Airbus Group Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = €153.85b | Revenue (TTM) = €76.99b
Market Cap = €153.85b | Estimated Revenue = €81.66b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = €158.40b | Revenue (TTM) = €76.99b
Enterprise Value = €158.40b | Forward Revenue = €81.66b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
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Airbus Group — Q2 2026 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for standing by. Welcome to the Airbus Half Year 2026 Earnings Release Conference Call. I am Laura, the operator for this conference. [Operator Instructions] The conference is being recorded.
At this time, I would like to turn the conference over to Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.
Thank you, Laura, and a very warm welcome to everyone joining us today to dive into our half year 2026 results. I'm in sunny Amsterdam with our CEO, Guillaume Faury; and our CFO, Thomas Toepfer, and they are here to break down the numbers and take your questions. This call is planned to last 1 hour, including Q&A, and the replay plus transcript will be available on our website.
Also on the Airbus website, you can already find today's presentation and the detailed financial statements. Before we start, let me remind you that we will be making some forward-looking statements. I encourage you to take a look at our safe harbor statement in our presentation slides. So please have a quick read.
And with that, let's get things started. Guillaume, the floor is yours.
Thank you, and good evening, ladies and gentlemen. As said by JC, we're here in Amsterdam with Thomas to run you through our H1 2026 results. Let me start by saying that we were very happy to see many of you at the occasion of the Farnborough Air Show and at our 2026 business update last week. Today, we returned to our quarterly disclosure cycle with the presentation of the H1 results. Before that, I want to spend a moment to share my thoughts with all those affected by the devastating wildfires in Europe and also in Canada. From our side, we are focused on doing our share, keeping our helicopters, aircraft and firefighting solutions working to ensure they can best assist where they are most needed.
While the global landscape remains complex and fast changing, we maintained a strong upward trajectory across our civil and defense businesses. to meet the rising demand, our immediate focus is on steady execution and ramp-up.
Our Commercial Aircraft deliveries that we achieved in Q2 at a record number of 237 aircraft. This brings our H1 deliveries to 351 aircraft as compared to 306 last year. I'm pleased with the progress made by team Airbus and by the entire ecosystem, we are actually where we wanted to be and that confirmed our trajectory. This is directly reflected in our financial results with EBIT adjusted standing at EUR 2.7 billion and the free cash flow before customer financing at minus EUR 0.1 billion following a strong inflow in the second quarter.
Our 2026 guidance remains unchanged. So let's now look at our commercial environment, starting with commercial aircraft business. So recently, the passenger traffic declined slightly due to the Middle East conflict and higher oil prices. Also, the rate of contraction appears to be easing. We have not seen any order cancellations or deferral requests and the demand for our aircraft remains strong.
Looking at our long-term trajectory, the commercial momentum we observed at Farnborough underscores the robust demand across the entire product portfolio, product and services portfolio.
During H1, we booked 886 gross orders. On the A220, we booked 178 gross orders as we welcome the landmark order from AirAsia for 150 A220s. That's a very strong endorsement of the A220 by AirAsia. Looking at the A320 family, we booked 605 gross orders. This brings our backlog for the A320 family to 7,467 aircraft, of which approximately 75% are for the A321.
Moving to the widebodies. On the A330, we booked 37 gross orders, including the latest order from Scandinavian Airlines, SAS for 18 A330s.
And finally, on the A350, we booked 66 gross orders as the family continues to evolve, the -1000ULR, the ultra-long range, the world's longest range aircraft recently completed its first flight. And you saw yesterday the record breaking of the flight of over 24 hours, actually, to be precise, 24 hours and 24 minutes. Meanwhile, the A350 freighter remains right on track for its first flight by the end of this year.
Net orders amounted to 821 aircraft, including 65 cancellations, which were largely embedded in our backlog valuation at the full year. Our backlog in units stood at 9,222 aircraft at the end of June of this year.
Moving to helicopters. In H1, we booked 215 net orders compared to 171 in the first half of 2025. During the ILA Berlin Air Show, Airbus Helicopters signed a contract with the Ministry of Internal Affairs of Romania under the European initiative, SAFE, Security Action for Europe. This acquisition for 12 multi-role helicopters includes 7 H160s and 5 H145s.
Earlier this year, 2 subsidiaries of the Vietnam Helicopter Corporation placed an order for 3 Airbus H225 helicopters, and it's important because it supports the ongoing expansion of their oil and gas offshore operations with this helicopter. Overall, we continue to see good momentum on all our platforms in both the civil and military markets and we remain fully focused on delivering on expectations.
Finally, on Defence and Space. Here, we continue to see a very strong commercial momentum across all business lines, with order intake reaching EUR 9.3 billion in the first half. On Air Power, the commercial performance is driven by several important contracts across the portfolio. Notably, we observed good traction related to the C295 with 6 orders year-to-date, including 4 from Thailand. On A400M, 7 NATO nations have launched a strategic initiative to establish a multinational A400M fleet. And meanwhile, Airbus is working closely with the French Air Force and the French Sécurité Civile, deploying the A400M fire fighting kits to support during the ugly wildfires that we see currently in the southwest of France.
Moving to Space Systems. Airbus was selected to develop and produce 2 advanced next-generation radar instrument for the Copernicus Sentinel-1 NG constellation as well as the Aeolus-2 wind sensing satellite. Importantly, we continue to foster partnerships and collaboration notably with European start-ups to benefit from their increased speed and agility in the defence sector. We are also advancing AI applications across the sector and beyond, not only through the recent partnership with Mistral AI. That's it for me. Now Thomas will take you through our financials.
Yes. Thank you very much, Guillaume. And hello, ladies and gentlemen, welcome to the call. I'm now on Page 6 of the presentation, and I'd like to take you through our financial performance. So as you can see on the left-hand side, our H1 2026 revenues increased to EUR 33.2 billion. That's up 12% year-on-year and it's mainly reflecting higher commercial aircraft deliveries as well as a higher contribution from our Defence and Space division, partially offset by the weaker U.S. dollar in 2026 as compared to the first half of last year.
On R&D, and you can see that on the right-hand side, our expenses slightly increased versus H1 of last year, and they stood at EUR 1.5 billion. And let me just remind you that our R&D expenses are expected to increase in 2026 including to support the defence portfolio acceleration.
If you turn the page, we can come to EBIT adjusted. So our H1 2026 EBIT adjusted increased to EUR 2.7 billion from EUR 2.2 billion in the first half of last year, and that increase reflects the higher commercial aircraft deliveries, a strong performance in Defence and Space, partially offset by a less favorable hedge rate.
And let me now come to the EBIT adjustments, which you have on the right-hand side of the page in which we are broadly neutral overall in the first half of this year. And as you can see, they included a positive EUR 124 million impact from the dollar working capital mismatch and balance sheet revaluation, mainly reflecting the mechanical impact coming from the difference between transaction date and delivery date, of which positive EUR 166 million in the second quarter.
Secondly, a negative EUR 123 million related to the integration of the former Spirit AeroSystems work packages, of which negative EUR 91 million in Q2 and then again, a positive EUR 60 million linked to the Airbus Defence and Space workforce adaptation plan where we released a provision, but where the plan is proceeding as intended and out of the provision release EUR 46 million concerned Q2. And finally, a negative EUR 43 million of other costs, including M&A, of which negative EUR 27 million in the second quarter.
So this takes our H1 2026 EBIT reported to EUR 2.7 billion, so almost the same number as the EBIT adjusted. The financial result was positive EUR 186 million and mainly reflects the revaluation of certain equity investments and of the participations held in the venture capital funds managed by Airbus Ventures, and these are partially offset by the revaluation of financial instruments and the evolution of the U.S. dollar. The tax rate on the core business continues to be around 27%. The effective tax rate for the half year is roughly 26%, including the tax effect on the revaluation of certain equity investments, partially offset by the effect of the French surtax.
And for 2026, we expect the French surtax to be broadly in line with 2025, which, as you recall, was roughly EUR 0.2 billion. So with all of that, the net -- the resulting net income is EUR 2.2 billion, with earnings per share of EUR 2.84 and our H1 2026 EPS adjusted stood at EUR 2.61 based on an average of 789 million shares.
So let's go to Page 8 and on to our U.S. dollar exposure. In H1 2026, $11 billion of forward matured with the associated EBIT impact and euro conversions realized at a blended rate of $1.21 versus $1.18 in H1 2025. And in the first half of 2026, we implemented USD 9.5 billion in new coverage over a 5-year horizon with a mix of instruments, including collars. And the blended rate of $1.22 for this first half additions reflect, in particular, the least favorable rate of our collars, which are primarily weighted towards the outer years of our hedging horizon. So as a result, our total U.S. dollar coverage portfolio in U.S. dollar stands at EUR 74.3 billion with an average blended rate of $1.22 as compared to USD 75.8 billion at $1.22 at the end of 2025.
So now on to a more detailed look at the free cash flow on Page 9. Our free cash flow before customer financing was negative EUR 1.2 billion in the first half of this year. And this outflow was mainly driven by the change in working capital and notably, it, of course, reflects the same inventory buildup to support our ramp-up across our businesses. As you can see in -- our CapEx in H1 of this year was negative EUR 1.5 billion. And to support our ramp-up and the successful integration of the former Spirit AeroSystems work packages, we expect our CapEx to continue to increase in 2026.
The free cash flow was negative EUR 1 billion, including customer financing of positive EUR 0.1 billion. And just as a general comment, we continue to see a diverse and competitive finance landscape in the first half of this year, and currently, we expect sufficient liquidity to support our 2026 deliveries.
So with all of that, as you can see on the right-hand side of the chart, our net cash position stood at EUR 8.4 billion at the end of June, also reflecting the dividend payment as well as the acquisition of Unical, slightly offset by the strengthening dollar environment, and overall, our liquidity remains strong, above EUR 30 billion.
And with that, I would like to hand it back to Guillaume.
Thank you. So coming to the divisional highlights and starting with commercial aircraft. In the first half, we delivered, as already said, 351 aircraft to 77 customers. I am pleased where we stand at the end of H1 with a good -- it was a very good second quarter that allowed us to recover from the low deliveries we had in Q1.
Looking at the situation by aircraft family. On the A220, we delivered 44 aircraft. The ramp-up is ongoing, and we continue to target a monthly production rate of 13 aircraft in 2028. So that's no change compared to what you know.
On the A320, we delivered 271 aircraft, of which 167 A321s, representing 62% of the deliveries for the A320 family. The administrative delay that affected the delivery of nearly 20 aircraft to Chinese customers has been resolved and aircraft have been delivered and the panel quality issue is largely behind us as anticipated.
Our production rate trajectory remains unchanged. As a result, again, no change for the A320. We expect to reach rate of between 70 and 75 aircraft a month by the end of 2027, stabilizing at rate 75 thereafter.
On widebodies, we delivered 36 aircraft, of which 10 A330s and 26 A350s that makes 36. On the A330, no change, we target to reach rate 5 in 2029 to meet customer demand. And on the A350, no change either. We continue to target rate 12 in 2028. Our target ramp-up rates for our widebodies have not changed, even though the strong market demand could support even more.
Now let's look at the financials for our commercial aircraft business. The revenues increased 15% year-on-year, mainly reflecting the higher deliveries, increased services and partially offset by the U.S. dollar depreciation. EBIT adjusted increased to EUR 2 billion from EUR 1.7 billion in H1 2025, driven by the higher deliveries and partly offset again by a less favorable hedge rates.
Looking at helicopters. Next page, in H1 2026, we delivered 144 helicopters, which is 6 more than in the first half of 2025. Revenues were broadly stable at EUR 3.7 billion, reflecting a slightly less favorable delivery mix in the first 6 months. As a result, EBIT adjusted stood at EUR 240 million, reflecting a solid performance from programs, offset by higher R&D expenses.
And let's complete our review with Defence and Space. Revenues increased 9% year-on-year to EUR 6.3 billion, driven by higher volumes across all business units. This includes deliveries of 3 A400Ms in the first half, which is plus 2, compared to the first half of 2025. This resulted in an EBIT adjusted of EUR 487 million, supported by favorable cost phasing, improved profitability and higher volumes.
Let me highlight that the yearly performance is somewhat front loaded to manage expectations. On to our guidance, which remains unchanged. As the basis for its 2026 guidance, the company assumes no additional disruptions to global trade of the world economy, air traffic, the supply chain, its internal operations and ability to deliver products and services.
The company's 2026 guidance is before M&A and includes the impact of currently applicable tariffs. On that basis, the company targets to achieve in 2026, around 870 commercial aircraft deliveries and EBIT adjusted of around EUR 7.5 billion and the free cash flow before customer financing of around EUR 4.5 billion.
We will conclude with our key priorities, which have not changed since the last quarter. And since the Farnborough Air Show, we remain highly focused on ramping up across all programs, utilizing our strong portfolio to deliver to our commercial and military customers. We will continue to be guided by the core pillars of Airbus that underpin our company, safety, quality, integrity, compliance and security, that's paramount to me. Against a complex geopolitical backdrop, we draw strength from our global footprint and our multiyear diverse backlog. I see strong momentum now and ahead of us as we embark on the phase highlighted at the business update. With a clear focus on advancing our sustainability ambition, we will continue to deliver profitable growth while driving our key priorities forward.
And now on this positive note, I hand over to you, JC, to open the Q&A.
Thank you Guillaume and Thomas. In order to allow an efficient Q&A session, let me set a couple of guidelines. First, please introduce yourself and your company before you dive in. Second, we ask you to limit yourself to 2 questions so that we can keep things fair for everyone in the queue. And finally, a small favor for the speakers, please try to keep a steady pace and speak clearly. It really helps us and everyone listening in to fully capture your questions. And now, Laura, could you please explain the Q&A procedure for participants?
[Operator Instructions] We have a first question from Ross from Morgan Stanley. Please go ahead.
2. Question Answer
So the first one on the Defence margin in Q2, very strong above 10%. Were there any one-offs in that number? You obviously mentioned profit is a bit front-loaded this year. If you could maybe just explain exactly what's driving that and your expectations for margins through the second half.
And then moving to commercial. I know you don't tend to like speaking about monthly production rates. But can you maybe just give us a broad sense of where you are on the core A320 and A350 programs at the moment? It looks as though you're maybe around the 60 on the A320 and 6 on the A350. And so when should we expect the next rate break?
So I'll start by the second one. And as you have rightly noticed, I don't like to be commenting on monthly production rates. I more believe in, well, at least quarterly production rates, if not yearly ones. So we're in ramp-up trajectories. That's what counts to me. We delivered a number of aircraft in the first half of the year, that is very consistent with the trajectory. We managed to recover in Q2 the missing deliveries of Q1 for a number of reasons I indicated in my introduction. And that's really what matters from my perspective. Please consider we're on the trajectory we need for this year and with the midterm targets.
And on Defence margins, Thomas, any one-off, what do you say about the Q2 margin?
Well, Ross, I was sure that you would spot that. So the way I would characterize it, no, there is no specific one-offs in H1 or in Q2. However, as I said many times also at other occasions, never over interpret a single quarter in terms of margin trajectory. Indeed, I would say, the first half for Defence was a semester where many things just aligned very positively. So we had the the export of the A400M, for example. We are planning to increase R&D, but that has not fully materialized yet. Same is true for headcount. There will be an increase, but it has not materialized so much in the first half. So I would say it's just many things coming together that produced a very good margin despite the absence of any, let's say, accounting one-off, but I think we should not get ahead of ourselves. So it's not indicative for a continuation of that margin in the second half of the year. But of course, we feel it's a good sign that we're on track to the midterm target that we have communicated for Defence. last week.
We have a question from Benjamin Heelan from Bank of America. Please go ahead.
First question was on the A400M and Guillaume, you mentioned the announcement around the multinational force. Could you give us a little bit of guidance and color about what that could mean potentially from an order perspective?
And then secondly, on Spirit, you've owned the business now for a while. Can you just give us a bit of an update what are you seeing? And how is that business performing? Where are you on the trajectory to driving the improvements there for the 350.
Thanks, Ben, and I think yes, I can say we are both well and I hope you're well, too. A400M, yes, it's a good endorsement of the A400M when it comes to the European needs for airlift. Actually, we see a good momentum on A400M on different fronts, and that's really what matters to me. So we feel confident with the short-term, midterm trajectory for the A400M. And we also here good feedbacks on the A400M where it is used in operation, and I was really happy with the first feedback from operations of the test, the use of the A400M for firefighting operation. That's something we were targeting, and we were considering now for a few years, but that's now something that has been that has been tested in real conditions. So good momentum for A400M. The multinational force is indeed for us a good opportunity. It follows the path of the MRTT, where we have the same pattern, the same frame, and that gives a lot of satisfaction to the European countries, which are part of the of the multinational force. So I see it as a real strong potential for use of A400M.
Spirit -- so maybe on Spirit, I would say, I mean we owned the business since December 8 last year. No real major surprise. And that means we also confirm the financial assessment for what it means for 2026 and 2027, namely a negative low triple-digit EBIT impact this year, but a high negative triple-digit impact in terms of cash flow. Why is cash flow so much more negative because we are front-loading the investments that we have to make. Secondly, working capital is an issue. We want to build some buffer stock. We are paying our suppliers in time to stabilize the supply chain. And of course, the integration costs also flow into the cash flow. So quite frankly, no change with respect to what we have, given you as financial indication earlier this year at the full year call. And the other thing that I would say also no change in terms of integration, it progresses well, of course, challenging in both key locations. But I would say it's in line with our ramp-up ambitions that we have for the A350 and the 220. So therefore, nothing to report that is off track with respect to the ramp up.
We have now a question from Milene Kerner from Barclays.
I have also 2 questions, please. The first one on the free cash flow. Your guidance implies around EUR 5.7 billion of free cash flow in the second part of this year. Last year, you generated EUR 6.2 billion on lower delivery volume and your inventory are nearly at $7 billion higher than what they were at the end of December. Excluding the Spirit impact, can you help us reconcile what is preventing a higher level of cash flow this year?
And then my second question is on FX and hedging. Last year, you mentioned that you were looking to optimize your hedging policy and potentially introducing more options. And yet the EUR 9.5 billion of new hedges you added in H1 were against stock around $1.22. Can you update us where you are in that process and whether we should expect any change in the hedging strategy going forward?
Okay. So I think those 2 questions go both to me.
So they are too difficult for me, Thomas. And I'd like to hear the answer on the first one.
So on the first one, I think what I said for the EBIT in the single quarter also applies for cash flow. So cash flow, of course, is not only -- is not always fully linear. So we were very pleased with the positive EUR 1.3 billion that we in Q2. But again, things are not super steady. I think with what we have achieved in the first half of the year, we are on a good way for the full year in terms of the guidance, but I would also say, let's not get ahead of ourselves.
Inventory buffer is an important thing because we have to cater for the ramp-up not only for 2026, but then also we want to have a much smoother transition into 2027.
And secondly, as you indicated, Spirit, a lot of the things in terms of cash flow are still ahead of us. So I would say the numbers that we're seeing are consistent with the guidance for the full year cash performance of the company.
On the second one, the hedging policy. Indeed, we have said that we have also used options. That was what I was referring to when I said we have also implemented collars in our hedging strategy. These collars are reflected with the least favorable rate. So meaning using collars does not necessarily leads to a, let's say, optically better hedge rates in the portfolio that we have because we give you the most conservative number. But of course, they provide the optionality that if the dollar is strengthening, that we can exercise those collars at a more favorable rate. And by the way, that's also what we have already been doing on a small scale in the first half of this year, which encourages us to increase or to go down that path even further and increase the share of options or collars, as you might call them, in our total portfolio. So again, I think the optics of what I've given you, the $1.22 maybe doesn't fully reflect the optionality and the opportunity that we have here. And currently, I would say we are pleased with what we're seeing, and we will continue that hedging policy gradually, but no fundamental change. I think that was also your question.
The next question comes from Chloe Lemarie from Jefferies.
I have a first one on the number of gliders. Previously, you said you were no longer building any. So I'm just checking whether this is still the case? And if you had any in your inventory at the end of the first half.
And the second question is a follow-up on Ben's question on Spirit. I was wondering if you'd be able to maybe refine the range of the low three-digit million impact you mentioned for the full year or at least share what it looks like so far in H1, please?
So maybe on the Spirit, no, I think I would leave it here with the guidance in terms of Spirit impact. So therefore, I think no further comment on this one. And maybe Guillaume, you take it on the gliders.
