By Robert Wall 

Airbus SE posted strong adjusted earnings growth Tuesday but played down the prospect of immediate market-share gains from rival Boeing Co.'s 737 MAX woes that have put the European aerospace giant on pace to regain the title of world's biggest plane maker.

Airbus earnings were boosted by higher plane deliveries in the quarter compared with the same period the year before and new Chief Executive Guillaume Faury said the company would this year assess whether it could hike output further.

Airbus is already increasing output of its popular A320 single-aisle plane, which competes with Boeing's MAX. The Toulouse, France-based company around midyear plans to start building 60 of the A320 airliners a month, up from around 52 last year. It previously said output would rise to 63 of the airliners a month in 2021.

Any further increase wouldn't take effect until after 2021, Mr. Faury said Tuesday.

Boeing this month announced it would temporarily cut production of the 737 MAX that competes with the A320, to 42 planes a month from 52. Boeing took the action after the March 10 fatal crash of a MAX, the second in less than five months, drove regulators world-wide to ground the fleet. Boeing is working on a fix to the MAX to address safety issues that crash investigators have implicated in both accidents.

But Boeing's move to build fewer MAX planes isn't changing Airbus's production plans, Mr. Faury told reporters Tuesday. Airbus has said producing more A320s is mainly limited by the ability of suppliers to ramp up output. Some suppliers are shared between Airbus and Boeing. But Mr. Faury said the overlap is small, adding "we don't see a relaxation and ease in the supply chain" following Boeing's MAX output adjustment.

Mr. Faury, who took the top Airbus job this month after running its commercial plane operations, wouldn't address if MAX customers are knocking on Airbus's door to buy A320s instead. "We are limited by production for the next years," Mr. Faury said. Demand for the A320 was strong before the MAX crisis, he said, and that continues.

Airbus confirmed plans to deliver at least 880 commercial jets this year. Boeing, which had targeted as many as 905 hangovers, last week suspended that guidance because of a freeze in 737 MAX deliveries and the cut in output. The 737 is Boeing's largest volume production program.

Airbus became the biggest airliner maker, measured by annual plane drivers, for the first time in 2003 after Boeing sharply cut output in response to an economic downturn that hit airlines in some markets hard. The European plane maker ceded the title back in 2012 when Boeing was increasing deliveries of its 787 Dreamliner planes.

Increased production helped lift Airbus first-quarter adjusted earnings before interest and taxes, stripping out one-time items, to EUR549 million ($614 million) compared with EUR14 million the previous year. Airbus delivered 162 airliners in the first quarter compared with 121 in the year-prior period, driving a 24% increase in sales to EUR12.55 billion.

However, net profit fell 86% to EUR40 million, linked to several program charges and a EUR190 million earnings hit from the German government's suspension of defense export licenses to Saudi Arabia over the Middle East country's military activity in Yemen. Airbus is unable to execute a border security contract for Saudi Arabia as agreed because of the arms ban, Chief Financial Officer Dominik Asam said.

Higher inventory levels to pave the way for increasing production contributed to EUR4.34 billion in free cash outflow before mergers, acquisitions and customer financing in the first quarter. Airbus, which typically generates most of its free cash flow in the last weeks of the year, stuck to guidance of generating around EUR4 billion in free crash before mergers, acquisitions or customer financing.

Airbus said demand for new planes remained robust despite weak order bookings in the first three months of the year. The company secured only 62 new orders in the period and suffered 120 cancellations, partly associated with the A380 superjumbo the company this year said it would stop building in 2021.

Airbus took a one-time charge of EUR61 million linked its decision taken in February to shutter the A380 superjumbo program. The last of the double-deckers is due to be delivered in 2021. Airbus, in March, said it had begun talks with unions about the impact of up to 3,500 jobs linked to the A380, mostly in France and Germany.

Write to Robert Wall at robert.wall@wsj.com

 

(END) Dow Jones Newswires

April 30, 2019 04:17 ET (08:17 GMT)

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