AIR Airbus SE

By Olivia Bugault and Doug Cameron 

Airbus SE said its quarterly net profit rose more than fivefold, driven by an increase in jetliner deliveries that positions the European aircraft maker to overtake Boeing Co. as the industry No. 1.

The upbeat results come despite production bottlenecks that have hobbled Airbus's efforts to deliver on a backlog of almost 7,300 aircraft. Nevertheless, the company still wants to boost output of commercial jetliners after 2021.

The European aerospace giant has been struggling to produce more of the largest version of its A321 aircraft, delaying deliveries to airlines and aggravating the capacity issues caused by the grounding of the Boeing 737 MAX.

A decadelong order splurge has left Airbus and Boeing with a combined backlog of 13,000 jets. But slower growth in airline traffic has triggered caution among their suppliers about supporting higher aircraft production.

Airbus needs to deliver around 500 new jets in the second half of the year to meet its 2019 financial targets.

"While 2019 is another backloaded and challenging year, we are on track, " Chief Executive Guillaume Faury told analysts.

The larger A321 has outsold similar versions of the 737 MAX by a wide margin, and Mr. Faury said Airbus is looking at options to assemble them at its main production facility in Toulouse, France. The planes are currently made at a plant in Hamburg, which has suffered the most production problems, and in Mobile, Ala.

With its single-aisle jets sold out through 2024, Airbus has limited opportunities to capitalize on the uncertainty over when the 737 MAX will return to service. It continues to be outsold by Boeing in the market for larger wide-body jets, where orders have slowed sharply over the past two years.

Mr. Faury said Airbus will maintain output of its A350 and A330neo jets at current levels to avoid "price wars," while Boeing has recently boosted output of its rival 787.

Airbus is on track to become the largest plane maker by deliveries this year for the first time since 2011. It overtook Boeing in the first half, with 389 planes shipped compared with the U.S. company's 239. Its top-selling A320 family of planes -- which includes the A321 -- accounted for a majority of the deliveries.

Airbus is boosting monthly production of its A320 single-aisle jets to 60, and is continuing talks about raising this number further after 2021, though engine makers such as General Electric Co. and Safran SA have so far resisted such a move.

The plane maker reported net profit of EUR1.16 billion ($1.29 billion) in the second quarter, compared with EUR213 million a year earlier. Sales climbed 23% to EUR18.32 billion, boosted by higher jetliner deliveries and a tailwind from foreign-exchange movements. Aircraft are generally paid for in U.S. dollars, and the majority of Airbus's costs are in euros.

Airbus retained its full-year financial guidance -- based on delivering 880 to 890 jets this year, 80 more than in 2018 -- though its target of securing EUR8 billion in free cash flow in the second half hinges on sorting out problems with the A321ACF.

Surging free cash flow has helped Airbus shares climb around 50% this year. The stock was recently up 0.8% at EUR128.62.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

July 31, 2019 10:23 ET (14:23 GMT)

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