Well, we have no gliders in the sense of aircraft not being delivered solely because of engines. So we are in a normalized situation. We don't have buffers of engines. So we don't have engines ahead of what we need from Pratt & Whitney. But we don't have aircraft non-delivered because of missing engines. We have a few other reasons why we don't deliver engines -- aircraft without engines, but I would not call them gliders in the sense of aircraft ready to deliver, but not delivered because of engines. So that's an important information indeed.
I can just maybe follow up. Should we assume maybe it's still to do with some remaining panel issue that you're still in the process of solving or maybe interiors?
Panel is behind us, if that's the question. Panel issue is behind us, it's resolved. Okay?
Yes. Thank you.
The next question comes from Sam Burgess from Goldman Sachs.
Firstly, coming back to A400M, do you see any potential for additional countries to join that initiative? And is it mainly about shared service and support or following on from what Ben was saying, do you see demand for incremental orders?
And then the second question is just whether there's any additional color you can offer in terms of the discussions with Pratt? And any update you can give us there in terms of '27 and '28 picture?
So the short answer to your second question is I don't have much more to say than we think we'll continue to get from Pratt & Whitney for '26, '27 and beyond, the number of engines that have been finally agreed and which are the current basis for the 2026 delivery guidance and consistent with the midterm targets that we have given before. So nothing very significant to report with Pratt, except that we continue to negotiate the dispute when it comes to the outcomes of the revised downwards number for '26 and '27.
When it comes to the A400M, yes, indeed, there could be more countries joining the initiative for the multinational European force, the program sharing. I'm not in the details of this. So I know it's open for other countries, but it's already very significant. And yes, indeed, it opens the -- well, it's consistent with the market dynamics that we see on the A400M. It's slowly moving, but it's moving in the right direction for more customers ordering A400M. So that's something that we will be happy to report as things move forward. But as you know, with military customers, we are not commenting on -- well, not with civil customers either, but even less with military customers, we are not commenting before things become official from the customer perspective because it's defense matters. So good momentum, good hope for more orders moving forward and a very concrete multinational force that is something that is actually public already.
Next question comes from Olivier Brochet from Rothschild & Co.
I have 2 small ones, actually. The first 1 is on -- in the press release, you called out Airbus Venture and the revaluation there. Could you maybe give us a bit of color on what drove that revaluation? What assets are behind that?
And the second one, another detail is you recently made the acquisition of small component manufacturing company in Spain, MASA. Could you just share the rationale of why you did that? And if there is anything else to happen in Aerostructure for the company?
Yes. Let me maybe start with MASA. And I think what I would say is that it's not indicative of any change in our strategy with respect to vertical integration, to be very clear. We are happy with the way how we are integrated in our supply chain and how the split of work is. So therefore, the thing is not to be overinterpreted. But there's always some time situation where as such an acquisition from a more defensive perspective can make sense. So it can be a succession problem or it can be other things. And here, we felt it would be good if we are in control of this business. But again, I would say no strategic change of direction to be interpreted into the acquisition.
Secondly, yes, on Airbus Ventures, we have invested in -- Airbus Ventures exists since a number of years, and they are investing into various start-up companies in the field of aerospace and that has been a successful journey so far. And so therefore, as part of the normal recurring revaluation of the portfolio, we're recognizing also the gains that they have in their portfolio. But of course, I should clearly say those gains have not been realized to the biggest extent, but those are gains in terms of valuation and not yet in terms of cash returns.
Thomas, is this related to the space industry by any chance?
Yes. Aerospace in the broader sense, but also some specific space investments.
The next question comes from Sebastian Growe from BNP Paribas.
Sebastian here from BNP. Two from me then. The first one is on commercial.
Can you speak a bit louder, please?
Yes. I will. Guillaume, on a prior call today, you seemingly pointed to deliveries in the range of 850 to 890 aircraft in '26 that was on the the wires today. So my question is if you can provide more color whether your engine supply has improved as of late.
And the second question goes to Thomas. The guidance implies adjusted EBIT for the group in the second half that is about EUR 100 million lower compared to '25. I heard your comments to not extrapolate the strong H1 trajectory at Defence and Space, but are there any other building blocks that you might want to call out in order to explain why the decline in the guidance for adjusted EBIT?
Okay. I'll take the first question, and I'm surprised it makes news because actually, at Airbus and now for many, many, many years, when we give a guidance in number of deliveries for the year, and we say around 870, for example, for this year, it means around means plus/minus 20 . And that was the case for the previous year, where we had a delivery guidance for 2025 of around 820, that we changed in the back end of the year for around 790, and we finally delivered, as you remember, 793. So the guidance for this year is unchanged. It's around 870 aircraft. And if you apply the plus/minus 20 that we consider is consistent with around, that's going from 870 minus 20 equals 850 to the upper part of the range, which is 870 plus 20, that makes 890. So this is exactly no news. It's just explaining with the numbers, what's around 870 means or repeating it, but apparently, it was useful to repeat it because it is surprising to some.
I look at you, Thomas, for the answer on the second question on EBIT.
Yes. I think Sebastian, I mean, essentially, your question is on what is the remain to do for the year and how does it align? So I think what the key building blocks that play a role here, of course, is the deliveries, first of all. So if you want to bring it to the midpoint of the guidance, the 870 and Guillaume explained always, it's plus minus 20. But if you want to bring it to the midpoint, that would mean an additional 32 deliveries in the second half of the year. I would say, however, that not all of these aircraft will be A320s, so therefore, not all of them with margin. So please deduct a certain number, and then you can multiply with, I would say the contribution that most of you have in your models. Let's assume that brings to [ EUR 0.3 billion positive ], then you have a couple of things against that. One is the FX hedging, let's say, negative impact of roughly EUR 0.01 degradation. Secondly, you have the Spirit effect where we only have digested half or maybe less than half in the first half of the year. And thirdly, remember, R&D, we pointed to an increase, but that has not materialize to the full extent in the first half of the year. So you should expect some further increase in the second half. So 3 headwinds, I would say, against the positive volume development. And then, of course, you do have some positive contribution, I would say, from the divisions. So a slight positive. But if you take all of these together, that should bring you to the midpoint of the guidance also in terms of EBIT.
Next question comes from Christophe Menard from Deutsche Bank. Please go ahead.
Yes. I have 2. First one, can I [indiscernible] a little bit more into the Defence and Space performance for H1. Obviously, I understood what you said. But is there any elements related to Space, which is structural and that could explain also that solid margin performance.
And another detailed question more of a detail, but the H1 or the Q2 performance in Airbus Commercial was actually slightly better than expected. Is it purely mix? Or did you, for instance, manage to retrieve some of the tariff you had to pay last year and you could repatriate, so to say, in Q2.
Thomas?
So I mean, is there anything specific in Defence and Space and you asked for Space. Nothing other than we are very pleased with the, I would say, turnaround that we're doing in Space, and that is materializing. So we are on plan, if not ahead of plan with the improvement that we wanted to make. And so therefore, I will not disclose now individual numbers for the subdivisions. But what we're doing in Space is better than what we probably -- or slightly better than what we had in our internal plans. And therefore, I think it's a reconfirmation that the turnaround that the new management team has done in Space is actually working.
And then on Commercial, now in the second quarter, there was no positive effect on tariffs. We're claiming of course, tariffs that we have paid, but we have not booked anything positive in our results in the second quarter of the year. What I would point to, though, is that indeed, as you indicated, the mix, of course, was pretty positive. So if you look at the 45 aircraft that we are ahead of last year, they are mostly -- there's only 3 220, so they all carry almost a margin. And so therefore, that was, of course, helpful for the first half of the year in terms of mix. And so I indicated that for the second half, that mix might be slightly less positive. And I think that goes back to the remain to do bridge that I tried to answer in the previous question.
The next question comes from Ian Douglas-Pennant from UBS.
It's Ian Douglas-Pennant at UBS. First question is on the next generation of aircraft. Some of the engine players have been making comments on the business structure -- potential business structure of the next-generation aircraft after the comments that you made last week, emphasizing the significant upfront costs of developing an engine. Is there anything that you'd like to add to that conversation, especially around your willingness and ability to support them with the costs early in the next engine program.
And the second question is on cost control. We're now 2 years after LEAD!, roughly, we're 6 months on from -- roughly from Pratt & Whitney's communication to you on 2026 engines. Is the cost structure now in the right place going into the second half? Or is there still an opportunity or work on conversations to be had at this point?
So I'll be short. No, there's nothing I'd like to add on the conversation when it comes to changing or adapting the business structure as we move to the future aircraft. Nothing else, then we see opportunities to tap more into the life cycle revenues and margins of the airplanes and the equipment, and I'm not specific to certain equipment.
And for the second question, Thomas.
And maybe in terms of cost, I would say, yes, I mean, LEAD! was quite successful in 2024 and 2025 and we are continuing, I would say, to monitor our costs very strictly. But I would rather see this as an exercise of cost containment and not so much cost reductions. So therefore, I would -- if I was you, not plug in anything specific as a tailwind in your models. But of course, we're very, very focused that costs are increasing way slower than our revenue line. And that's how I would characterize it. So nothing specific on the horizon in terms of a cost tailwind that I would put in the models.
We have now a question from Douglas Harned from Bernstein.
I want to first go back to the earlier question on production rates. And as a business update, I asked Lars about getting to 12 per month on the A350. And you said that you were already at a production rate of 8 to 9 per month. But that is higher than what we've seen in terms of deliveries. So first, perhaps you could explain that difference, what creates that gap? And should we expect it to close?
And then second, you also talked a lot about building a services business and seeing a good growth opportunity there, both organic and through acquisitions. And so how do you envision the steps going forward to grow services? And when should we expect a material contribution to overall growth?
Okay. Thank you, Doug. So on the A350, as far as I can recall, I think Lars said that the ecosystem, which -- using my words would have been the supply chain was operating at rates around 8 to 9 a month, at the moment of the comment. And as you know, the supply chain is ahead of the FAL. So in a ramp-up phase, we are always in a situation where the supply chain and what Lars called the ecosystem as far as I can remember, is, of course, at higher rates than the rates we have for assembly. You know that we measure the rate at the so-called Station 40 at Airbus, that's a station where we put the wings on the fuselage, which also comes significantly ahead of the time of delivery of the aircraft. So in a ramp-up, you have the supply chain operating at higher rates than the Station 40 where we measure rate that is itself operating at higher rates than the deliveries. And this is, of course, on average, because when you have a situation like what we had in the first quarter of this year, we had a production rate that was rather linear, but we had aircraft that could not be delivered either because of industrial challenges, namely the panels or for administrative reasons, namely the issue we faced with the delivery of aircraft in China for certification items or reasons. So there's always a nonlinearity on deliveries that is significantly higher, generally speaking, than production, especially when production run reasonably well. And the supply chain is operating at higher rates than the Airbus deliveries. And I think the reason why Lars made the comment is to highlight the fact that our production system in the external part, in the supply part is on track to support the rate increase that we want to demonstrate at Airbus. It's our way to check that the supply chain is actually delivering on the expectations for higher rates moving forward. So I hope it clarifies the answer or the comments made by Lars. And again, that's top of my head of what Lars said, I think it was at the business update.
Yes. So maybe let me clarify on the service topics. So what we are targeting is EUR 10 billion in Commercial Aircraft services revenues by 2030. And in terms of profitability, we're expecting to cross the line of double-digit profitability in the midterm. And as we said in the business update last week, that is clearly an upgraded target because we're focused on the efficiency of that business and also cost reductions. Now how will we get there? It's a combination of both organic growth and efficiency improvement, but also some inorganic potential acquisitions. You've seen that we have closed the Unical acquisition in H1 of this year. So that is definitely playing into that. Now it's very difficult to plan, of course, for but part of the growth path is also potential for the bolt-ons in the next years to come. And maybe just to remind everyone what is the Commercial Aircraft service businesses. In our case, it really consists of 2 parts. One is the highly profitable trading services, and that is things like spare parts, training, digital solutions, et cetera. And the other one, the second one covers the core support costs, which we have to ensure that the aircraft that we have delivered are operating as promised to their life cycle. So it's really 2 very different businesses that are grouped in here. And the main growth, of course, will come through the highly profitable part where also all the acquisitions should play into.
We have 5 minutes left. So this might be our last question, depending on how complex it is to answer.
Next question is from Ken Herbert from RBC CM.
Yes. I'll keep these 2 questions relatively simple. The first is you typically see at least last year, a significant step-up in helicopter margins, profitability from -- or profitability, I should say, EBIT from first to second half. Is there any reason we shouldn't see that this year again in 2026?
And then my second question, on the A350, on the freighter. You called out first flight this year. Can you just give a little more detail, Guillaume as to your schedule for the freighter beyond first flight in terms of when you'd expect entry into service? And how quickly you expect to ramp production on that variant the A350?
I'll start with this one. Yes, I confirm we expect the first flight before the end of this year, which means start of flight test immediately and very dense flight test program, targeting certification and first delivery ideally by end of next year. And then the ramp-up. So delivery of aircraft in rather significant numbers as soon as 2028.
Yes. And so maybe on the helicopter topic. So I mean, yes, your observation is right. Margins are increasing in the second half of the year relative to the first. What is driving that is that helicopters last year had a very back-end loaded delivery profile. And I mean, without making any too precise of a prediction, I would say the profile will not materially change this year. So since the delivery profiles are similar, I think that could be a good indication that also the margin trajectory could be relatively similar to last year.
Maybe question for the remaining 2 minutes.
We have a next question from Robert Stallard from Vertical Research. Please go ahead.
A couple of quick ones for you, Guillaume. First of all, these very serious forest fires you've seen in France and Spain. Have they had any impact on the Airbus business?
And then secondly, Lars talked last week about potentially raising A350 production beyond 12 a month, which would require another [ FAL ]. Where would you put it?
So on the first one, no material impact so far on the business, but we've had employees, well, no longer accessing their place and actually even some employees losing their house, their house has burned. So it's really a very tragic situation when it comes to individual situations. We -- in the period where most of the activities were about to pause for the summer break, or had already paused on the Friday. So that's the current situation. And it's very important for us that the Sécurité Civile forces and the firemen managed to contain the fire in areas not impacting large industrial activities, not only ours, but the one of others, which is the case for the moment.
Well, no comment on the second one. We are investigating what we could do potentially beyond rate 12. We are not advanced enough to be able to give indications of what it will be specifically, how much, by when and even less where that would take place. This is for later.
Thank you, everyone. Thank you for taking the time to join us today. If you have any further questions, please reach out to Victoria, Olivier or myself and we'll get back to you as quickly as we can. As we close, a special thanks to Edouard for his last disclosure of today. Best of luck in your new challenge. And this brings our session to close for today. Have a great evening, everyone.
Thank you, everyone.
Thank you. Bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening. Goodbye.
Airbus Group — Q2 2026 Earnings Call
Airbus Group — Q2 2026 Earnings Call
Strong H1 operational progress: deliveries and orders up, EBIT improved, but H1 cash flow hit by inventory build and Spirit integration; guidance unchanged.
📊 Quarter at a Glance
- Revenue: €33.2bn (+12% YoY)
- Deliveries: 351 H1 (record Q2 237) vs 306 last year
- EBIT adjusted: €2.7bn (from €2.2bn) — EBIT adjusted = earnings before interest and taxes, adjusted for special items
- Free cash flow: -€1.2bn before customer financing in H1 (inventory build and Spirit integration drove outflow)
- Backlog: 9,222 aircraft; A320 family backlog 7,467 units (≈75% A321)
🎯 What Management Says
- Ramp-up focus: Priority is steady execution of production ramp across A220, A320 family and widebodies; stated monthly/rate targets unchanged (A220 → 13/month by 2028; A320 → 70–75/month end‑2027; A350 → rate 12 in 2028).
- Demand resilient: H1 bookings 886 gross, 821 net; no order cancellations or deferrals noted despite geopolitical and oil-price headwinds.
- Defense & Space momentum: €9.3bn H1 orders, A400M multinational initiative progressing; Space wins include Sentinel‑1 NG radar instruments and Aeolus‑2 selection.
🔭 Outlook & Guidance
- 2026 targets: ~870 commercial aircraft deliveries, EBIT adjusted ≈ €7.5bn, free cash flow before customer financing ≈ €4.5bn; guidance unchanged and assumes no major new disruptions.
- Balance sheet & FX: Net cash €8.4bn, liquidity > €30bn; U.S. dollar hedging portfolio €74.3bn at an average $1.22, increased use of collars/options to add optionality.
- Key risks: engine supply (Pratt & Whitney discussions), Spirit AeroSystems integration cash drag, supply‑chain volatility and geopolitics.
❓ Analyst Q&A
- Production rates: Management declined to give precise monthly rates, stressing multi‑quarter trajectories and that deliveries recovered in Q2 to stay on the year target.
- Defence margin: Q2 Defence margin strong with no single accounting one‑off; management warned not to extrapolate a single quarter as the trend.
- Spirit impact & cash: Integration confirmed: low‑triple‑digit € EBIT drag in 2026 and a larger negative cash effect; work ongoing and on track with prior guidance.
- Hedging: Increased collars/options used; reported blended $1.22 rate is conservative and reflects optionality rather than lost upside.
⚡ Bottom Line
- Implication: Operational momentum (deliveries, orders, Defence & Space wins) supports earnings upside while H1 cash was weighed down by inventory and Spirit integration; guidance stands but monitor engine supply, integration cash flow and FX/hedge execution.
Airbus Group — Special Call - Airbus SE
1. Management Discussion
Good afternoon, ladies and gentlemen. Very warm welcome to the 2026 Airbus Business Update. It's fantastic to see so many familiar faces in the room. On behalf of Airbus top management, we are delighted to host you today in London. This event is also broadcasted live. So good morning to the participants connected from the U.S. Good afternoon or good evening to all of us from around the world.
Before we start, let me go through a few practicalities and starting with safety first. We've talked to the hotel management earlier today, and there is no fire alarm test scheduled. So if you hear the fire alarm, please follow the staff towards the nearest exit and let's assemble outside of the hotel in front of the main entrance.
I also kindly ask you to pay attention to the camera in case you walk around during the session because the event again is broadcasted. During the presentation, but also during the Q&A, we will be making some forward-looking statements. Please review the safe harbor statement that is displayed behind me and also accessible on the Airbus website.
Furthermore, please note that we are in our quiet period ahead of our midyear financial results next week. As a consequence, speakers won't comment on recent financial performance of Airbus.
Now let's have a quick look at our agenda for today. This event is planned to last 2 hours and will conclude at 7:30 p.m. U.K. time. We'll start with our CEO, Guillaume Faury, who will set the scene globally before handing over to our CFO, Thomas Toepfer, who will guide us through our financial outlook. It will be followed by business perspectives delivered in the following sequence: First, Lars Wagner, our Commercial Aircraft CEO; then Mike Schoellhorn, our Airbus Defense and Space CEO; and then Matthieu Louvot of Airbus Helicopter CEO.
Guillaume will then come back on stage to deliver the final wrap-up, leading us to 30 minutes joint Q&A session. Let's get started. Ladies and gentlemen, please welcome to the stage Guillaume.
Hi, everyone. It's a great pleasure to be here today with you at the Farnborough Airshow. Airshows are always an exciting moment for us for plenty of reasons. Aircraft and helicopters flying in the skies, opportunity to meet with customers, partners, suppliers as well. This year had a very good start yesterday, and it looks like a very good edition. And I'm very happy to be here and to be here with the team. Of course, Thomas Toepfer, our CFO, that you know him well, and Mike Schoellhorn, whom you know well as well.
But it's a pleasure to be for the first time with Lars Wagner. Lars, if you can stand up. The CEO of our Commercial Aircraft business, for the first time with us. But also Matthieu. Matthieu Louvot, in charge of helicopters was formerly the Head of Strategy for Airbus. So I guess is known already, but it is the first time at least in this capacity as the head of Airbus Helicopters.
So very happy to be with them, especially because they will be giving a lot of color and the bulk of the work is for them.But I'm obviously happy to introduce and be in a position to share with you a midterm target for the company, for the group. Also, the fact that we will go for a share buyback. We are today at Airbus in a place in the market where demand is very strong. We have a level of visibility we've never had before. We've put behind us a lot of challenges, and we've cleared the skies to move forward and we think we're in a good place to give an outlook to give a target for the midterm, a place we have never been before.
