French aerospace giant Airbus (AIR.PA) has warned that the global air travel market is recovering slower than it had hoped, underlining the need for the drastic restructuring announced earlier this year.
Airbus chief executive Guillaume Faury said the company was making “progress” adapting to the new COVID environment by reducing costs and limiting cash burn.
In a third quarter update on Thursday, Faury said: “Despite the slower air travel recovery than anticipated, we converged commercial aircraft production and deliveries in the third quarter and we stopped cash consumption in line with our ambition.”
Revenues in the third quarter were €11.2bn (£10.2bn, $13.3bn), down 27% on a year ago but ahead of analyst forecasts. The company booked a net loss of €767m in the quarter.
Airbus said revenues so far this year were €30bn, which was 35% below last year’s levels. The company made net loss of €2.7bn. Cash flow was negative €11.8bn, although it turned positive in the third quarter.
“Our ability to stabilise the cash flow in the quarter gives us confidence to issue a free cash flow guidance for the fourth quarter,” said Faury.
Airbus said it was aiming for “at least breakeven free cash flow before M&A and customer financing” in the final three months of 2020.
In June, Airbus announced plans to cut 15,000 jobs in order to “safeguard its future.” The company booked a restructuring charge of €1.2bn in the first nine months of the year.
“The restructuring provision booked shows our discussions with social partners and stakeholders have advanced well,” Faury said.
“After nine months of 2020 we now see the progress made on adapting our business to the new COVID-19 market environment.”
The COVID-19 pandemic has dealt a huge blow to Airbus by depressing the global travel business. That, in turn, has let to plummeting demand for new aircrafts. Airbus said revenues from its plane business were down 50% in the third quarter.
Shares fell 1.5% in Paris.
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