though perhaps that was the China 20 planes. It seems as though the underlying deliveries remain quite low, so I was wondering whether you could perhaps give us some color on the fuselage panel issue and what exactly is happening there. Guillaume, you mentioned it would largely be resolved in H1, but any color on how deliveries will be paced across April, May and June would be helpful. Then for the second one, you've now had a few months to look around Spirit, so I was wondering whether your views have changed at all regarding the work that needs to be done. Is everything as expected? Any thoughts or color on the A350 ramp would be great. Thank you.

Hi David, hope you’re doing well too. Thanks. Regarding the, well, Spirit, and the first question was about...

Regarding deliveries in China.

On China deliveries, what I want to say is this: what backs the deliveries for the year is production, and production is progressing according to plan. That does not mean deliveries are on plan, because we have what I refer to as the desynchronization between production and deliveries. It stems from various factors that we flagged earlier. As you can well imagine, China is a significant factor—almost 20 planes. For a single quarter, particularly the first quarter, that's big. We're also dealing with this panel issue from the end of last year, Q1, Q2, and it will be largely wrapped up by the end of Q2. I won't get granular on how many arrive in April, May, June, but that work is ongoing, so it's going to land mostly somewhere in the second quarter. That brings us to a recovery as we go forward, beginning from a very low base in 20 in Q1 2026 when it comes to deliveries once more. As Thomas mentioned earlier, the rise in inventories actually demonstrates that this ramp-up is happening, and that's something we observe, and we trust that we have made possible the deliveries for the next three quarters to support the guidance we have confirmed for aircraft count.

I hope that's useful. Now, Spirit, would you like to say a few words?

Regarding Spirit, David, we haven't found any negative issues. I'd say things are progressing as planned, so the financial guidance we provided for Spirit remains the same. Keep in mind that it's a low triple-digit negative on EBIT and up to a high triple-digit negative on free cash flow. What's the reason for that? Since we need to invest and concentrate on ramping up two essential parts — one being the wings for the 220 in Belfast, and the second being the section 15 in Kinston. I'd say the wings are the somewhat simpler one, because we have teams in Broughton, so sending experts to Belfast is, I'd say, the easier task. Kinston, being in the middle of nowhere, is the somewhat harder one for sending experts and ensuring the ramp-up takes place. On the whole, our view hasn't changed, and the financial guidance for Spirit is also unchanged.

That's very clear. Thank you. And thank you, David.

Laura, let's take the next question.

We’re taking a question from Chloé Lemarié at Jefferies. Go ahead, please.

Good evening, Guillaume, Thomas, and JC. May I ask two questions? The first concerns a remark, I believe, from the press call regarding the fact that no agreement has yet been reached with Pratt & Whitney. Would you elaborate on that? What is holding up this agreement? What are the implications for supply over the rest of the year? Is that uncertainty essentially within the typical materiality threshold you apply to delivery guidance? The second question concerns the A220 and the A350 stretch, where you mentioned you are not yet ready to decide on those. What would change your mind? Is it simply clearing a technical hurdle and assessing demand, or is it because you will focus on the current production ramp at the moment? Thank you.

On the Pratt & Whitney question, what I can basically say is this: the count of engines Pratt will deliver to Airbus during this year is fixed and steady. There's no change, so there's no reason to think it affects, or to imply any effect on, deliveries for this year. We disagree on a number of areas, but how many engines get delivered this year isn't one of those areas of disagreement. Resolving a dispute like that takes time. As I said earlier, on one hand we're trying to settle and reach an amicable resolution of the dispute and the disagreement. On the other side, we're pursuing the contractual rights we hold so as to enforce our contractual rights if we don't reach an amicable resolution of the disagreement. Finding a resolution to these kinds of topics always takes time, particularly given how big the impact is for us and, obviously, how big it is as well for Pratt & Whitney and their airline customers. As for the second question, well, reaching a decision to launch a new product, or an upgrade of an existing product, at the magnitude of what we're discussing here involves a lot of work.

This is simply continuing work aimed at reaching technical convergence, industrial enablement, supplier agreement, timing, financing — all of it. We carry out the usual work we perform as we move through milestones and the decision gates for those products. It takes time, and that is something we want to do, I would say, by the book, so that we don't take shortcuts or overlook an important aspect of launching a new product. We do this in parallel with the focus we have on the ramp-up. These are not exactly — in fact not at all — the same teams working on developing future products and ramping up the existing production system. There is some overlap, but not too much, and we run the two in parallel. These are two independent flows of activities. We try to do both as well as we reasonably can.

That’s very clear. Thank you. Thank you.

Laura, let's take the next question.

Our next question comes from Milene Kerner at Barclays. Milene, the line is yours.

Yes, good evening, Guillaume, Thomas, and Jean-Christophe. This is Milene Kerner calling from Barclays. I have one question, if I may. At what point do you anticipate that the delivery rate will structurally return to converge with your production levels?

At what point do we anticipate delivery rates will align with production levels? If you examine full-year performance, well, broadly speaking, a certain degree of convergence exists—there's a strong degree of it. Over recent years we've experienced periods of desynchronization, at times considerable desynchronization, yet a December with 130 deliveries represents desynchronization in the opposite direction, since we are handing over far more aircraft than we build. In fact, notionally, our production proceeds in a far more linear and steady fashion than our deliveries, which are shaped by a range of parameters—ones tied to customers, ones connected to regulatory hurdles, ones involving tariffs that arrive and must be handled, ones involving logistics, ones tied to particular customer matters, as I mentioned before, and ones connected to our own industrial difficulties, with planes nearly complete but lacking engines or with panels awaiting repair. That can occur in November or December, as it did last year, and it can equally occur at another point in the year, so we end up with non-linearity in deliveries far exceeding what we fortunately see on the production side.

That's the reason we guide on an annual delivery basis. We prefer not to guide or provide rates when it comes to monthly production rates or even quarterly production rates, but it's even harder to do so for deliveries. Deliveries are non-linear and tend to be back-loaded in Q2 and in Q4 during most years, though not always. That's something we're suffering from probably more this year than I can recall us ever suffering in the first quarter. We believe we should be reasonably back to where we should have been by the end of H1. The administrative issue affecting deliveries to China is resolved, and what was not delivered in Q1 will be delivered in Q2 on top of the Q2 deliveries. As I said earlier, we think the vast majority of the aircraft affected by the panels will be back on track and delivered by the end of H1, absent a new situation that could arise from the Middle East crisis or I don't know what, we think we should be reasonably resynchronized by the end of H1. That's how I see it today. I hope not to be proven wrong by something new again.