We have a business that has shown resilience that keeps going, keeps moving forward and actually in the different businesses we're in. You see on the slide that has not yet appeared that you see already that we think we enjoy a level of visibility we've not had so far. And obviously, against the backdrop of the world as we know it, with all the currencies, a lot of experiencing, sorry, a lot of changes and disruptions, but there are some midterm, long-term trends, which are strong underlying trends, and we are working in this environment for our businesses.
We are also now having ticked a lot of important boxes when it comes to our ability to supply. So basically, what I'm saying is we have a very strong demand. This is the case for commercial division. That's the case for defense. We've done a lot as well on space. I will come back to it. And we are now in a market where space comes with a lot of demand, especially when it comes to space for defense, and we keep moving forward with the Helicopter business that is strong.
So strong demand. We have a backlog of more than 9,200 commercial aircraft, but we have very strong backlogs as well in Defense & Space and Helicopters, and we've had in the past years, record order book supporting the growth moving forward. So the markets we are working in are strong, but our ability to supply has also made a lot of progress. We have invested significantly to be fully prepared to deliver in a few quarters at rate 75 for the A320. We have recently inaugurated the last of the 10 FALs, which are fully designed to support the ramp-up till rate 75 with a high percentage of A321s. So all those 10 FALs are fully A321 capable. So we are fully prepared now to assemble those aircraft.
The supply chain that was heavily impacted by COVID and after difficulties of recovery in the post-COVID environment is now in a much better place and you have seen through the deliveries that we have achieved in the first half of this year but we are progressing well and we are progressing according to the trajectory we have given to ourselves and we see that the level of preparedness, what we call the enablement of production is also in a good place.
We have closed the acquisition of Spirit, Spirit AeroSystems end of last year. And so when we look at the make and the buy, we think -- and we observe we're in a good place to deliver on this very strong demand that I was mentioning before. We've done also a lot in our Defense and Space businesses. Defense has been for Airbus coming with challenges in the past. We've been discussing A400M for many, many years, and we had a level of profitability we were not satisfied with.
So a lot of transformation has been led by Mike and Mike will say things about it.But we've also entered into a significant deep turnaround of our space activities. And I'm very happy to share with you that we are ahead of the trajectory we have given to ourselves. So space is also moving forward in a very high way. Helicopters, there's nothing new except that helicopters keep growing profitably at a pace that is a good pace given the support from defense. But as you know, we are the world leaders in helicopters on the civil side and we're also the world leader when it comes to civil plus military.Military is for us a good boost.
So we are today with the level of visibility that we have not enjoyed before with a level of visibility on the demand side and on the supply side. So these things come well together and this is a good moment for us to give midterm targets for the group. And we are very happy to share with you that we target for the EBIT adjusted 2029 between EUR 12 billion to EUR 13 billion. We are a long-term company, where we are today, thanks to the investments that have been made over the years and over the decades, and we continue to be a long-term oriented company.
Thomas will share with you the fact that in those numbers, we have factored in the ability to continue to invest and we have significant investment in front of us as we want to continue to grow. And as we are preparing the next generation of products that are so important for our different businesses. We've been able to operate so far with this level of growth and delivering a cash conversion of one.And moving forward, we continue to see the ability to deliver free cash flow with a level of conversion of one compared to net results.
And given the fact that we come with this level of visibility that we look at 2029 with a team that will deliver on this growth and on those results. We have a level of visibility that gives us the opportunity that's been supported by Airbus Board to announce a share buyback of EUR 5 billion over a period of 3 years, starting later in the year. So the midterm target, the midterm visibility comes also with the use of a tool and we had said that there was a tool in the toolbox that we want to use now that is called a share buyback.
So this is an outlook of what we are looking at for the years to come. There's nothing that can be done without leaders at the helm of the businesses. That's why I'm so happy to have the team we have at Airbus today. That is a very strong team, very committed high level of skills, competencies and solidarity in the team. They're here today. They will indicate they will show, they will share with you important strategic elements of what we intend to do, where we are, why we believe in this.
We are at a place. And at the moment, that is very exciting for us to see the fruits of a lot of efforts and commitments we've had so far to be in that place and to enjoy the visibility we have. And that's why we are so excited to share this with you today and to take the time to explain how we're going to do this and why this is something we are, we believe in and we are excited to deliver.
So Thomas, I think it's now on you to come and give more color on this. So Thomas, please come on stage. Thank you for coming here and sharing with the audience what it means in terms of financials. Thomas, the floor is yours.
Well, yes. Thank you, Guillaume, and hello, everyone. I'm really happy to be here. It's a pleasure to walk you through our financials for the business update. And starting with our performance today, which, of course, is the anchor for the target that we will communicate.
So you remember, in 2025, we delivered a highly resilient performance despite some intense headwinds, we delivered 793 aircraft, yielding a strong EUR 7.1 billion in EBIT adjusted and EUR 4.6 billion of free cash flow before customer financing. And capitalizing on our industry-leading value proposition enables our trajectory for future growth.
Now turning into 2026. I would like to emphasize, first of all, that our guidance for the year remains unchanged. And so for the full year, we're targeting around 870 commercial deliveries and EBIT adjusted of around EUR 7.5 billion and a free cash flow before customer financing of around EUR 4.5 billion. And I would just like to emphasize that achieving these 2026 targets will actually represent historic highs for both deliveries and for EBIT adjusted, alongside one of the strongest cash performances in our history and with this, we kick off our midterm trajectory from a position of strength.
Now I know that you and the market has been waiting for Commercial Aircraft midterm outlook for some time. And today, we're delivering that clarity with a balanced plan for the group that sets the ambition for future performance. So our midterm plan moves the EBIT adjusted from EUR 7.1 billion in 2025 to EUR 12 billion to EUR 13 billion in 2029. And this would represent a profitability increase of around 75%, looking at the midpoint in '29 versus the 2025 EBIT adjusted, which again, I recall, was a historic high for Airbus.
Now looking at the components that make up that company target, you have them on the right-hand side. Commercial Aircraft steps up from EUR 5.5 billion to around EUR 10 billion in '29. Airbus Defense & Space grows from EUR 0.8 billion to around EUR 1.3 billion in 2029 and helicopters increases from EUR 0.9 billion to around EUR 1.2 billion. And this trajectory is obviously underpinned by a set of base assumptions, which I would like to make very clear. So first of all, on the macro front, while we do not model a world which is frictionless, we do assume no major disruptions to global air traffic, supply chains or internal operations. And we also assume that trade regulations remain stable versus today and our framework as usually it excludes any potential M&A impacts.
And secondly, you also have it in the fine print, our euro-U.S. dollar currency rate is modeled at $1.22 for 2029. So for your models, our FX sensitivity will mechanically increase step by step along our trajectory as deliveries ramp up, reaching plus or minus EUR 250 million EBIT impact per 1 point of dollar deviation by 2029. And we have anchored our midterm targets in 2029 as this year represents the horizon where all our programs should be at their targeted rates.
Now let's look at the specific program building blocks driving this trajectory. Starting with the A320 family. By 2029, we expect the program will be operating at full rates, unlocking profitability through fixed cost absorption and positive operating leverage. And this margin expansion is further supported by a favorable product mix with the A321 variant now comprising approximately 75% of our A320 family backlog.
Secondly, if you turn to our Widebody programs, the strong market demand continues to drive momentum across both platforms. And for the record, both programs reached breakeven post COVID in 2022. Now first on the A350. As we scale to more than double our deliveries by 2029, we are restoring our trajectory towards structural margin expansion. As we drive that forward, let me highlight 2 near-term headwinds for the A350.
First of all, we will see a temporary negative impact from the initial learning curve on the A350 freighters. And at the same time, our overall margin potential is still constrained by the lingering impact of the launch customer contracts, which is the second reason. Because of those two, the true financial, what I would call sweet spot for the A350 program actually sits beyond the midterm horizon of 2029.
Secondly, on the A330, our focus is on steady industrial execution to capture sustained global demand. And while it remains a solid contributor, its mature life cycle naturally limits further cost reductions, making its margin expansion per aircraft structurally lower than the one for the A350. So if you take the Widebody platforms as a whole, the combined profitability will surpass historical benchmarks crossing the line of EUR 1 billion EBIT pre-R&D in the coming years. And looking beyond 2029, we expect further acceleration in bottom line growth as the backlog matures.
Now on the A220, our teams are focused on reaching breakeven on the path to rate 13, driven by ongoing improvements in our cost structures and scaling effects. And across all programs, we are leveraging all possible profitability levers. And beyond volume, we are actively focused on value. Now given the visibility that our backlog provides, the financial upside of these efforts will materialize in a few years, and Lars will, of course, expand in a few minutes further on the topic.
Complementing the program building blocks, we are targeting $10 billion in Commercial Aircraft Services revenues by 2030. And alongside this, we now expect to cross the line of double-digit profitability for services in the midterm. And importantly, this is an upgraded target driven by efficiency and profitability improvements we have made across the business. And just to clarify what is the service business, the segment is made up of 2 parts. The first one includes our highly profitable trading services, such as spare parts, training and digital solutions. And the second covers our core support costs, ensuring that the aircraft operate as promised throughout their life cycle.
Now I would like to turn to our divisions, starting with Airbus Defense & Space. The division's comprehensive reorganization and operational turnaround have already yielded tangible financial results. And in addition, the business is currently leveraging strong defense momentum in the market, which is reflected in our record order intake, and we are sharply focused on converting the strong demand into incremental margins.
And moving to Helicopters. The division continues its strong performance while advancing its industrial transformation to capture broader market growth. And like Defense & Space, helicopters is well positioned to capitalize on military exports. So going forward, for helicopters, its profitability trajectory will be driven by 3 factors: the ramping up the product portfolio and cost optimization; secondly, expanding the services business; and thirdly, capturing the defense upside.
Now we are encouraged by the commercial acceleration and enhanced competitiveness of both divisions, and this sustained momentum will deliver a combined EBIT adjusted of around EUR 2.5 billion by 2029, providing a diversified pillar of profitability to the company. Simultaneously, we're making targeted investments in our future. As we said last year, R&D continues to remain stable in the mid-single-digit range as a percentage of revenue, meaning in absolute spend, the absolute spend will grow trending towards EUR 5 billion per year by the end of the decade.
And this funding supports continuous platform development, next-generation technology and proactive life cycle management. And crucially, we're pairing R&D with strict internal efficiency levers such as procurement optimization, digitalization to ensure our margins remain structurally protected as we grow.
Now let me quickly speak on FX. As I said, our 2029 target incorporates a known headwind, which is shifting from the $1.19 blended EBIT rate that we've seen in 2025 to $1.22, which is the baseline assumption for 2029. And to be very clear, the $1.22 is a working assumption based on today's market conditions and our current hedge book. And as mentioned earlier, macro shifts can certainly impact the actual rates, meaning the $1.22 assumption could naturally evolve as we go.
And in terms of hedging, I would say, while we are rather well covered in the short term, we are proactively managing the outer years, looking for the right balance between locking in rates while at the same time, reducing hedging costs for the company. So these parameters underpin a disciplined approach to value creation and diversification of our profitability levers. And as we scale our operations to cross the 1,100 delivery milestone and surpass the triple-digit revenue threshold, we project an EBIT adjusted of EUR 12 billion to EUR 13 billion in 2029.
And looking ahead, as deliveries trend towards a steady cadence, we plan to shift the focus of our annual guidance to core financial KPIs because this approach, so focusing on core financial KPIs in terms of guidance better reflects our broader revenue base, which extends well beyond Commercial Aircraft deliveries only. But I want to be very clear and for the avoidance of doubt, this transition in terms of guidance will not apply for 2026. And furthermore, Commercial Aircraft deliveries will still be provided as an underlying assumption and reported on regularly so that we are ensuring that the market visibility remains completely unchanged in terms of our delivery trajectory.
Now turning now to how these earnings translate into cash. As a reminder, our cash conversion is defined as net income to free cash flow before customer financing. During the last 4 years, our execution has yielded a cumulative cash conversion of around 1, and this strong track record was supported by robust order momentum across all businesses and a favorable working capital contribution. And this was a major achievement given our intense phase of industrial acceleration.
Looking forward, our ambition is to sustain a high-quality cash conversion ratio of around 1 over a 5-year time horizon while increasing, of course, nominal free cash flow generation.
So let me walk you through the key puts and takes that will drive this cash generation moving forward. The profitability upside we outlined earlier will translate directly into cash. Alongside this, unlike most industrial companies, we have the capacity to fund our growth without deteriorating our working capital. And this is primarily due to our predelivery payment scheme, which naturally finances our inventory needs. And as a result, we expect working capital to remain neutral over this projected horizon.
On CapEx, going forward, we project a moderate increase driven notably by the need to support our industrial ramp-up as well as the continuous upgrading of our industrial system. Ultimately, this free cash flow generation supports our commitment to disciplined, balanced capital allocation, and it secures our operational resilience, preserves strategic optionality and ensures we continue to deliver attractive, consistent returns to our shareholders.
And with this, now to capital allocation, where our priorities remain exactly as we outlined last year, rooted in strict discipline. So that means organic investments to support future growth always comes first. And then comes our commitment to growing shareholder returns. And finally, we maintain the flexibility to accelerate growth through targeted bolt-on M&A. Anchoring this entire framework is our unchanged policy on our net cash balance, which we will maintain at levels consistent with recent years. And because of our strong financial trajectory, we believe it's now the right time to accelerate shareholder returns.
Therefore, we are launching a EUR 5 billion share buyback program to be executed over a 3-year time horizon, subject, of course, to continued shareholder approval. And this marks clearly a significant step change. Over the past 4 years, we returned EUR 7.2 billion to our investors through regular and special dividends. And with this new program, we are expanding that commitment. We expect total cash returns over the 2026 to 2029 period to represent around 60% of our cumulated free cash flow generation.
And importantly, I would like to emphasize, of course, this share buyback is a targeted tactical move based on our current strength rather than a permanent recurring annual commitment, and so thereby ensuring that we continuously drive long-term shareholder value while fully preserving our strategic flexibility.
So to conclude, these strategic levers mark our transition into a value-driven phase for Airbus. And as we scale past 1,100 deliveries and surpass the triple-digit revenue mark, our success is driven by disciplined execution across Commercial Aircraft, Defense & Space and Helicopters alike. Our structural cash generation enables us to invest in our future while accelerating shareholder returns at the same time, and we're delivering on this through our continued commitment to a progressive dividend policy, which will be complemented by the EUR 5 billion share buyback program. And these actions demonstrate our focus on consistent value. So I would like to leave it here.
And with that, hand over to you, Lars, for further details on Commercial Aircraft. Thank you.
Thank you, Thomas. Good evening back to the community of capital markets. Good to be back with you after 1 year now with a different badge. I'm happy to talk to you about the Commercial Aircraft agenda for 2029 and sometimes even beyond 2029. And I thought about it, how do I structure that with 4 elements. One is where do I see the current demand. We are a long-term industry. So demand is not tomorrow, not next year, not by the end of the decade. We think about demand in 10, 15, 20 years' time frame. Second cluster will be how do I fulfill this demand. So what do I think about is supply. Third cluster is how do I think about profitability in our business. And then the fourth, as we are a long-term industry is about how do we prepare the future.
So coming out of the air show, there's a lot of demand. There's really a lot of demand on all product families. And you see here the result of our recently published general market forecast that gives roughly a 4% CAGR on both the new aircraft market but also the services market. We said we see a demand of 42,000 new aircraft in the year by 2045. That's probably around 60% new aircraft and 40% replacement of aircraft. And we believe we have the right product, we have the right platform, and it's a superior platform. You see here what we have recently communicated in our rate trajectory. So we are serving the market on the 220 with a rate ambition of 13 going into the year '28.
We have said rate 70 to 75 because we had to delay our ramp-up of the engine supply, mainly from Pratt & Whitney. So we said 70 to 75 by the end of '27 and then moving into the rate 75 shortly after beginning of '28. What we see, we already were very strong on the market share in single-aisle. We see an even higher demand on the Widebody, where we usually have a smaller market share than our competition, and we want to tap this market share, meaning we want to increase our market share. I look at the 330neo and I look at the 350, both of them are targeted to be one is the rate 5 on the 330neo in '29 and the 350. So far, we have said rate 12 in '28.
As we see the Widebody demand going up, we are actually investigating on both platforms, how to increase the rate to supply the demand that's out there, and that could go higher on both 330 and the 350. We have a superior platform. We're serving the market with the -900. We're serving the market with more demand now on the -1000. We have the A350 freighter having its first flight towards the end of the summer. And we have flown the 350 ULR, the ultra-long range on the 2nd of June. And both of these new platforms will see the entry into service in the course of the year '27.
So adding up on the Widebody demand, especially on the 350, I see a possibility to increase the rate well beyond rate 12. That's what we're investigating right now, and we will communicate it once this has been decided. More aircraft mean also more services. And the services market also grows by 4% CAGR. We are going to have roughly 50,000 aircraft in the sky in 2044. That's PAX & Freighter. And the annual revenue in services for this year is supposed to be slightly north of $300 billion.
If you look at the lower bottom, we have an ambition of $10 billion revenues in 2030. We're coming from roughly EUR 5 billion in 2025. So comparing these figures, it's natural we need to tap into this market. We want to use the position of our superior platform to sell more services to our customers. That's why we've given us ourselves the ambition to double the revenues by 2030. And obviously, 2030, we don't stop. So we want to tap into this market. We want to have an even greater ambition beyond 2030. And here, we look into spare parts, we look into operational excellence. We look into data, obviously.
We are owning the data of the 15,000 aircraft currently out there. And how do we transform the data into knowledge that we can sell and that we can offer to our customers with the aircraft or even without the aircraft. We will not do that just by organic growth. We have a radar on the market for M&A. And one of the examples recently, we have acquired Unical that is showing that we have ambition that we have appetite to go into an M&A market, even significant M&A market to fulfill these $10 billion revenues. We are targeting as well a double-digit profitability on these services going into the next years. But the ambition, as I said, is very high even going beyond 2030.
So again, coming out of the airshow, you've seen the orders that we have signed yesterday and today. Now it's about execution. When I think about execution, I think about both. One is obviously the output, but the other one is also the improved quality. That's what I'm hearing when I talk to customers, Lars, you have to step up your output, but you have to step up your quality as well. I'm going to talk about it both because that's super important that's priority #1 for 2026 and beyond is to deliver on what the market is expecting. And that goes with 4 subclusters.
One is the supply chain resilience. We have invested a lot as Airbus into our own capacity to deliver. And I'm super comfortable with what I've seen after coming in at the beginning of the year, how Airbus Commercial Aircraft is invested into its own capacity to fulfill the rates I've previously said on the different programs. But we need to embrace the whole supply chain, and that has been an off and on topic since COVID. So we are looking into our supply chain. We are embracing them. We're looking into multi-sources and multi-sites for critical parts because we have seen during COVID and post-COVID that if you rely to a single supplier, a single partner, then sometimes you can get into difficulties.
So we're watching the performance, both financially, but also operationally of our partners and the suppliers. And we look strategically where do we need to source, where do we need to find multi-sources. And when we have suppliers, let's make sure they have multi-sites as well given the geopolitical uncertainties we have in the world. So that is securing our ramp-up.
Then we're investing into a digital system. We call it Aero Excellence. That's both a kind of an assessment for our supply chains, the multi-thousand suppliers we have in our network. I'd like to follow their value stream. And ideally, I connect that digitally with Aero Excellence into our systems. So at every point of their value chain, I have a visibility on quality and quantity.
And as I said earlier, we are ramping up all different -- all 4 product lines. So it's super important to have the suppliers with us, to have them connected digitally and to be all the time in a position to say, we know what's coming, we know the quality, we know the quantity, what's coming. Guillaume talked a little bit about our own capacity. So we have now 10 FALs operating on the single-aisle, all of them 321 capable. We've seen that doubling in the U.S. We've seen that doubling in China, and we just opened the last one in Toulouse. So the FALs, and that's only single-aisle what I mentioned, but also on the 350, also on the 220 and also on the 330, the capacity that we need is actually installed, and we are ramping up the rates in that capacity as described.
But it's not only the FALs. It's also the subassembly, the pre-FALs section as we call them, and that is sometimes internal, that sometimes external. And that goes again with the supply chain resilience. And one of the examples where we wanted to create a better reactivity and visibility and operational control is the former Spirit AeroSystem packages, where we're now investing into the 5 different sites and specifically in the U.S. for the Section 15 of the A350, and we bring in our own people, and we make this operation an Airbus operation, and we have the visibility that this Section 15 is now delivering of what we needed and going up the rate towards 12 and then later beyond 12.
So that's more the capacity and the supply chain. On the quality, let me start with operational excellence. When I get the feedback from the customer, you need to step up in your quality. We have launched a so-called quality moonshot to reduce the non-quality in our own operations by 50%, that's 25% in '26 and 25% in '27. By that, obviously, it helps us. It's safety relevant as well, and it eases the entry into service for our products. For us, it's less resources, less rework, more profitability and a delivery on time.
But also the culture needs to change towards execution. So we're using our support functions to really think about what needs to happen that we can deliver basically 4 aircraft a day. That's the currency we're bringing in. If you want to go to the numbers of 1,000 or even beyond and you divide it by the working days, that's the currency. So it's 4 aircraft a day. It could be 5, it could be 3, but it's a lot of aircraft per day. And we need to streamline the culture in our operations and in our support functions to make sure that we have lead time, that we have faster decision, that we have digital enablement to really be able to bring the aircraft out of the door to the expected time that the customer wants it.
For that, we are automized. We have robotics, but we rely on our people. We rely on the skills and the competencies of our people. So we are hiring people. We are hiring people ahead of the time to make sure they have the right skill set that is needed in the aerospace environment. We have an academy, an operations academy where we bring in our people to be ready on the spot when we need them for the rate. And we are increasing their certification. We've seen a lot of movements across the aviation supply chain after COVID. So we make sure we have skilled people. We call them Level 3 people where they can actually self-qualify and self-attest their work result. Level 4 would be an external quality provider.
So ramping up the competencies and the skill set of our people to a higher level to make sure we satisfy both not only the technical output from a capacity perspective, but also the improved quality and the culture to make it happen to deliver on the amount of aircraft. You've seen demand, you've seen supply. So how does that translate into profitability ambitions? Thomas and Guillaume talked about it. We have closed the year 2025 with EUR 5.5 billion on EBIT adjusted, and we're targeting a EUR 10 billion EBIT adjusted for 2029. How is that materializing? I've said -- we've shown here 3 different elements, 4 different elements. One is the additional volume. You've seen the rate figures. So more volume is obviously beneficial for top line and for bottom line growth.
We see the mix benefit the customers are asking for larger aircraft, for more capacity aircraft for more longer-range aircraft. You can see that trend both in the single-aisle environment, where we're now focusing more into the 321 as a larger aircraft, but even in this segment, more into the long range and the extra long range. And you see the same trend on the 350 where we had the 900 and now there's a good momentum, probably even balancing between 900 and 1,000 for longer range, longer capacity.
So when we offer these longer-range aircraft, that creates more yield and more benefit, more value for our customer. And inherently, that needs to create more value for us as a producer. And then I talked about the operating efficiency in the slide previously. That will kick in. The more we do it, the more we focus on it, that will kick in as well. And what's -- where we need to invest, what's hampering that a little bit, this figure is a post-R&D figure. So we obviously invest in the future as we are a long-term business. This one is EUR 10 billion for 2029, but I'm looking into the next decade already. And what I see materializing is more or less along the line what we promised here, additional volume, especially on the Widebody, especially on the services, as I outlined the ambition on services.
The mix benefit will continue, and we are investigating even more larger aircraft, stretch aircraft as this is probably pretty public. We're investigating a stretched version of the 200 of the A220, and we are investigating on a stretch version of the 350, even larger than the 1,000. So all these 3 elements, more value-driven focus will contribute to an even growing profitability beyond 2029.
Then when I say post R&D, investment into the future, that's a storyline of how do I see the future. I have 3 time horizons in mind. When I think about Commercial Aircraft on execution, we talked a little bit today, enabling tomorrow, you see the incremental developments, as I said, the 350 freighter, the 350 ULR, the investigation on the feasibility on the 220 stretch and also the 350 stretch -- we're working obviously on the technology of the next-generation products. So we're investing into the wing of tomorrow and the fuselage material. We call the engine technology brick. We call the connectivity technology brick. So all that goes then into launching next-gen single-aisle as we have said here in the show as well, launching it towards when the technology is ready, launching it towards the end of this decade and the entry into service towards the latter half of the next decade.
The technology brick, by the way, is also hydrogen. As you've seen, roughly 2 weeks ago, we have announced a joint venture with MTU on a hydrogen fuel cell propulsion system. I'm a strong believer that hydrogen will play a role in our industry in the decades to come. So that's a technology brick that we also want to propel and giving it some time to investigate how this is working and how big the aircraft could be that's fueled by hydrogen and the fuel cell. And when I think about and maybe let me close with that one. When I think about the next-gen single aisle, it's not only technology bricks. It's also the industrial setup that we need to be quickly at rate to be as efficient as possible, as automated as possible, supported by robotics and AI.
And the third one is how do I rebalance the business model. There's probably a once-in-a-lifetime opportunity to rebalance the business model and to participate in the aftermarket in the 3 to 4 decades of aftermarket, and this goes together with the technology bricks I mentioned.
So all of that shapes the storyline in the Commercial Aircraft agenda for 2029. But when I talk about preparing the future, it's more 2035, seeing all this opportunity, seeing all this growth. We have launched in the commercial ExCom team a 2035 growth transformation plan. How do we prepare this division to double its size going into the next decade? And how do I want this to be? And then looking right to left and how do we structure the different streams of this growth transformation plan that's obviously supported by a lot of digital, a lot of technology and artificial intelligence.
So in a short nutshell, these were the 4 clusters, demand, supply, profitability and investing into the future. And with that, I'm handing over to my colleague, Mike, for Defense and Space. Thank you very much.
Good afternoon, everybody. It's good to be with you again 1 year after the air show in Paris, which was the last time that we talked about the midterm outlook for ADS. And as Guillaume has already mentioned, quite a lot has happened since, and I want to take you a bit on a journey from what did we accomplish in '25. What are we focusing now internally and externally to benefit from the growth that we're all seeing and witnessing on the defense and the space side. And what does that lead to in terms of the major transformation that we continue of ADS, including the space business and the joint venture that we aim to create with 2 partners in Europe.
So with that, let's look into 2025. I'm quite proud of what my team has accomplished and building on what I told you 1 year ago, we have had a record intake -- order intake in '25 with EUR 17.7 billion. That leads us to a backlog of, in total, EUR 50 billion plus. Securing the growth for the future, but obviously, we need to deliver on that growth. The EBIT result was much improved against the difficult year before that was in the, let's say, under the cloud of the space write-offs that we had to take in '24. So EUR 798 million precisely, let's say, EUR 0.8 billion or EUR 800 million in EBIT adjusted.
And we have, as a result of the space results, but also actually started before, formed the end-to-end business units with a full accountability through the whole business in a major transformation, organizational transformation of the division. That has turned out to be very successful. That has created the entrepreneurial ownership that we wanted to see. We have really taken the lessons learned from the space, mishaps before in terms of the discipline on the order intake, the quality of the order intake, the risk management of project management, the ability to deliver and to be ready to deliver when the project starts.
All these have been very valuable and have been applied across the board into the whole division, and that has helped us reap the benefits that we're seeing today. So that puts us in a good position and right on time to continue to capitalize on the growth in Defense and Space. Europe, as we all know, is recognizing Europe needs to be much better in taking care of its own security than in the past. That is obviously playing in our favor. We have the widest portfolio in Air and Space in Europe, and that puts us in a good position. We're working on the right products for the future. So continue to propose best-in-class solutions will have to be part of our recipe for success.
And the defense budgets are increasing. It doesn't look like the planet is going to take a different trajectory anytime soon in terms of becoming more peaceful. That obviously leads Europe and other nations that we serve to do more for defense.
So with that, focusing on what we're doing precisely on a selection of our important programs. MRTT, you heard Lars talk about the A330. The A330 is the base for the MRTT tanker and transport aircraft. Meanwhile, of the A330neos, calling it the MRTT plus. We are in the process of doubling the production. That is the conversion capacity that we have to turn the civil green aircraft into a militarized version. We are continuing to ramp up on the Eurofighter coming from a rate 10 per year a few years ago, aiming at more than a rate 20 in '28 on a very good trajectory as we speak. And we prepare a scenario for a rate 30 depending on continued export success, which is not a given, but it is possible.
On the UAS, if you see the air shows here in Farnborough or in other areas, you see how jointly with our colleagues from Airbus Helicopters, we have worked on our UAS, on our drone portfolio and especially in the important area of the so-called CCAs, the collaborative combat aircraft, the fighting drones, if you will, unmanned fighter aircraft. This is something that we're banking on and that will be important for the future.
One thing that people sometimes forget because we talk a lot about products and the OEM parts that we do, but we're also a big service company. Usually, our products go with the in-service support. In addition, we have services that are nicely growing like drone as a service, something that really a lot of organizations like police forces, border forces, Frontex really don't want to own a drone. They want the service. They want the results out of it. FCAS is a complex story to be summarized in one sentence, but I'll try it with the decision that was taken in June to end the cooperation with Dassault on the manned fighter jet opens a new chapter for us, opens new opportunities for us.
Spain and Germany as the 2 countries that we had represented in the old FCAS program continue to be adamant about they need a sixth-gen fighter and want their own industries to play a leading role in that. And we are positioning ourselves in that regard, and we're quite optimistic to get to a good solution. Space, not -- I mean, I would say there couldn't have been a better time to fix the space business and to be ready for the significant order and demand that we're currently seeing, largely coming -- well, actually coming from both, from the institutional business.
ESA has declared and has made available a record budget for the 3-year cycle that they have. That was decided in Bremen at the ESA Ministerial Conference last fall. And on the defense side, you hear it all over the place. Europe is really doubling down with constellations. You hear IRIS squared, you hear military constellations, you hear earth observation. And even in the very institutional exploration business, there's significant traction.
My smallest business, Connected Intelligence creates the digital fabric that connects all these platforms, whether it's a satellite or a flying platform an aircraft, is very successful currently in the much-needed integrated air and missile defense. We're seeing lots of new threats that need answers for coming from swarms of drones, coming from ballistic missiles. So it's been extended to the lower end counter UAS and to the high end, ballistic missiles that actually leave the atmosphere and then come back.
So this is something that countries need to protect itself from, and that's where we play a major role in terms of the so-called command and control system. So we are one of the few providers in Europe that actually have a NATO-certified open and modular C2 architecture that integrates agnostically almost any kind of effector, meaning missile. That's a business that's really taken off.
And the other part in Connected Intelligence that finds it very difficult to satisfy all the demand that's currently happening is the earth observation business. Whenever there's a crisis, people want pictures of that crisis, and we scramble to deliver those pictures. We're quite good at it, but we're thinking about increasing the capacity as well.
So all of this said, this is something that helps us to unlock more value going forward. You see the 3 business units on the left-hand side, this is our current structure. We have successfully created in the past 2 important joint ventures that Europe needs to defend itself. One is MBDA, the missile maker. It is maybe the only way how we can create as Europeans scale at a European standard or level, if you will, because with the countries having vested interest in their defense companies, it is very difficult that there's just a normal consolidation happening. So this is probably the best way how to create scale in Europe when each and individual company in each country would be too small to compete against American and more and more Asian competitors.
And the other important joint venture is Ariane, our launcher company that we have a 50% stake in and the other shareholder is Safran. I jump to the right side of the slide. So this is what we want to create from 2027 on. We want to add a third major strategic joint venture to this. You know it potentially under the nick name Bromo, which is not going to be the final company name, but that is the space joint venture that we want to create jointly with Thales and with Leonardo. You see that this leads to a significant revenue if you add all the 3 joint ventures together of about EUR 15 billion.
So it's really a strategic business that we're taking a lot of organizational measures also to govern that and to reap the benefits from these participations, including boards and strategic cooperation. And if we then zoom in on the center of the slide, which is the remaining division of Airbus Defense & Space, it will be very much an air power division. It will be very air power-centric, so meaning the military aircraft, but it will be -- and you see it wrapped around the digital fabric, the data-centric solutions that we provide through the Connected Intelligence business will be part of that.
So we have a clear plan and a clear vision of where we want to continue on a bigger scale, the transformation of ADS specialize more, create the end-to-end accountability and the specialization that you need and moving away -- moving even further away from the old hodgepodge of putting everything in one bowl and then maybe not having the grip on the business as we want it. And that leads me to my final slide of explaining a bit more in detail of what Thomas presented to you already.
Last year, I reported to you the ambition to have a EUR 1 billion plus EBIT adjusted by 2028. I'm happy to say we are ahead of the curve. We're now seeing that we could be in 2029 at around EUR 1.3 billion. Some of you might ask, and I anticipate the question, is that with or without Bromo? My answer will be it is robust against both scenarios. What is helping us in this is everything that I try to get across in terms of how do we working on the efficiency, how do we keep the discipline, how do we not grow at any price, but keep our focus on selectivity in the bids.
We want to invest very targetedly. The typical model in defense is you get customer money to invest, you get early cash and then you can work with that. That works for the most part. But in some areas, especially in the drone sector, where the things are moving very fast, we need to pre-invest, do that in a very targeted fashion. As I said, that puts us in a better position to win the business later on. And we continue to work on the transformation of the business, of the competitiveness. We have kept our SG&A spending flat over the last years. We will try to continue that. That obviously is good for the percentage of the turnover in terms of SG&A and good for the profitability. And the volumes will be going up because we are geared to deliver on the promises that we made through our orders, and we don't see any relaxation anytime soon.
So with that, I'm basically done with my presentation and I welcome on stage Matthieu. Thanks very much.
Good evening, ladies and gentlemen. Last least, but hopefully fascinating, I will walk you through a few slides about helicopters. Starting by the market, then going to the ramp-up and the execution, the profitability and finishing by the future and the innovation.
So first, a few words about the market. The market for helicopters is civil and military. The military is bigger, roughly 4x bigger than the civil. And we are present, of course, in both with a dual business model, which has proven to be very successful for us. On the civil market, which is on the left part of this slide, we have a very large market share, roughly half of the market. It's in units here, but it's the same in value. We have a very wide range, which has proven to be very successful with the many customers we have.
And you know the civil market, it's many segments. It goes from firefighting to oil and gas to air ambulance, police, utility work. And it's a growing market. You see almost 6% CAGR forecasted till 2031 because there is a positive trend in the commodities, especially oil, which offshore oil is a big part of it, but also the government is investing more and more in their police services or ambulance services.
On the military side, also very great success last year. Market share, 28%. It's not the average number. It's a record number. Well, our aim would be, of course, to stay there for a while, but it will be a change because our historic market share was closer to 18%, 20%. Nonetheless, we see a very good trend, thanks to a very large range as well, mostly successful military versions of our civil aircraft. For instance, the H145M, which Germany has bought, 82 executive units. The HIL, which is the H160M, the military version of the 160, France, about 169 of them.
So we've got a lot of success with the aircraft and not only in our home countries, also on export market, for instance, the H225M, which was sold to the Netherlands, to Iraq to Morocco. This military market, 4%, a bit more than 4% anticipated of growth. Actually, you might find the number a bit underwhelming, but the reference here is '25, which was a record year for bookings, not just for us, for the whole market. If you're starting from '24, you would find 15% growth. So it's really -- if we keep the good numbers of '25 and expand on them, it's also a very good market.
Our business model, and you see it on the right, balanced civil and military, which is good because it's contracyclic. And when the military goes well, the civil might not or the other way around. I must say no, the 2 trends are positively synchronized. And split between platforms and services, a big half for platforms, a small half for services which is very resilient. Helicopters, they fly low. They absorb a lot of stuff when they fly close to the ground. And they have rotary parts, rotating parts, which require some regular maintenance, a bit like engines, which is why services is a very important part of the business model and builds a lot of profitability and resilience to it.
What is our ambition? Of course, staying #1 in the civil and para-public market, and I think we're in a very strong position to do that with a very large product range, ranging from 2 tonnes helicopters to 12-tonne helicopters. Continued growth in military exports, and this year starts successfully. You've seen the sale to Romania, for instance, of 12 H225Ms. We sold H145Ms recently to Armenia, for instance, or to Uzbekistan. Becoming a leader of uncrewed solutions, not all uncrewed solutions, but it's drones and it's also unmanned helicopters, which is why we took this word of uncrewed solutions.
And it's in the drones, it's rotary wing drones, vertical lift of a certain size, which is the area where we're relevant with our skills. And it's, of course, the unmanned versions of helicopters and the teaming between the drones and the helicopters, I'll come back to it.
And finally, #1 in services, and I would tend to say not only in the business, but also in the satisfaction of the customers, which is, of course, crucial to sell the platforms down the road. How do we plan to execute on our ramp-up? The ramp-up is a bit different from last numbers. Actually, it really depends on the platforms. One platform which undergoes a very strong ramp-up and it's positive because it's a very -- it's the best seller and a very profitable platform, it's the H145. You see it went from deliveries around 68, so close to 70 in 2023 to 120 this year, which is a very large growth. And the top end of that blue bar is close to 140 actually in the next years. So we are doubling the production of that -- so of course, it means a large expansion of the production capacity and a draw on the supply chain.
The supply chain situation is getting better. It was very difficult post-COVID. Now the most difficult supplier situations have been solved. It doesn't mean, of course, there is no problem, but there is a steady improvement in the quality and including our own production. Perhaps we have more vertical business model than in airplanes. We produce ourselves our own gearboxes or on rotors or own blades. And we have invested in our facilities, in the quality system, in the digitization of our production in a new facility, for instance, to assemble the gearboxes, which delivers very strong quality, steady quality and allows us to ramp up efficiently the production.
We're also expanding worldwide. We opened a new assembly line in India, which is very important, of course, to both expand our production capacity, but also to address the very large Indian market where helicopter sales are really taking off, military and civil alike. Very resilient setup. We increased our workforce, and it's largely linked to engineering workload. I'll come to it. And we have a global footprint with 10 industrial sites, but also an industrial organization that has been optimized a few years ago, where we have like Airbus Commercial Aircraft, an organization which splits the work between the main European countries, which all built together with helicopters, structures, main aerostructures in Germany, the blades and the gearboxes in France, the tail boom in Spain and assembly mostly in France and Germany. But we also have assembly lines in the U.S. and Brazil and now India.
We upgrade our platforms continuously, which is why we have, for instance, this very large market share in the civil market. And it has really accelerated in the last year. So the ramp-up for us is also a strong ramp-up in engineering workload. We doubled the engineering hours in the last 5 years. This is due to very large military developments. I mentioned the military version of the H160 for France and later for the export market. The 82 military H145 that we sold to Germany, also very large development, the upgrade of the Tiger called Tiger MKIII, plus very large 2 to 5 contracts such as the 38 aircraft we sold to the Federal Police in Germany or the 16 aircraft we sold to the Netherlands.
All these require a lot of customization. Customers want to install their own systems, new systems on the aircraft, and that drives a lot of workload as well as the new developments. I'll speak a bit later about the H-140. And we have 13 product families when you include the drones. So it's quite a large portfolio, which requires a lot of constant care and work. On our profitability ambition, how will we achieve it? Perhaps I will start by the numbers. So as Thomas mentioned, we were close to EUR 900 million EBIT last year. We want to grow this number to around EUR 1.2 billion. How will we achieve that?
First, ramping up the production, I mentioned it, but also optimizing costs, and there are several ways to do that. Artificial intelligence will be important. It can really help us in software development. I mentioned the large engineering workload. This will really help in optimizing, for instance, the simulation tools to have lower flight test times and more efficient test to automate the inspections, which are a large part of the production cost.
So many ideas to optimize them, leveraging on the partnerships we have both with Google and Mistral AI. Support and services growth will continue alongside the growth of the market, very steady. We have a very large market share, more than half of the accessible market of the service of our platforms, and we plan to keep and continue to gradually increase it and the upward trend of the military market I was mentioning. We must invest. It's part of the game. We must invest in upgrades of our platforms or on preparing the next generation of platforms. I'll say a bit more in the next slide. It's the guarantee of the long-term success of the company.
And the ramp-up in itself, of course, will help optimize cost by absorbing the fixed costs, which will contain continuously on the larger revenue base. If we go about where we want to go in the future, a few important themes of our innovation, our long-term future. Crewed-uncrewed teaming and drones. So all is important in there. Unmanned versions of our helicopters. Here on the show, we exposed the U145, which will be the unmanned version of the 145 for dull, dirty, dangerous missions, a very large market appetite for this. Of course, when you unmanned the helicopter, you also gain more cabin capacity, removing the controls. So you can put much larger loads within the helicopter.
So a lot of interest for that program starting on the military -- U.S. military version of the 145 and soon, hopefully, in Europe. Also H teaming. It's our teaming solution to team any kind of drone with helicopters. It can be launch effectors. It can be loitering ammunitions. It can also be observation drones. We created the drone center to be extremely agile in this development, which is a kind of separate entity working with different development processes, much faster, much more agile, and they developed this teaming solution in 6 months, which was demonstrated in Singapore between this aircraft, the 225 that you see and the Flexrotor on the top right corner of the slide.
So it has proven to be extremely effective, and we now continue with many drone companies to do that. We also have our own drones. We have made acquisitions, the Aerovel company in the U.S., which is the Flexrotor you see here and our own drones developed in-house, such as the VSR700, [indiscernible], which we recently renamed.
We continue, of course, to invest in developing our helicopters. The H-140 will be the newest light twin helicopter. It was unveiled last year at the Annual Helicopter Show in the U.S. It has a very large order book already, a lot of expectation by the customers. It will be the most -- by far, the most performing platform in its category. We have a much more efficient water and tail boom and we have a larger cabin, which is important, especially for the medical services, which want always more room to take care of the patients or to accommodate larger patients. We have also ENGRT and NGRC, sorry for the soup of acronyms. These are the names of the new military programs for the future of helicopters in Europe. So a few new helicopters.
NGRC is the NATO project. ENGRT is the European Union project. They will both converge to define and fund the next generation of military helicopters. They can be conventional helicopters. And there, they can be an upgrade of the NH90 with more weapons, more connectivity, software defined in order to upgrade the systems very fast, team with drones probably with more endurance. So this is one possibility. It can be perhaps a new conventional helicopter, clean sheet or it could be high-speed concept. And here, we have unveiled in the last years and months our racer prototype, which achieves very high-speed performance while keeping very good hover and stationary performance and very optimized costs for this concept.
So we are exploring them, exploring the space of possibilities. We are doing R&D to mature the technologies in the last years of this decade before we hope for a full program launch in Europe, beginning of the '30s that will either upgrade or replace the NH90.
And finally, operational optimization. There is a lot of innovation in what we want to do. AI will be central here, and it will be both to optimize our processes, our development processes, our production processes and maintenance processes and to optimize our platforms, especially our drones, for instance. You can team one helicopter with one drone without too much AI. If you want to team a helicopter with dozens of drones, there, you need AI.
So our strategic priorities to conclude, it's at the bottom part of this slide. Customer loyalty. As I was saying, maintenance is an important part of the life of helicopter and unfortunately. So we need to be extremely good and continue to focus on improving it to keep the very large market shares that we have acquired. Innovation, I don't come back to it. It was a point of this slide, continue to grow our market share in Defense and Security higher than what it was. And I think we know we have the range, both of manned and unmanned platforms to do it. And sustainability remains a priority. And sustainability is not only mitigation of climate change, it's also adaptation to climate change and their helicopters, which are extremely essential for disaster relief, for firefighting are key tools to adapt to climate change. So we have a mission there. That's it. Thank you very much.
And now I have the pleasure to give back the floor to Guillaume for a conclusion.
Thank you very much, Thomas, Lars, Mike and Matthieu. Thank you for your attention. I think there was a lot of information and background on our different businesses. Again, we are at a point where the company has visibility, visibility on demand, visibility on supply, visibility on how to get there, and you've heard a lot from our CEOs, visibility as well on the team to make it happen and visibility on the commitment. At Airbus, we like to say what we do and do what we say. That's not necessarily obvious in the current environment, but we are happy to come with an outlook that goes to 2029, with an outlook that is backed by strong backlogs.
So we have a level of certainty when it comes to what we have to deliver at a point where a lot of progress has been made, as it was explained earlier, on the make and on the buy that is required to deliver on those numbers. Having the possibility to have an outlook till 2029 and share that outlook in so-called midterm targets was and is for us an opportunity to use the share buyback to return cash to shareholders, and we think that paves the way for a clear execution for all our teams and also for our partners and suppliers.
So we think we're in a good place here at Farnborough to look forward. It's honestly quite exciting to be working for Airbus in the current environment where the demand for our products is so strong. That gives a very strong sense of meaning of belonging also into a community of customers, be it for the Commercial Aircraft business, for the helicopters and all the missions that are served by our products, but also in defense in the current environment in this world that is a fast-changing and unpredictable and not such a safe world as the one we have experienced before. So that really gives a lot of meaning to all our teams on what they're doing, and that's convergence of what we want to do in terms of targets, but also why we come to work every morning.
With this, I'd like to thank you for your attention. There's been a lot of data and information shared. I just want to conclude basically wrapping up with the few figures that I think count for today, the EUR 12 billion to EUR 13 billion EBIT adjusted that we are targeting for 2029 with a cash conversion rate maintained at 1. As Thomas highlighted before, that's something we have delivered and we want to continue to deliver and the EUR 5 billion share buyback program over 3 years. That's in a nutshell, the summary of what the different businesses have as a plan and will deliver. And I suggest we go to the Q&A, giving you the opportunity to ask your questions and try our very best to give answers.
So I would be happy to call on stage the speakers, Thomas, Lars, Mike and Matthieu, and we will do our very best to address your questions. So now JC, I guess you are orchestrating this. Thank you.
Thank you, Guillaume, for wrapping up those key takeaways, and thank you for the whole team to share both strategic and financial insights. So we will start the Q&A. We have a solid 30 minutes ahead of us. So plenty of time to answer to your questions. Before that, a few rules of engagement. [Operator Instructions] Now let's start and get the first question from the room.
Ben, do you want to start?
2. Question Answer
Can I ask 2 on the A350? First of all, you mentioned you're investigating going beyond 12 months. Can you talk a little bit more about that? What are the rates that you're considering? And when do you want to make a decision? And then Thomas, you said the sweet spot for the 350 is beyond '29. What does the sweet spot look like?
Let me start with the A350. When I summarize, there's a lot of demand on the already existing platforms we have on the 900, 1000 on the freighter, on the ULR, we're investigating a stretch version. And with that comes a thought, how do I enable earlier slots. And we see now that we need to be able to offer earlier slots to the customers. And when I said it's a rate beyond 12, significantly beyond rate, then you can do the math, and it's not going to be 20. So it's somewhere in between. And the decision ideally, I would like to do it with Guillaume with the Board in the course of the year, decide on a rate scenario.
So when you give a -- I was not expecting that the first question when you give the '29 outlook would be what comes beyond '29, but you did it. No problem. So let me remind again, why is the sweet spot not yet in '29 because we have 2 things. One is we have the freighter that is in its infancy, if you like. And secondly, we still have the launch contracts for the A350, and that will be with us until the end of this decade.
So I would say the sweet spot really comes in the 2030s. And I would say it has a -- we can do significantly better in the next decade with the A350 than what we have today. I will not give you an exact number. That is when we talk about the 2030s, but it's not an incremental ramp-up or the incremental improvement, it's a significant improvement that we can do with that platform.
David?
And again, please stand up and say your name and institution, please.
David Perry from JPMorgan. First question for you, Thomas, if I may. I mean you're guiding to a lot of profit and a lot of free cash flow. So I'm just wondering why you decided EUR 5 billion for the share buyback and not something perhaps bigger. And maybe I'll ask Mike one. Could you just talk about your preferred options or what the options are now for FCAS without Dassault?
Let me start with the first one. We think it is the right balance in terms of our capital allocation. You've seen that our first step was to step up the dividend policy from 30% to 50%. I think that gives us quite a bit of flexibility in light of the fact that also our net income will increase.
And secondly, if you add on top of that for the next 3 years, the share buyback, as I said, that gives us a payout of roughly 60% of our cash flow that we're expecting. We think that is the right balance between the cash that we would like to preserve for investments and also for a buffer in the company. And at the same time, a 60% payout ratio, we think that is what the company should target for.
And lastly, I would say, the share buyback, of course, gives us the flexibility to accelerate, decelerate depending on how the environment develops. So therefore, there's always flexibility built in to react to how the environment will develop in the next 3 years.
On the question of the preference, I would say it's not only my preference that will decide on what might happen, but you need 3 things to align. One is you need the respective countries to want to work together. You need the respective Air Forces to want to work together and then you need the industry to want to work together. So my preference, I'm not going to give you a specific answer, but my preference does entail that we find a solution that gives Airbus a significant positioning in a 6th gen fighter in our Spanish and German footprint and set up. And it will have to be something where we have the feeling from day 1 that the industry actually is pulling at the same rope in the same direction, and that will give us the, say, recipe for success.
There's a few options in Europe to work together. We're currently setting ourselves up to not lose time to continue to do the work that we know already has to be done and be open for others to join. And you know that we have partners in Spain and in Germany that have also come together around the Berlin Air Show and declared that they're ready to support us in that.
Ross, do you want to take the next one?
Ross Morgan Stanley. The first one on the Airbus target EUR 10 billion EBIT. Out with FX, where would you say is there the most conservatism baked in across sort of volumes, pricing, operating leverage, for example?
And then secondly, on the NextGen Single Aisle, the image of the aircraft on Slide 18, it looks like it has a ducted fan engine. Should we assume that you are becoming less confident on the merits of the open rotor?
Should I start with that one? I haven't seen the image in the back of my mind. But no, you should not assume something out of the image. We're investigating both technologies. You've seen us going live yesterday with the flying test bed for the RISE concepts. But I said this is one technology brick that we need to mature, and we're investigating both of them.
Well, on the question of conservatism, we always have to strike a balance between ambition and ability to deliver on objectives. So I would say it's real. It's something that is consistent with we say what we do, we do what we say, 3 or 4 years ahead.
Next question here, please. Doug.
1
Doug Harned, Bernstein. Two questions. First one, going back to the A350 and looking toward that 12-month rate. So you talked about the longer term. But in terms of getting from the current rate to that 12 a month, what are the hurdles you have to get through at this point?
And then second, if you look at the stretch for the A220 and the A350, presumably, that requires a new engine. How do you think about the engine technology for that?
So on the current rate, we are somewhere in the ecosystem, let's say, between 8 and 9. When I look at the path towards 12, I'm looking more or less into the supply chain and there in the cabin environment, so lavatories and galleys, linings. That's what we are currently short of. So that needs to be secured, embraced, as I said, we're doing with the supply chain.
But on the pre-FAL, on the material, on the subassemblies, I don't see a risk to go to 12. We talked about Kinston in the U.S., our Section 15 that has been an issue in the past. We have sent people. We are now progressing. We're performing. So it's about the cabin interior supply chain where I'm after.
And on the 220, the engine is actually pretty good. So the engine, the 1500 developed quite well over the past 2 to 3 years. We believe we don't need a new center engine. So we can walk this 220 stretch with an improved but similar engine as we have it right now from Pratt & Whitney. So I'm not concerned on the engine. It's a little bit heavier the aircraft, obviously, because it's stretch that will limit a bit the range, but the customers are very fine with them, more capacity, less range.
Sam for the next one.
Samuel Burgess, Goldman Sachs. You spoke about A350, if I could just come to that. It sounds like your thinking on that is actually quite mature in the idea of doing a stretch or moving to higher rates. If you made that decision, what would that CapEx commitment look like? And is that incorporated into the current guidance on cash conversion? And have you accounted for that?
And then secondly, just on Engine Technologies, you talked about the desire to increase aftermarket exposure and part of that being the engine technology brick. Could you just give us any color or sense of what that might look like? Is that just a capital commitment to the next engine program or something different?
Take the first one...
You want me to take the first one. Yes. I mean I think, first of all, to be clear, we have not yet taken a decision on the 350 stretch, but we're looking into it. I think it could certainly be a very, very interesting aircraft because it would be the reference in the market in terms of, I would say, technology, but then also size. So therefore, I think it could be in a very, very interesting spot for the customer, but also for us. And I think you said it, the reason why the decision, of course, has to be investigated very carefully is not only the development work for the aircraft itself, but also what does it mean in terms of commitments for the production systems. That is, I would say, slightly more complex, and therefore, we're looking into it very carefully.
Generally, the assumptions that we have taken in our midterm ambition for 2029 also in terms of the CapEx investments that we want to make do comprise, let's say, the production program and the product portfolio that we want to develop. There is no precise decision, but so that we are building some room left or right. But I would say, intellectually and conceptually, we should be able to cover sensible expansion of our product range and also of our, I would say, industrial system within the envelope that we have given yourself. That's the base assumption.
Maybe on the second question, I didn't -- as far as I remember, didn't link it specifically to the engine. I talked about when I look about -- when I think about the Next Gen aircraft, I think about technology, I think about the industrial setup and I think about the new business model. Right now, we are mostly exposed to a linefit to OE sales-driven company, but there are a couple of players that are involved into a 30-year aftermarket exposure. And we're discussing with them how could the merge of this business model look like. So we participate also from the aftermarket exposure.
Ken?
Ken Herbert with RBC. Maybe 2 questions. First, on the cadence from the EUR 5.5 billion to EUR 10 billion within Airbus Commercial, how does that pace as we think about the progression? And anything we should keep in mind on the timing between '26, '27, 2029? And then maybe, Lars, specifically, you called about a target of 50% improvement in quality. And I'd imagine quality is an important piece of the margin and obviously, the delivery cadence. Can you just give a little more detail on what's changed now since you've been running the business for a period? And what gives you more confidence in supplier quality and execution and what you put in place to ensure that sticks?
Yes, maybe I take the first one. I mean we will not give you intermediate targets on a year-by-year basis. What I would say is that the key driver, specifically for commercial is, of course, the ramp-up. I think we've been clear that in 2026 and to some degree also in 2027, we will be slightly be held back by deliveries of the Pratt engines relative to what our industrial system could have delivered and what we would like to have received in terms of engines but there's no change since our communication in February of this year.
So things with Pratt, I would say, in terms of the delivery numbers that they will give to us are stable, albeit the fact that they're not exactly what they are. Having said that, the real ramp-up will come in terms of profitability once we are at a stable rate. So I would say the trajectory is not fully linear, but with a slight back-end loading pattern specifically into 2028, '29.
Well, then maybe to the quality question to maybe start with make sure we didn't start that to drive margin. We started to drive customer satisfaction in the first hand. So it gets back to first-line principles of how do our people think about their own accountability when they finish their day-to-day activities. And we've seen a lot of issues that happens in the value stream of the aircraft, especially in the final assembly line, but you just need to react to a customer feedback when they take delivery of the aircraft and they mention, I don't like this, I don't like this, I have seen this. And then there needs to be a quality feedback loop back to the supply chain. And it's -- I spoke about it in the context of a cultural change.
So we're obviously starting that within our own company, and we want to put the quality. And by the way, that's feeding into the safety that we mentioned all the time, the quality will be at the same level of people safety. So that's a DNA thing that we want to establish. And the 50% is an ambition for 2026, 2027. But we see already that the teams are super engaged. They want to -- no one is here to create non-quality. So they want to focus on quality. The management, the teams, they're all engaged on delivering that. And when we think about a moonshot quality, we also talk to our suppliers, obviously.
And quality in our industry is not something that we change from one day to the other or from 1 month to the other. So it's really a cultural change, but it's first and foremost of shortening lead time, reducing rework and then focusing on the final delivery date that the customer is expecting and the quality.
Maybe one word on my side. As we ramp up volumes and as we produce much more, the regularity and the predictability of what we are doing is really important. You remember what happened last year when we had the panel issues created indeed a lot of disturbances in the system. So as we move up, it's really important to have this regularity that a better quality would enable.
Ian?
Yes, it's Ian Douglas Pennant with UBS. Firstly, on the pricing, a lot of aircraft that you're delivering today were ordered before COVID when I would assume that pricing is not as attractive as it is today. Does that mean that you've got further pricing upside after 2029?
And secondly, does that mean that you're rethinking the size of the backlog, like the target size of the backlog and how far forward customers need to order and to give you better flexibility? And the second is kind of maybe half a question, but there's been a couple of able comments I picked up on over this presentation when you talk about rebalancing the business model towards the aftermarket. Do you want to be involved in some kind of partnership with engine players? Just to ask the question directly.
You take the 2, pricing and the business model...
Well, guys, we're not going to talk about pricing here. You've seen the impact of pricing delivering into 2029, whatever we have sold post-COVID is going to be delivered as we speak, '26, '27. What we are selling, for example, today at the air show is benefiting our top line and bottom line post 2030 and 2032, '23. We spoke about value creation. And we create value for our customers by enlarging the plane, by giving them more yields for more premium seats, et cetera. And if the customer has more yield and more value, we want to have more value as well.
Second one, business model, it's premature. It's premature. We think about the NextGen Single Aisle launching it towards the end of the decade, and service in the latter half of the next decade. So you need to think creatively. You need to think different than the business model we have right now. This is a once-in-a-lifetime opportunity when you come up with a new platform to think about the actors, to think about new partnerships, to think about the business model, and that's what we're doing. And when the time is right, we talk about it.
So Lars is very humble, but he spent 10 years in the engine industry. So we think it's an opportunity to have views and ideas on how we could also embark our engine partners on a different way of doing business moving forward and where we could do better on tapping into the long-term value created by aircraft and engines and systems and equipment going into service. But indeed, as Lars explained, we are in the preparation of all of this, but that's something we have very high on our priority list.
Do we have a question from the buy side? No, you're not from the buy side.
Chloe Lemarie with Jefferies. I have a follow-up on Sam's question on the A350. At what rate would you need to add a new FALs on that program?
And the second question is, could you actually talk about your -- how you see your competitive positioning evolve given that your competitor is looking to certify an aircraft closer to the A321 positioning and obviously adding the 777X to their portfolio. So what's your priority in terms of market share versus pricing going forward?
Sorry, I believe I didn't get the first question because of quality and then I was thinking about that one I didn't get the second either. So could you...
The first question was on the A350 rates. What rate would force you to add a new FAL to the existing setup?
Well, that's easy to answer. The FAL currently is maxed out at rate 12.
Very clear. And the second one was on how you think about the evolution of your competitive positioning given your -- how your competitor is adding the MAX 10 to their portfolio and the 777X? And what's your strategy and your priorities between pricing versus market share on those kind of segments?
Well, I believe what I said is we have a very competitive product family and platform. I believe the competitor is just now following us with our successful positioning of the 321, the LR and the XLR and we have the 320. We're going to the 220. So I believe we are first mover on the positioning of our platforms, and now we see the competition going afterwards. And it's on us to incrementally improve our products, like I said, on possible stretches to close the gap from 220 to 320 to 321. So at the end, we have one product family lined up from 120 seats to whatever, 350, 380 seats.
Sash Tusa from Agency Partners. Just a question for Thomas on your comments about your net cash position or your net cash positioning. You talked about aiming for net cash levels consistent with recent years. So let's say that's in a EUR 10 billion to EUR 15 billion range. But over the next 4, 5 years, your revenue is going to grow from EUR 75 billion to EUR 115 billion. Should we take from that, that you think that you can run the company with a smaller capital buffer as a percentage of your revenues than you have done in the past?
I'm not sure whether I would use exactly that wording, but let me try to repeat, but maybe slightly rephrase what I said. So we have defined the EUR 10 billion net cash as a minimum for the company in terms of threshold. I would say, in the last years, we have seen values that were consistent that we said. So we exceeded or slightly exceeded those EUR 10 billion. And we think going forward, that policy we will maintain. So therefore, I would say that indeed, things should not move automatically in line with the size of the company because size to some degree, can also give us protection. So therefore, our view is the policy and the way we deal with the policy should be unchanged going forward.
Yes. Here in the front.
Two questions if I may. The first one, in the past, you've talked about targeting a less back-end loaded delivery profile. Is this something that you are still targeting? And will this only be achieved towards the end of the plan or possibly even earlier with the supply chain improving? And then another question, possibly also for Lars. If my math is correct, the services growth you're targeting is about a 14% CAGR, which is quite strong. Can you elaborate to what extent that is just driven by the installed base growing or also new solutions that you're offering to customers?
Shall I start.
Floor is yours.
Backloaded all over the place, but talk about commercial. You cannot come in into this position and think about the back loading of the delivery profile. We need to be able to optimize it ideally to a string of pearls along the line. Now in '26 and potentially in '27, we know that the Pratt & Whitney engine delivery is not what we expected at the speed of what we actually wanted. So I believe for '26, this ship has sailed. For '27, we are targeting, let's say, a smaller step to have quarter-by-quarter a similar amount of aircraft. And then towards '28 when the engine situation should be eased up, then we think about month by month.
And then at the end, ultimately, if we come to a Swiss clock system that's delivering 4 or 5 aircraft per day. That's the ultimate goal, and that most likely will only happen towards the end of this.
The second one was services. Well, I said we'd like to continue growing stronger than the market. I believe we have a competitive advantage because we know the aircraft. We know what the customer wants. We have a fleet of 16,000 and counting in the air that we want to connect digitally in our Skywise platform to be able to predict what the customer actually needs and what -- how do we influence this operational excellence and efficiency, how do we manage crew management. So there are a couple of items, spare parts, obviously will grow. But I also said we're looking at M&A. So it's a combination of organic and inorganic growth going forward. And that continues into the next decade because we're delivering so many aircraft. You've seen the figures on services revenue in 2044. So there's a lot of market to tap into.
Maybe the center here.
I have 2 questions. One on the A320. What will be the theoretical constraints to push beyond rate 75? I mean you've done 2 new FALs, one in China, one in the U.S., probably both more automated. So just wondering on potential rate increase on the A320 beyond 75. And then 2 on working capital, you have a lot of capital locked up in inventory. And I guess, as you -- as you ramp the rates, that's difficult to unlock. But what -- when you're in 2029 at steady rates, do you see inventory staying at the current levels? Or could there be inventory release?
The first one.
So here, again, this rate 75 has been announced and ambition since several years already. That means we have focused our investment in the industrial capacity we have in place, both internally and externally on the rate 75. That's a strong ambition we are achieving towards the beginning of '28. And then we'll see it needs either another investment to go up the rate or we try to squeeze out a little bit by operational efficiency. But our ambition first is to go to rate 75 and see what the demand, what the flight level looks like and then think about further steps. But that also comes into play when we think about the NextGen aircraft.
So we need to see what's the feasibility, what's the business case to go beyond rate 75, why you have in mind the launching NextGen aircraft towards the end of the decade. So it's a little bit seeing how we get there first and then what's about the next aircraft, the next-generation aircraft.
So maybe on the inventory topic, yes, indeed, we're sitting on elevated levels of inventory, EUR 45 billion or so. And -- that is, however, I think, to be accepted at this point because we're still in the ramp-up phase. So the company is still growing. We're doubling the output on the widebodies. The A320 is still on the ramp-up to rate 75. And we're in a situation where the supply chain is significantly improving, but not yet at the level of stability that we would like ideally to see.
And so therefore, for me, at this point, to start with, I accept this level of inventory. And I would not expect it to be reduced by 2029 because, again, the ramp-up will continue at this point, and then we are in a stabilization phase. I think starting '29 into the 2030s, there should be opportunities in terms of reducing inventory. So I think there's another, let's say, source of cash when the company is at a stable rate. But we have not modeled in any significant amount because I think that will be premature. And also from my experience, inventory reduction is not the easiest thing. So sometimes it takes a little longer than half a year. So I would say there is no major assumption baked in, in terms of cash coming from inventory reduction.
Charles in the middle of the room.
Charles Armitage at Citi. Production engineers love flat production and hate ramp-ups. Carrying on from the inventory, there's a whole bunch of cost from ramping up, which you can hopefully will disappear once you achieve rate 75, quality goes up, things turn up when you want them to, rework comes down, et cetera. Is there any way to -- you can help us quantify the excess costs that will then start coming out over the next few years post flat production?
Maybe I'll give it a try. And I would say, Charles, the way how we have characterized this excess cost in terms of what is with us think the big -- the best proxy we were able to give you is this excess workforce that we're carrying relative to the output that we have. And when we were hiring a lot of people in 2023, we said the order of magnitude is around 10,000 people, which equals almost EUR 1 billion of extra costs that we're incurring because of training the people, because of rework, because of inefficiencies, because of throughput times that, as you said, are longer than what they ideally should be in a steady state. And we're continuously now reducing these extra costs because you've seen that our hiring has come down quite significantly. And our view is that hiring should be decelerated further.
So essentially, these 2 curves is actually from the people that we prehire and the production that comes will cross in, let's say, 2027, '28 when we come to a stable rate. So the total amount of inefficiencies 2 years ago, we would have said is roughly EUR 1 billion. We have since then reduced that by, I would say, a small but not insignificant amount, and the majority is yet to come on the way to 2029. But that's, of course, fully baked into the EUR 12 billion to EUR 13 billion that we've given you as a midterm ambition for the company.
And with the assumption that we could still be ramping up on the Widebodies depending on the decisions to come.
We have a question right there.
Steve Friedman, Darsana Capital. Two questions. One, Thomas, you asked -- or you said on rate that you were assuming about 1,100 deliveries, if I heard correctly, for the 2029 ambition. And if I just do the basic 75 plus 13 plus 5 plus 12 and multiply by the 11.5 months, I think the number is kind of over 1,200. So can you just clarify what the number of deliveries is? And then on inflation, I think you had talked about in the past that there is a potential to recover some lost ground on inflation depending on what happens. Can you just comment on what's kind of assumed in the EUR 10 billion?
Well, my honest answer will be we just wanted to slide away from giving unit guidance towards the outer years. I think your math totally is right, but we haven't communicated on the new rates. So we want to guide financially in the future and not on units, and we'll see how the units support the way we are trajecting here, but it could be more than 1,100.
Maybe I'll just take the question on inflation. So you know that all our contracts have escalation clauses that protect us within certain, I would say, brackets, and they are linked to both labor cost inflation baskets and also material cost inflation baskets. And so far, that has worked extremely well, including, I would say, some learnings that we took out of the COVID times where when inflation went so high that we introduced what we now call hyperinflation clauses in all the contracts that we have.
Our assumption is that inflation will be in, I would say, in the normal range also as being, let's say, targeted by the central banks in Europe and also in the United States. So a level that is, let's say, consistent with what we're seeing currently. And that is also a level where we feel well protected through the contracts that we have. So that is essentially the assumption that is baked into the projections that we're making.
We now have a final question. Yes.
Two questions as well. Herve Drouet from CIC CIB. The first one is on cash return to shareholders to come back on that. I see you give this dividend payout flexibility plus the share buyback. But is the way you think more based on cumulative free cash flow and maybe 60% is what you have in mind?
And the second one is, should there be any one-off significantly on cash flow, let's say, coming from, for example, Pratt & Whitney for the issue with the contract or maybe some compensation with Bromo that may potentially come. Should shareholders expect as well potentially maybe a 60% cut on that?
So thank you very much for the question. That gives me the opportunity to clarify. The intention was not to make the 60% a, let's say, guiding principle target number or anything. It was a backward calculation of what we think we will do in the next years or what we could be doing in the next years, and we feel this is a relatively, let's say, attractive number from a shareholder perspective. But our concept is more anchored in our net cash level that we want to have, which I gave you is unchanged, both in terms of principle and way how we deal with it.
Secondly, I think the share buyback program that we have announced gives us a lot of flexibility. So therefore, we would be able to deal with cash -- also cash situations where more cash is coming in than what we had projected because we have the, as I said, flexibility to accelerate, decelerate. So that, I think, is one other aspect that we find makes sense to have in the overall framework that we've given you.
Ladies and gentlemen, that brings this event to an end right on time. Thank you very much to the executive team for their time. Thank you also to all the teams who behind the scene made this event possible. And to our guests connected online, thank you for tuning in, and goodbye.
Airbus Group — Special Call - Airbus SE
Airbus Group — Special Call - Airbus SE
Airbus set a midterm financial target (EBIT adjusted €12–13bn by 2029), launched a €5bn buyback and outlined delivery/ramp-up plans and risks.
📊 Key Message
- EBIT target: €12–13bn in 2029 (EBIT adjusted = earnings before interest and taxes, adjusted), up ~75% vs 2025.
- Cash & returns: Maintain cash conversion ~1, progressive dividend plus a €5bn share buyback over 3 years.
- 2026 guide: Unchanged — ~870 commercial deliveries, EBIT adjusted ~€7.5bn and ~€4.5bn free cash flow before customer financing.
🎯 Strategic Highlights
- A320 ramp: Industrial footprint now supports rate 70–75 (targeted end‑2027/early‑2028) with 10 final assembly lines A321-capable.
- Widebodies & A350: Exploring A350 rate >12 and potential stretch variants; freighter learning curve and launch-customer contracts limit near-term A350 margin.
- Services push: Target $10bn in Commercial Aircraft Services by 2030 with double‑digit profitability, via organic growth and M&A.
- Defense & Space: ADS turnaround, record orders, and planned space JV ("Bromo") with Thales and Leonardo to capture scale.
🔭 New Information
- Share buyback: €5bn over 3 years, tactical and flexible, subject to shareholder approval.
- FX & R&D: 2029 FX assumption $1.22 (sensitivity ~€250m EBIT per $0.01 by 2029); R&D to trend toward ~€5bn/year by decade end.
- Guidance change: Plan to shift future guidance to core financial KPIs (not for 2026); deliveries still reported as an underlying assumption.
❓ Analyst Q&A
- A350 focus: Questions on timing and size of any rate increase or stretch — management said decision sought in year, sweet‑spot margins likely in the 2030s due to freighter learning and launch contracts.
- Supply & engines: Cabin interior suppliers and Pratt & Whitney engine deliveries are near‑term constraints on ramp timing (noted impact in 2026–27).
- Capital allocation: Buyback size debated; management emphasized balanced policy (organic investment first), €10bn net cash floor and flexibility to adjust buyback pace.
⚡ Bottom Line
- Investor takeaway: Airbus pivots from recovery to value creation — aggressive midterm profit and services targets plus a sizable buyback signal confidence, but execution hinges on engine supply, cabin suppliers, A350 program dynamics, FX and inventory/ramp normalization.
Airbus Group — Q1 2026 Earnings Call
1. Management Discussion
Thank you for standing by. Welcome to the Airbus Q1 2026 Earnings Release Conference Call. I am Laura, the operator for this conference. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.
Thank you, Laura, and a very warm welcome to everyone joining us today to dive into our Q1 2026 results. I am in Amsterdam with our CEO, Guillaume Faury; and our CFO, Thomas Toepfer. They are here to break down the numbers and take your questions. This call is planned to last 1 hour, including Q&A, and a replay will be available on our website. Today's presentation and detailed financial statements are already available on Airbus website. Before we start, let me remind you that we will be making some forward-looking statements today. I encourage you to take a look at the safe harbor statement in our presentation slides. It's important stuff, so please have a quick read. And with that, let's get things started. Guillaume, the floor is yours.
Thank you, JC, and good evening, ladies and gentlemen, or good morning, depending where you connect from. We are in Amsterdam, as said by JC, and I'm with Thomas to run you through our Q1 2026 results. As I told you in February, the global environment was complex and dynamic, and the situation in the Middle East demonstrates that it remains the case, and it remains fast changing. While today, there's no direct impact on deliveries, we are actively monitoring potential consequences on air traffic and the global economy. Our priority remains the safety of our employees based in the region who are supporting our customers.
On defence, the momentum continues. The focus is on steady execution and ramping up to serve the global demand. On commercial aircraft, we delivered 114 aircraft in Q1. Despite this low number of deliveries, we are ramping up production in line with our plan for 2026 while navigating a shortage of Pratt & Whitney engines. This is directly reflected in our financial results with EBIT adjusted standing at EUR 0.3 billion and free cash flow before customer financing at minus EUR 2.5 billion. Our full year 2026 guidance remains unchanged.
So now let's look at our commercial environment and starting with commercial aircraft. In early 2026, the passenger traffic expanded and air cargo demand showed sustained momentum. Short term, we are monitoring the situation in the Middle East and the global air traffic, and we remain confident in the fundamentals of the industry. During this quarter, we booked 408 gross orders. On the A220, we booked 20 gross orders, and we continue seeing positive momentum. Looking at the A320 family, we booked 336 gross orders. This brings our backlog to 7,418 aircraft, of which approximately 75% are for the A321.
Moving to the wide-bodies. On the A330, we booked 17 gross orders. And finally, on the A350, we booked 35 gross orders. I'm pleased to report our largest freighter order that has been placed by Atlas Air Worldwide for 20 A350 freighters. This also makes them the largest customer for the freight and the first in the U.S., bringing our total freighter backlog above 100 units. Net orders amounted to 398, including 10 cancellations. Our backlog in units increased to 9,037 aircraft at the end of March 2026. Before moving to helicopters, let me highlight a key milestone in our growing services business. Indeed, in order to better deliver digital services to our customers, we have recently merged our flight operations specialist subsidiary, Navblue, with our Skywise digital solutions activities to form a new company called Skywise. It will provide end-to-end digital solutions to aircraft operators.
So now moving on to Helicopters. In Q1 2026, we booked 79 net orders compared to 100 in Q1 2025. We signed strategic long-term framework contracts for the H135, the H140 and the H145 helicopters with 2 significant emergency medical services operators in Europe. At the VertiCon 2026, Airbus Corporate Helicopters announced ACH140, so the corporate version of the H140. So Airbus Corporate helicopters announced launch customers across 3 key regions: the U.S., Europe and Brazil, our leading markets for private and business aviation. The market reaction for the new helicopter for this new helicopter is a positive one.
Finally, looking at Unmanned Air Systems, Garuda Technologies in the U.S. signed a contract for delivery of up to 18 Flexrotor Uncrewed Aerial Systems. Overall, we continue to see good momentum in both the civil and military markets, and we remain fully focused on delivering on expectations, including ramping up. And finally, on Defence & Space, we finished Q1 with a very strong order intake of EUR 5 billion, mostly on the air power side, reflecting the need from our customers for military aircraft and services.
In addition, we continue to strengthen our position in the drone and anti-drone markets. Notably, we are making progress on the [indiscernible] UCCA, Uncrewed Collaborative Combat Aircraft as well as on our Bird of Prey drone interceptor designed to provide armed forces with a cost-effective counter UAS capability. On FCAS, work is ongoing with the French, German and Spanish governments to decide on the project's way forward. At Airbus, we continue to believe in the need for Europe to develop new combat air systems, and we continue to play a leading role in that effort.
In Connected Intelligence, we are advancing on our cybersecurity road map with the signing of the acquisitions of Ultra Cyber Limited in the U.K. and Quarkslab in France. This further strengthens our sovereign cyber capabilities, complementing the 2024 acquisition of Infodas in Germany. Finally, in Space Systems, we continue to observe good order dynamics. We are very proud of our contribution to the Artemis II lunar flyby mission. Indeed, the Airbus design and built ESM, the European Service Module provides essential propulsion, power and thermal control, ensuring the safety and success of this historic journey into deep space.
And now Thomas will take you through our financials. Thomas?
Thank you very much, Guillaume, and hello, ladies and gentlemen. Thank you for joining the call. I'm now on Page 6 of the presentation, and I'll take you through our financial performance. As you can see on the page, our Q1 2026 revenues decreased to EUR 12.7 billion, down 7% year-on-year, and that's mainly reflecting the lower commercial aircraft deliveries in the quarter and also the U.S. dollar depreciation, however, partially offset by a higher contribution from our Defence & Space division. And on R&D, as you can see on the right-hand side, our expenses slightly increased versus Q1 2025 and stood at EUR 0.7 billion. And let me remind you that our R&D expenses are expected to increase in 2026, notably to support the defence portfolio acceleration.
If you turn to the next page, on to EBIT adjusted. Our Q1 2026 EBIT adjusted decreased to EUR 0.3 billion from EUR 0.6 billion in Q1 2025, and it reflects the lower commercial aircraft deliveries as well as a EUR 0.02 hedge rate deterioration, but it also reflects a strong performance in Defence & Space. Now coming to the EBIT adjustments, which were EUR 76 million negative in Q1 2026. You see them on the upper right-hand side, and they included a negative EUR 42 million impact from the dollar working capital mismatch and balance sheet revaluation, mainly reflecting the mechanical impact coming from the difference between transaction date and delivery date.
Secondly, negative EUR 32 million related to the integration of the former Spirit AeroSystems work packages. And last but not least, negative EUR 2 million of other costs, including M&A. And this takes our Q1 2026 EBIT to plus EUR 0.2 billion together. As you can also see on the right-hand side, our financial result was positive EUR 466 million, and that mainly reflects the revaluation of certain equity investments and the tax rate on the core business continues to be around 27%. However, the effective tax rate is 20% in the quarter, including the tax effect on the revaluation of certain equity investments, partially offset by the effect of the French surtax. For 2026 as a whole, we expect the French surtax to be broadly in line with 2025, which you recall was roughly EUR 0.2 billion. So the resulting net income is EUR 0.6 billion with earnings per share of EUR 0.74. And our Q1 2026 EPS adjusted stood at EUR 0.33 based on an average of 787 million shares.
Now on to our U.S. dollar exposure coverage on Page 8. In Q1 2026, $3.4 billion of forwards matured with the associated EBIT impact and euro conversions realized at a blended rate of $1.21 versus $1.19 in Q1 2025. And in Q1 2026, we implemented $5 billion in new coverage over a 5-year horizon with a mix of instruments, including collars and the blended rate of $1.24 for this quarter's additions reflects, in particular, the least favorable rate of the collars, which are primarily weighted towards the outer years of our hedge horizon. And as a result, our total U.S. dollar coverage portfolio in U.S. dollar stands at $77.4 billion with an average blended rate of $1.22 as compared to USD 75.8 billion at a rate of $1.22 at the end of 2025. And as mentioned in the full year 2025 disclosure, we have adjusted our portfolio this quarter by implementing some rollovers to reflect the delivery target and phasing for 2026, which we expect to be back-end loaded.
Now on to a more detailed look at the free cash flow on Page 9. Our free cash flow before customer financing was minus EUR 2.5 billion in Q1 2026. This outflow mainly reflects the low level of commercial deliveries, which leads to a further inventory increase on top of the one that we had already planned for the ramp-up. And our Q1 2026 CapEx was minus EUR 0.6 billion, as you can see on the page, and this supports our ramp-up and the successful integration of the former Spirit AeroSystems work packages. In order to do this, we expect our CapEx to continue to increase in 2026.
Now the free cash flow was minus EUR 2.4 billion, including customer financing for positive EUR 0.1 billion, and we continue to see a diverse and competitive financing landscape in Q1 2026. And at the moment, we expect sufficient market liquidity to finance our 2026 deliveries. And last but not least, as you can see, our net cash position stood at EUR 9.8 billion as at the end of March, and our liquidity remains very strong, above EUR 30 billion. And with this, I would like to hand it back to Guillaume.
Thank you, Thomas. So starting with commercial aircraft. In Q1, we delivered 114 aircraft to 46 customers. Looking at the situation by aircraft family, on the A220, we delivered 19 aircraft. The ramp-up is ongoing, and we continue to target a rate of 13 aircraft a month in 2028. So that's no change. On the A320, we delivered 81 aircraft, of which 55 A321s, representing 68% of deliveries for the A320 family. As mentioned, this low number of deliveries results from a so-called desynchronization between production and delivery. The first element of this is the panel quality issue that you know. On this, we are progressing well, and we confirm the operational impact will be limited -- is limited and will spread mainly over H1 of this year.
Secondly, we faced an administrative delay that affected the delivery of nearly 20 aircraft to Chinese customers. The origin of the issue is behind us and the corresponding deliveries have resumed. So that's something we are putting behind us now. Overall, Pratt & Whitney remains the key pacer of our A320 ramp-up trajectory and deliveries for this year and for next year, so impacting both '26 and '27. As a result, I would say, no change for the A320. We expect to reach a rate of between 70 and 75 aircraft a month by the end of next year, 2027, and stabilizing at rate 75 thereafter.
Now moving to widebodies. We delivered 14 aircraft, of which 3 A330s and 11 A350s. On the A330, no change. We target to reach the rate 5 in 2029 to meet customer demand. And on the A350, no change either. We continue to target the rate 12 in 2028. When it comes to the A350 freighter, the ground testing program is on track, paving the way for the first test flight later this year.
Now let's look at the financials for our commercial aircraft business. Revenues decreased 11% year-on-year, mainly reflecting the lower deliveries and the U.S. dollar depreciation. EBIT adjusted decreased to EUR 0.1 billion from EUR 0.5 billion in Q1 '25, driven by the lower deliveries as well as a less favorable hedge rate.
Moving to helicopters. In Q1 of this year, we delivered 56 helicopters, so 5 more than in the first quarter of 2025. Revenues stayed flat at EUR 1.6 billion, reflecting a less favorable delivery mix in the first quarter. As a result, EBIT adjusted stood at EUR 65 million, reflecting a solid performance from programs, offset by higher R&D expenses. We next complete our review with Defence & Space, where revenues increased 7% year-on-year to EUR 2.8 billion, driven mainly by higher volumes in Air Power. This notably reflects deliveries of 2 A400Ms in the first quarter, including export A400M to Indonesia. This resulted in EBIT of EUR 130 million supported by better profitability across all business units.
Now moving on to our guidance, which remains unchanged. As the basis for its 2026 guidance, the company assumes no additional disruptions to global trade or the world economy, air traffic, the supply chain, its internal operations and ability to deliver products and services. The company's 2026 guidance is before M&A and includes the impact of currently applicable tariffs. On that basis, the company targets to achieve in 2026 around 870 commercial aircraft deliveries. An EBIT adjusted of around EUR 7.5 billion and the free cash flow before customer financing of around EUR 4.5 billion.
Moving on to our key priorities, they have not changed since last year. We remain focused on ramping up across all our programs, ramp-up, ramp-up, ramp- up. With our strong portfolio of products and services, we are fully committed to serving both our commercial and military customers. We continue to rely on our core pillars that underpin everything we do as a company, safety, quality, integrity, compliance, and security. When it comes to the geopolitical environment, we can also rely on our global footprint, diversified backlog and operational resilience. Finally, we continue to deliver profitable growth while advancing our key priorities. And now we are ready to take your questions.
Thank you, Guillaume and Thomas. Before opening the Q&A session, let me set a couple of guidelines. First, please introduce yourself and your company before you dive in. Second, we ask you to limit yourself to 2 questions so that we keep things fair for everyone in the queue. And finally, a small favor for the speakers, please try to keep a steady pace and speak clearly. It really helps us and everyone listening in to fully capture your question.
Now Laura, could you please explain the Q&A procedure for our participants?
[Operator Instructions] We have a first question from Ross Law from Morgan Stanley.
2. Question Answer
So a couple for me. The first is you're calling out a shortage of Pratt & Whitney engines. I just want to check, is this shortage versus the initial agreement? Or is this a shortage versus the lower number that they proposed to you for this year? And secondly, just on working capital, inventories grew by over EUR 5 billion sequentially in the quarter. How many aircraft do you currently have fully built with engines but are just awaiting the panel fix?
Thomas, do you want to take that?
Yes. Let me maybe start with the -- your last question, Ross. So indeed, we built EUR 5 billion of inventory. That is significantly more than the buildup of last year, almost EUR 1.5 billion more buildup, if you like, and that explains obviously the free cash flow development. And the driver behind that is mainly what Guillaume mentioned in his speech saying that we had an administrative delay. So almost 20 aircraft couldn't be delivered to China. The issue is resolved and the deliveries have resumed after the close of the quarter, but that is the main reason why inventory is so elevated, and it also gives you the order of magnitude of aircraft that essentially have been built and were ready, but could not be delivered for -- because of an administrative topic that we had to resolve.
Shortage of Pratt & Whitney engine. You want me to take it or you take it?
And maybe on Pratt & Whitney directly, Ross, no, the situation has not changed. So the shortage is the same shortage that we were talking about in our full year call. So it's a shortage about what we have requested from them. The situation in terms of what they told us they would deliver for 2026 has since then not changed. So therefore, that is what we have put as the basis for our guidance. And as I said, this is unchanged. So we're on track with it.
Now we have a question from David Perry from JPMorgan.
Two questions, if I can. Can I just follow up on the China deliveries? Because I think we all look at Cirium and noticed there was a nice bounce in the deliveries in the last few days, but maybe that was the China 20 planes. So it looks like the underlying deliveries are still quite low. So I just wondered if you can maybe add some color about the fuselage panel issue, what's kind of going on there? You said it would mostly be resolved in H1, Guillaume, but just any color on the cadence of deliveries for April, May, June might be helpful. And then the second one, just now you've had a few months to poke around Spirit. I just wondered if your views have evolved at all in terms of the work needs to be done? Is everything as expected? Any thoughts or color on the A350 ramp would be great.
David, I hope you're well, too. Thank you. So on the -- well, the Spirit and the first question was on...
The China delivery.
The China deliveries. What I'd like to say is that the -- what supports the deliveries in the year is the production. And the production is moving forward on plan. So that doesn't translate into unplanned deliveries because we have what I call the desynchronization between production and deliveries. That's coming from different factors, which we highlighted earlier. Obviously, as you can imagine, China makes a significant difference, almost 20 planes that's big for 1 quarter, especially the first quarter. But we're also managing this panel issue end of last year, Q1, Q2, and it will be mostly finished by end of Q2.
I'm not granular here on how many will come in April, May, June, but that's an ongoing exercise. So that's going to come somewhere mostly in the second quarter. That leads us to recovery of the situation as we move forward, starting from a very low base in Q1 2026 in terms of deliveries again. But as Thomas commented on before, the increase in inventories actually show that this ramp-up is taking place. And that's something we see, and we trust that we have enabled the deliveries for the next 3 quarters to support the guidance that we have confirmed for a number of aircrafts. I hope that helps. Now Spirit, do you want to say a few words?
Yes. On Spirit, David, no negative discoveries. I would say that we are on track. And therefore, the financial guidance that we've given for Spirit is unchanged. Remember, it's a low triple-digit negative on EBIT and an up to high triple-digit negative on free cash flow. Why is that? Because we have to make investments and focus on the ramp-up of 2 critical parts, one being the wings for the 220 in Belfast and secondly, for the Section 15 in Kinston.
I would say the wings is the slightly easier one because we have our teams in Broughton and so to send experts to Belfast, I would say, is the easier one. Kinston, as you know, is in the middle of nowhere. So this is the slightly more difficult one to send experts and make sure that the ramp-up is happening. But overall, our view is unchanged and the financial guidance for Spirit was also unchanged.
We have a question from Chloe Lemarie from Jefferies.
I have 2 questions, if I may. The first one is on, I think, a comment that was made on the press call about the fact that there is so far no agreement yet with Pratt & Whitney. Could you please elaborate on this? What's slowing this agreement? What does that mean for the supply for the remainder of the year? And is the uncertainty essentially within the typical materiality threshold that you apply to your delivery guidance? And the second one is on the A220 and the A350 stretch, mentioning you're not yet ready to make a decision on those. What would change your mind? Is it just kind of clearing technical hurdle assessing demand? Or is it because you're focused on the current production ramp at the moment?
So for the question on Pratt & Whitney, basically, what I can say is that the number of engines to be delivered by Pratt to Airbus this year is something that is frozen and stable. So no change, and therefore, no reason to impact or suggest there is an impact for the number of deliveries for this year. We have a number of areas of disagreements, but the number of engines to be delivered this year is not an area of disagreement. Well, it takes time to resolve a dispute of that kind.
As I mentioned earlier, we are, on the one hand, trying to resolve and find an amicable resolution of the dispute and the disagreement on the one hand. And on the other side, we are going through the contractual rights that we have to enforce our contractual rights would we not find an amicable resolution of the disagreement. So it always takes time to find a resolution of this kind of topics, especially given the magnitude of the impact that it has for us and obviously, that it has as well for Pratt & Whitney and their airline customers.
When it comes to the second question, well, it's a lot of work to come to the decision of launching a new product or an upgrade of an existing product with the magnitude of what we're speaking here. So it's just an ongoing work to come to technical convergence, industrial enablement, agreement with suppliers, timing, financing, everything. We do the normal work that we do when we go through the milestones, the gates of making decisions for those products. So it takes time, and that's something we want to do, I would say, by the book to not do shortcuts or overlook important aspects of launching a new product. And we do it in parallel of the focus we have on the ramp-up. These are not exactly -- not at all the same teams that are working on development of future products and ramping up of the existing production system. There is a bit of overlap, but not too much. And we conduct the 2 in parallel. These are 2 independent flows of activities. We try to do them -- to do both of them as good as we reasonably can.
We have a question from Milene Kerner from Barclays.
[indiscernible] Guillaume, Thomas, and Jean-Christophe. Milene Kerner from Barclays. One question for me, please. When do you expect delivery rate to structurally converge back towards your production levels?
When do we expect delivery rates to converge with production levels? Well, when you look at the full year performance, Well, generally speaking, there is a certain level of convergence. There is a high degree of convergence. We've had over the past years moments of synchronization, sometimes of significant desynchronization. But a month of December where we have 130 deliveries is the desynchronization in the other direction because we are delivering by far more aircraft than when we produce.
So actually, notionally, we produce in a much more linear and stable way than what we deliver under the influence of a number of parameters that can be customer related, that can be linked to regulatory challenges, can be linked to tariffs coming and having to be managed, can be linked to logistics, can be linked to some specific customer issues, as I said earlier, can be linked to our own industrial problems, having planes almost finished without engines or with panels having to be repaired. And that can be happening in November or December as it happened last year, can be as well another moment in the year. And therefore, we have nonlinearity of deliveries by far more than what we have, fortunately on the production side. That's why we're guiding on a yearly delivery basis.
We don't like to guide or to give rates when it comes to monthly production rates or even quarterly production rates, but it's even less possible to do it when it comes to deliveries. It's something that is nonlinear that tends to be backloaded in the Q2 and in the Q4 in most of the years, not always. And that's something that we are suffering from probably more this year than I remember we've ever suffered in the first quarter. But we believe -- we hope, we believe we should be reasonably back to where we should have been by end of H1. The administrative topic impacting the deliveries to China is resolved. So what has not been delivered in Q1 will be delivered in Q2 on top of the Q2 deliveries.
As I told you earlier, we think the majority of -- the vast majority of the aircraft impacted with the panels will be back on track and delivered. So by end of H1, absent a new situation that could come from the Middle East crisis or I don't know what, we think we should be reasonably resynchronized by end of H1. That's the way I look at it today. I hope not to be proven wrong by, again, something new. So it's not unusual that we have up and downs in deliveries that are significantly higher with more amplitude than what we see on the production. And that's also something we have on helicopters. We have on military products. Especially on military products, we are very vulnerable to customer negotiation as we approach end of the year.
We have a question from Douglas Harned from Bernstein.
When you look at -- clearly, you're working through getting to that 75 a month number on the A320 family. But the first question is, as you look toward that, you talked about stabilizing at 75 a month, but you're sold out well into the next decade. Is there a point when you would look at taking that rate up above 75 a month and thinking about investment for that? And then second question, on Pratt & Whitney, you now have a certification of the GTF Advantage engine on the airplane. And we would expect to start those deliveries perhaps by the end of this year. How do you see the ramp of the GTF advantage-powered A321s moving through the next couple of years?
So on the rate 75, it's a very important topic where we have made the decision to move to rate 75 and stabilize at rate 75 thereafter for long. So never say never, maybe there will be enough reasons to do something else at a point in time, but we are not at that point in time, and that's not the current thinking at Airbus. The current thinking is on the single aisle. We go to rate 75 and then we deliver the backlog at rate 75. We have worked hard. We have invested to have the production system, to have the final assembly lines around the world to support that rate 75 in a stable manner. And it's also a time for us to harvest all the investments because we are much more efficient when we are stable at a given rate than when we ramp up. The ramp-up is a difficult exercise. It requires a lot of working capital of hiring, training, qualification of people for us and for the supply chain.
So 75, as soon as we reach the 75, we stabilize and we keep fit for years, ideally in our perspective, a lot of years. When it comes to the Advantage, so the GTFA, indeed, it's certified. We will be delivering those engines moving forward. And the intention is that this will be the new version of engine that will be delivered as we move forward. So aircraft progressively will be delivered with Advantage engines, which we are very satisfied with. It's an important upgrade of the engine that resolves the shortages, in particular, in terms of durability that we had observed on the previous -- on the existing version of the GTF engine. So that's a very good milestone. And moving forward, we believe this will be recognized by our customers, and they will enjoy this -- the characteristics of this engine.
We have a question from Ken Herbert from RBC CM.
I have 2 questions, please, Guillaume and Thomas. First, it sounds like we should expect a nice relief of working capital in the second quarter just based on some of your delivery commentary. How do you think the cadence looks in terms of free cash flow from the first to the second quarter, which typically sees a pretty good seasonal step-up from the depressed first quarter levels? And then second, have you seen any change in your supply chain in Europe, in particular, as a result of higher input costs associated with the war, energy disruptions, anything like that, that could add any incremental risk into the production ramp within your supply chain?
Yes. Thank you. I think these are, if I may, good questions. The one -- the first one is too difficult for the CEO. I will hand over to the expertise of the CFO. And when it comes to the supply chain, there's no disruption or no change that we observe today, but we are worried about the potential impact of the different aspects of the Middle East crisis, starting with the increased price of oil and therefore, products, derivative products. That's something we are monitoring now very closely. We use the playbook that we have developed through the previous crisis, in particular, the COVID crisis to dig into the supply chain, look at the Tier 2, the Tier 3 suppliers anticipate situation of disruption, gather information, exchange information through industry association in the different countries where we are operating. And we feel that we will see things coming.
Now we are in a rather good place, if I may, entering into this crisis as we have rebuilt over the last 2 years, basically primarily and mainly the buffer stocks target that we had given to ourselves that were really low moving out of COVID. So we don't know exactly what will be coming, but we are really on it. We are prepared to anticipate and to manage a lot of situations. And that's the way we are entering into this new situation that is coming with a number of uncertainties.
Just on the free cash flow, I think, again, what I can fully confirm is it's a pure seasonality issue that is linked to the deliveries that were lower than what we had expected because of the China issue and the inventory that we have built. Indeed, that issue should be resolved also including inventory over the course of the year. So I would fully reconfirm the free cash flow guidance for the full year. And that also means indeed that in Q2, you can expect a reversal and cash flow should be positive, of course, because we will release some of the inventory that we've built in Q1.
Cash flow in Q2 will be positive.
Yes.
We have a question from Robert Stallard from Vertical Research.
A quick question or 2 questions, actually. First of all, on the broader supply chain, excluding engines. Are there any other watch areas that you have on your mind such as seat certification? And then secondly, on the defence side of the business, I was wondering how big a contributor to the growth rate you saw in Q1 was coming from MBDA.
Okay. I will turn to Thomas for the second one. When it comes to the first one, actually, we continue to have the same areas of concern, probably with a lower degree of intensity, interiors, seats, aerostructures. But again, to a lower extent, part of the aerostructure is still now internal challenges when it comes to Spirits, it's now becoming Airbus. And well, the name of the game for this year is obviously on the engine side. Now we have a reduced number of engines as a reference for the 870 deliveries. So as long as we get those engines, and I have no reason to believe it's not the case, that's stable for this year.
The other topics are not necessarily, I mean, impacting deliveries, but they impact the way we deliver, the completeness of the aircraft, especially when it comes to seats. And you might remember that we've delivered and we are entitled to deliver by contract. Aircraft squeeze out the seats when the seats are buyer-furnished equipment and they are late or very late. We don't like to be doing this. We like to find solution with customers, but that's something sometimes we have to do. So that's basically it.
On MBDA, Thomas?
On MBDA, yes. So I mean, just to be very clear, MBDA is not contained in our order intake and the revenues that we show in Defence & Space. So therefore, everything that you see here is purely organic. MBDA is only incorporated in our EBIT adjusted with the respective share that we hold. However, also to be clear here, the uplift that you see EBIT adjusted in Defence & Space, so up from the EUR 77 million to the EUR 130 million, MBDA does not play the key role. It's all organic from all the 3 business segments that we have in Defence & Space that has contributed to that. So essentially, it's really reflecting our organic growth and not our participation.
We have a question from David Strauss from Wells Fargo.
Two-part question. Are you producing any A320 gliders at the moment? That's the first part. And then the second part, you spoke of Pratt impacting your ramp-up not only in '26, but also out in 2027. As you look to 2027, is there any opportunity potentially for GE to take a bigger role in your engine delivery profile?
So no, we are not producing at this moment. And yes, we have worked with CFM to the maximum extent possible. They've supported us to the extent they can to offset part of the missing engines from Pratt & Whitney, but we also have to deal with the mix of engines and the flow in the contract. So that's something we have tried to leverage as much as we can, but it's not enough to offset the significant number of missing engines from Pratt & Whitney.
We have a question from Herve Drouet from CIC CIB.
Two questions as well on my side. The first one, just on the integration cost for Spirit. The figure of EUR 32 million, I believe we've seen in the first quarter, is it something we are likely to see on a recurring basis over the year for Spirit Aero for total in the region of EUR 150 million for the full year? And the second question is on the adjustment regarding part of the panel, which needed rework. I was wondering, I mean, initially, I believe there was an expectation that it should be almost completed by the end of first quarter. What was the reason behind the move a bit towards the end of the second quarter? Was the work scope a bit more than anticipated? And how much has been the effect on the cost side?
So maybe I'll start with the second question to the extent I can. Well, on the panel -- well, the resources required to replace the panel on an aircraft are quite significant. And therefore, we have spread the work to the extent we can, trying to find a good balance between being as fast as we can to deliver to customers, but also managing those resources so that we can repair a number of aircraft at the same time, which is compatible with this availability of resources. So no major news linked to the fact that we had said mostly by end of Q1 and now we say mostly by end of H1. So we have spread the work on 2 quarters or 1 quarter more than what we had said so far, but it doesn't change fundamentally the view I have on the situation. Now maybe on the adjustment for panels and on the integration cost of Spirit, I look at Thomas.
I mean just to be clear, for the effect of the panels, we have not taken any adjustment in our EBIT. It's a phasing effect that we have over the course of the year. And so therefore, this is nothing that we're adjusting for it's operational. And secondly, on Spirit, again, 2 statements. One is the effect of Spirit negatively that you will find in our EBIT adjusted because we have taken over the work packages that were loss-making. If you remember, we got a positive compensation for that is roughly a low triple-digit number, and I can reconfirm that. And of course, there are some integration costs that we are adjusting in our P&L because they are, as I said, classic M&A integration costs. I cannot make an exact prediction for this, but it's fair to assume that they will slightly increase over the course of the year.
That was the last question for -- and before we close, I hand over to Guillaume for the statements.
Thank you, JC. Yes, before we close, I wanted to share with you that we will host a business update at the time of the Farnborough Airshow in July. It will take place in downtown London. And the date that has been earmarked is on Tuesday, the 21st of July in the evening. And it's preliminary information. Logistic details will be shared, JC, I look at you, I think, in the following days. So again, happy to share this with you tonight. Business update on the 21st of July in London. And then back to you, JC, for the conclusion of this call.
For the closing -- thank you, Guillaume, and thank you, everyone. We really appreciate you taking the time to join us today. If you have any further questions, as usual, don't hesitate to reach out to Victoria, Olivier and [indiscernible]. Just send us an e-mail, and we will be answering as quickly as we can. That brings our session to a close for today. Have a great evening, everybody.
Good day. Thank you. Bye-bye everyone.
Thanks. Bye-bye.
Ladies and gentlemen, the conference has now concluded. You may disconnect your telephone. Thank you for joining, and have a pleasant evening. Goodbye.
Airbus Group — Q1 2026 Earnings Call
Airbus Group — Q1 2026 Earnings Call
Airbus reports a mixed Q1 2026 with ramp-up underway and guidance unchanged.
📊 Quarter at a Glance
- Revenue: EUR 12.7B (-7% YoY)
- EBIT adj: EUR 0.3B
- FCF before customer financing: EUR -2.5B
- Deliveries: 114 aircraft in Q1
- Backlog: 9,037 aircraft
🎯 What Management Says
- Ramp-up: On plan to ramp across all programs in 2026, with A320 rates toward 70–75 per month by end-2027 and stabilization thereafter.
- Skywise: Navblue and Skywise merged to form Skywise, enabling end-to-end digital solutions for operators.
- Defence & Space: Momentum remains strong with growth in drones, counter-UAS, and FCAS progress; Artemis II participation highlighted.
🔭 Outlook & Guidance
- Guidance: Unchanged for 2026 — about 870 commercial aircraft deliveries; EBIT adj around EUR 7.5B; FCF before customer financing around EUR 4.5B.
- Assumptions: No material disruptions to trade, air traffic, or supply chains; tariffs reflected in guidance.
- Risks: Engine supply, geopolitical tensions, currency moves, and delivery desynchronization.
❓ Analyst Q&A
- Engines: Pratt & Whitney shortage remains; GTF Advantage certification underway; 2026 ramp and 2027 planning discussed.
- China & panels: China deliveries resuming; panel fix cadence extending into H2; cadence expected to improve in Q2.
- Spirit integration: EUR 32m integration cost in Q1; some recurring integration costs; EBIT impact modest this year; wings/assembly ramp focus.
⚡ Bottom Line
Airbus maintains 2026 targets despite Q1 delivery slowdowns and inventory buildup from engine constraints. Ramp-up across programs, Defence momentum, and Skywise services anchor the plan; key risks are engine supply, geopolitical tensions, and currency moves. Q2 cash flow is expected to turn positive as inventories unwind.
Airbus Group — Q4 2025 Earnings Call
1. Management Discussion
Good morning, ladies and gentlemen, and welcome to our Airbus event center. Thank you for being here with us today for our annual press conference, where we will present and discuss our 2025 results. And a big thank you for all of you and all of those who are following us online today.
My name is Guillaume Steuer. I look after External Communications and Media Relations for Airbus. And here with me to present the results are Guillaume Faury, our CEO; and Thomas Toepfer, our CFO.
Guillaume will start today by sharing a few highlights about last year, 2025, and Thomas will provide you then more details about our financials. And finally, Guillaume, again, will discuss our outlook and priorities for 2026. And then, we'll move on to our Q&A session, which also those of you following online can take part in by submitting questions using the live e-tool.
As always, with these things, this entire conference is going to be in English, and there will be no simultaneous translations.
So now, ladies and gentlemen, just as usual, please familiarize yourself with our safe harbor statement, which you can now see on your screens. And please remember that in this conference, all forward-looking statements such as in our guidance are based on assumptions. And as conditions may change, so may our projections and plans.
So before I hand over to Guillaume for this overview of 2025, we wanted to share with you another short video, which we think captures some of the key achievements of Team Airbus in 2025. And I hope you enjoy it as much as the teams enjoyed putting it together. So we'll be back with you in a moment after the video.
[Presentation]
Over to you, Guillaume.
Thank you, Guillaume. Two Guillaumes on stage. Thank you, and hello, everyone. Thank you for joining us here in Toulouse and online. You will have seen from the video that last year was a colorful and exciting one. 2025 was indeed a landmark year characterized by very strong demand for our products and services across all businesses in both civil and defense. We navigated a complex and dynamic global environment, our primary focus being to manage supply chain constraints that created a disconnect, a desynchronization between production and delivery over the year.
In Commercial Aircraft, we continue to expand our industrial footprint to support our production ramp-up. We completed the acquisition of certain Spirit AeroSystems work packages with the closing on the 8th of December, and we opened a new final assembly lines in the U.S. and in China for the A320. Going forward, the shortage of engines from Pratt & Whitney will require this year our ongoing focus to secure our delivery trajectory. I will get back to this point in a moment.
Our Helicopter division delivered a strong performance from programs and growth in services. This is true on the civil side, where we are maintaining our leadership position, and on the Defense side, where our market share is growing.
Finally, in Defense and Space, we're reaping the fruits of the transformation of the division, and we're capturing the momentum created by increased defense spending in Europe and worldwide.
Overall, Team Airbus did a great job in 2025. We delivered on our commitments, meeting our updated guidance with 793 commercial aircraft deliveries. This demonstrated our collective resilience in the face of persistent and significant headwinds in our supply chain and in the broader global environment. Overall, this translated into a strong financial performance for 2025 with a record EBIT adjusted of EUR 7.1 billion and a record net income of EUR 5.2 billion, supporting our 2025 dividend proposal of EUR 3.2 per share. Thomas will give you more details on our 2025 financials in a moment.
Now, let's take a closer look at our Commercial Aircraft business. We disclosed our 2025 order and deliveries last month already, and I will go quickly over the numbers. Overall, we delivered, as I said, 793 aircraft to 91 customers, representing a year-on-year increase of 4%. The A320 panel quality issue we faced at the end of 2025 was a significant event that put pressure on our ability to deliver in an already back-loaded year. We took immediate steps to address the challenge, putting a strong focus on quality, and therefore, unfortunately impacting our 2025 deliveries.
During the year, we won repeat orders and key new customers in both single-aisle and widebody campaigns booking 1,000 gross orders, and we ended 2025 with a record backlog of 8,754 aircraft. In 2025, we delivered 607 aircraft from the A320 family, and we booked 656 gross orders, bringing the backlog of the A320 family up to 7,163 aircraft. The A321XLR, our latest addition to the family, also continued to attract new customers.
Almost 39 years ago to the day, actually, on the 22nd of February 1987, the A320 made its first flight. Last year, it officially became the most delivered commercial aircraft of all times. We saw that on the video. I can't resist and take a second to honor the Airbus pioneers who made it possible and to thank the customers who have turned it into such a global success.
And switching to another innovative single-aisle aircraft. On the A220, we delivered 93 aircraft in 2025, representing an increase of around 25% year-on-year, and we booked 49 new orders. So 93 A220s, 607 A320s, that makes 700 single-aisle, and then again, 93 for the widebodies, makes 793. On the widebodies, we delivered 36 A330s and 57 A350s.
Looking at orders on the A330, sorry, we booked 102 gross orders in another strong year, confirming the high demand for this versatile aircraft.
On the A350, we received 193 gross orders, underpinning the good commercial momentum, which was also a successful year for the A350 freighter variant with 28 new gross orders.
Now, looking ahead at the specific production ramp-up plans for each program. On the A220 family, the ramp-up is ongoing and paced by the integration of Spirit AeroSystems work packages and the balance between supply and demand. As we continue to make tactical adjustments on this ramp-up trajectory, we are now targeting a rate of 13 aircraft a month in 2028.
On the A320 family, Pratt & Whitney's failure to commit to the number of engines ordered by Airbus is negatively impacting this year's guidance and the ramp-up trajectory for this year. As a consequence, we now expect to reach the rate of between 70 and 75 aircraft a month by the end of 2027, stabilizing at rate 75 thereafter.
On the A330, there's no change, and we continue to target rate 5 in 2029.
And there's also no change on the A350, where we continue to target rate 12 in 2028.
Helicopters. 2025 was an outstanding year for helicopters, which delivered 392 units, 31 more than in 2024. We booked 536 net orders compared to 450 in 2024 with a book-to-bill well above 1, both in units and value including a strong contribution from the military segment and a good order intake from services. We continue to see positive momentum, in particular, in military markets.
Notable contracts included the order for 100 helicopters from the Spanish Ministry of Defense, the largest helicopter purchase by this customer. The Super Puma family kept performing well on the market with an important contract with the Royal Moroccan Air Force for 10 H225Ms signed in the second half of the year. And we also saw the German armed forces reinforcing their commitment by firming up options for 20 additional H145M military helicopters.
The division's drone range also recorded notable successes with contracts for the Flexrotor small tactical unmanned air system as well as for the larger VSR700 system, a 700-kilogram unmanned rotorcraft, which you see on the picture, which was ordered by the French Ministry of Defense.
And finally, we are actively preparing the future of our helicopter range. The military version of the H160 made its maiden flight last year ahead of force deliveries planned at the end of 2028. And we announced the launch of the H140, which you can also see on the slide, designed to complement our current range of light twin-engine helicopters, particularly for EMS, Emergency Medical Services, and we did that at the Verticon show in Dallas last year.
And now, moving to Defense and Space. 2025 reflected 1 more year of record order intake, which stood at EUR 17.7 billion, corresponding to a book-to-bill of around 1.3. The performance of the division last year was also the result of our transformation efforts, which are now paying off.
Looking more closely at our activities, 2025 was an excellent year for the Eurofighter program. We recorded an order for 20 aircraft from Germany, 8 for Italy, and we also welcome Turkey to the program with an order for 20 aircraft. To support this growing demand, we're ramping up production of the Eurofighter along with our program partners.
In 2025, we also recorded a first order for the new A330 MRTT+, an evolution of the existing MRTT based on the re-engined A330neo, new engine on the 330. It's an important milestone that ensures the world's most successful tanker will remain successful for the next decade.
While on air power and given how much has been written on the topic lately, let me say a word on FCAS. At Airbus, we believe that the European need for an ambitious future combat air system is unchanged. And we also believe an ambition of this scale can only be delivered through cooperation fostering operational interoperability and life cycle synergies for European air forces. But the deadlock of a single pillar should not jeopardize the entire future of this high-tech European capability, which will bolster our collective defense. If mandated by our customers, we would support a 2-fighter solution and are committed to playing a leading role in such a reorganized FCAS delivered through European cooperation.
Now coming back to our 2025 performance and looking at Space Systems. Airbus was selected by Eutelsat to build a further 340 one-way Low Earth Orbit satellites, LEO satellites, complementing the first 100 recorded in 2024. All these satellites will be produced at our Toulouse site, not far from here and will be an important contribution to Europe's efforts to strengthen its sovereignty in LEO constellations.
In Space, last year's agreement with Thales and Leonardo to bring together our Satellite and Space services activities was obviously an important milestone. At Airbus, we firmly believe, led by pulling our resources, skill and capabilities, we'll be able to create a new leader rooted in Europe and able to compete globally. Scale will help increase industrial efficiency, lower cost and ensure that Europe can maintain its autonomy across the strategic space domain. We'll continue to work closely with our partners to ensure this proposed joint venture can be established as quickly as possible while going through all necessary steps and approvals.
And now, this concludes the overview of our 2025 achievements across businesses I wanted to share with you. Handing over to you, Thomas, for a detailed look at our financials.
Well, thank you very much, Guillaume, and good morning to everybody in the room and online. I will now talk and take you through our key financial elements for the financial year 2025. And overall, I think we can say 2025, we delivered very strong financials across the board in the context of many challenges.
Now, starting with the top line, you can see our 2025 revenues increased to EUR 73.4 billion, which is up 4% year-on-year, and it's mainly reflecting the higher contribution from our divisions, the stronger services volumes across the business and also a higher level of deliveries, which was then partially offset by the weakening of the U.S. dollar. Our 2025 EBIT adjusted increased to EUR 7.1 billion from EUR 5.4 billion in '24. And of course, let me remind you that in the financial year '24, after the completion of the in-depth technical review of our space programs, we recorded a total charge of EUR 1.3 billion.
Now, in 2025, the higher commercial aircraft deliveries together with a more favorable hedge rate and lower R&D expenses were partially offset by the impact of tariffs, of which the vast majority actually occurred in Q4, and it also reflects a stronger performance in both of our divisions.
If you look at the earnings by business, the commercial aircraft's EBIT adjusted increased to EUR 5.5 billion from EUR 5.1 billion a year earlier, and that was driven by the increase in deliveries with a more favorable hedge rate and lower R&D expenses. And as I said, it was partially offset by the impact of tariffs, which we had to digest.
If you look at Helicopters, the EBIT adjusted in that division increased 13%, 1-3 percent, year-on-year to EUR 925 million. And that is, of course, reflecting the higher deliveries as well as very solid growth in the Service business.
And finally, our EBIT adjusted at Airbus Defense and Space stood at EUR 798 million, and that is reflecting the higher volumes and also is supported by the improved profitability in line with the mid-term trajectory that the division has given itself, and it's, of course, also a result of the successful transformation plan.
Now turning to the EBIT consolidated reported, this was EUR 6.1 billion with the adjustments totaling a negative EUR 1 billion and namely that negative EUR 1 billion includes a negative impact of EUR 622 million from the dollar working capital mismatch and the balance sheet revaluation. And the resulting net income for 2025 is a record EUR 5.2 billion with a reported earnings per share of EUR 6.61.
Last, but not least, and you can see it on the right-hand side of the page, our free cash flow before customer financing totaled EUR 4.6 billion in 2025. And that mainly reflects the level of deliveries, the commercial momentum across all our businesses, resulting in very healthy pre-delivery payment inflows, and it was only partially offset by the planned inventory buildup, which is associated to the ramp-up across all the programs that we have. So that finally, our net cash position for the year stood at EUR 12.2 billion at the end of December, which is also reflecting the weaker dollar environment. And I would just like to emphasize that our total liquidity is still very healthy and stands at around EUR 35 billion.
And with that, I would like to hand it back to you, Guillaume.
Thank you, Thomas. Our ambition to pioneer sustainable aviation and our corresponding roadmaps remain key priorities for Airbus. We took a number of significant steps in 2025, and let me mention a few. During our Airbus Summit last year, we presented an updated roadmap for our hydrogen aircraft research effort, a road map that takes stock of the slower-than-expected development of the global hydrogen economy and of our ambition to focus our efforts on solution that would enable a commercially viable and competitive product. In line with this approach, we announced in June last year the signature of an agreement with MTU Aero Engines to collaborate on hydrogen fuel cell propulsion, the technology we have identified as the most promising for a future hydrogen aircraft.
In parallel, we continue to mature a number of key technology bricks for our next-generation single-aisle aircraft, which we aim to bring to the market in the second half of the next decade. It will bring a step change in terms of decarbonization and competitiveness, and we aim to reduce fuel burn by 25% to 30% compared with current modern generation aircraft.
On SAF, sustainable aviation fuels, Airbus continues to partner with several airlines to accelerate their development to overcome the logistical challenges of physical delivering -- physically delivering SAF to market. We launched a new book and claim demonstrator, allowing customers to buy SAF and claim the corresponding CO2 emissions. And looking at our own operations at Airbus, in 2025, we used 21% SAF in our aircraft and helicopter flights. This puts us on track to reach our goal to use at least 30% SAF in our operations by 2030.
And now let's have a look at our outlook and priorities this year and beyond. It starts with our guidance, which I will read out to you now. As the basis for its 2026 guidance, the company assumes no additional disruptions to global trade or the world economy, air traffic, the supply chain and its internal operations and ability to deliver products and services. The company 2026 guidance is before M&A and includes the impact of currently applicable tariffs. On that basis, the company targets to achieve in 2026 around 870 commercial aircraft deliveries, EBIT adjusted of around EUR 7.5 billion and free cash flow before customer financing of around EUR 4.5 billion.
In conclusion, what will Team Airbus be focusing on in 2026? The key pillars that underpin everything we do as a company are unchanged. Going forward, we will remain focused on safety, quality, integrity, compliance and security. Last year's events, notably the A320 software recall, the ELAC B topic and the fuselage panel issues have only reinforced our resolve to put safety and quality first.
Our primary focus in 2026 will remain ramping up production in commercial aircraft, where global demand continues to show that people around the world want and need to fly, and in defense, where we intend to play a leading role in supporting Europe's efforts towards sovereignty and security. Across all businesses, we'll continue to prepare the future in order to deliver profitable growth. Across the group, we'll do so by maturing the technologies that will help decarbonize aviation and prevail on tomorrow's battlefields.
The world around us is changing fast and becoming more unpredictable. In this environment, it takes the daily commitment of Team Airbus to make a difference by delivering products that help to connect and protect people, which is why these -- in these volatile times, we remain guided by our purpose to pioneer sustainable aerospace for a safe and united world.
And on that note, inspiring to me, back to you, Guillaume.
Thank you very much, Guillaume and Thomas, for those opening remarks.
So we will now start the Q&A session. [Operator Instructions] So let's begin the session now. We will start by taking questions from the room with our colleagues here. So the floor is yours, please raise your hands. We can start over here. Daniel?
Jens Flottau, Aviation Week. Lars Wagner said in Dublin the other day that he would like to see a lot higher rate of production for widebodies. And I was wondering whether, Guillaume, what's your view on this topic is? Related to this, are you -- how concretely are you looking at A350-2000, stretched A350? And finally, what's the latest on the 220-500?
Thank you, Jens. Well, I agree with Lars. I'd like to see higher rates on the A350 as well because we have very strong demand. Now, we are in a steep ramp up from where we are today to rate 12 in 2028. That keeps us busy, but we're also looking at what it would mean, what it would require and by when to increase, significantly increase the rates on the A350. So it's not for today. I agree with Lars, we would like to see more, but we have to work and do the homework before we take decisions and move forward.
The A350 family relies on a very strong platform. The product is very successful. We booked significantly more than we can produce on the short term. And we see a demand for a larger plane. So that's also something we are looking at. But again, we are in the development phase of the freighter. It's an important year for the freighter. We have to come to deliveries of the aircraft. So we are timing things one by one, but we are seriously looking at what the further potential of the aircraft is and a stretch would be a natural evolution of the product. We're not at a point of decision. We are at the point of working, of analyzing, of listening to customers, but that's indeed something possible.
And for the A220, a lot on our plate as well with the integration of the Spirit AeroSystems work packages and what it means for the A220 program. So we keep ramping up. But we hear loud and clear from the market that there is a strong potential for what is called a 500 that would make plenty of sense. We had the opportunity to say earlier that it's more a question of when than if, whilst we are not yet at the when, and we are not yet there either. As you have seen, we have plenty of things to do, and we want to time things one by one. But this is also something we are seriously considering.
Thank you, Jens. Thank you, Guillaume. We have the next question, just in the middle here.
My name is Jorge Penalba from Avion Revue. My question is for Guillaume about the new company that you are facing with Leonardo and Thales. Can you explain a little more of the process taking so far to integrate the company? What of the goals that they have -- the companies have independently will be merged? And if it has already a name decided?
Thank you. I'll start with the latter. There was a code name for this project at the very beginning, which is Bromo and everybody is speaking about Bromo. So Bromo is not the name of the company, but it starts to become more than a code name. So I don't know. There's no name decided, and we'll come to it later, but we just use now this code name to name this company.
We are not at the point of integration. And actually, by law, we cannot do anything that is related to working together as a team or integrating as long as the closing is not done. But we are working hard together to pass the milestones required to then be able to do the closing of this merger at a point in time. And we are obviously responding and presenting our files, especially on the antitrust side to the authorities and starting with the European authorities. So that's the place where we are. And as long as we are not together, those companies continue to play on the market and compete on the market, as they were doing before.
Thank you, Guillaume. We have a question over there.
Yes. Niklas Zaboji with Frankfurter Allgemeine Zeitung. Guillaume on FCAS, could you please give us some more explanations on the deadlock? So on the one hand, there is this dispute with Dassault on governance. On the other hand, now the German chancellor said clearly that there are also just different requirements between France and Germany. So why the deadlock? And do you still see chances to overcome this dispute? And then, on the 2 fighter solution, are the 3 discussed options equally thinkable, so either Airbus develops and you fight alone or together with Sweden or joins GCAP? Or do you have any preference for 1 of those 3 options discussed?
Well, I think we would be wrong to be right too early. We're in a program that is called FCAS. We've spent a lot of time, energy to support this program that has a number of pillars. The so-called next-generation fighter is one of those pillars, and it's important to say that the other pillars are working well and making good progress, namely the so-called Combat Cloud, the pillar on the remote carriers. The engine pillar also is making progress.
On the next-generation fighter, there is a deadlock that is linked to expectations on the governance that differ between partners on what leadership means, what cooperation means. That's one of the reasons of the difficulties and also under a certain governance on the ability to reach the objective of the program for the different customers. And it belongs to the customers to express themselves on that one. I will not comment. So we believe we are at a difficult juncture of the program. At Airbus, we continue to believe that the program as a whole makes sense and that we should not jeopardize the progress and the relevance of the other pillars, and we need to find a way forward on the NGF pillar, expecting decisions from customers.
And then, we'll see. We are not at the point of deciding next before this step is passed. We believe in European cooperations. We believe if there's a way forward with 2 fighters, it could be an opportunity to have other partners with us, but it belongs to our customers to decide with whom they want to join forces would it be the case. Again, we are not yet at that point.
Thank you. We have a question just here from Robert.
Robert Wall with Aviation Week. Just a quick follow-up on the FCAS and then the A400M question. On FCAS, the German Chancellor has said as part of the requirements review, he does want to ask the question, do they even need a sixth-generation fighter? So I guess the question, if there is an NGF divorce, how sure are you there is going to be -- there's even going to be a German program for Airbus?
And then, on A400M, well, a small housekeeping thing, what was the charge for? And then more broadly, how confident are you of this year getting top-up orders or new customers for the program to keep production stable at 8 a year?
You take the A400M, Thomas, I will take the first one. I think the trend from manned to unmanned is very broad and very strong, and we see the capabilities of autonomous systems moving forward very fast. So the question of going from manned to unmanned is on the table. The timing is very unclear. And the manned, unmanned teaming is also another capability that is being developed. So I think it's fair to raise the question. I think a lot of us believe that there will be a point in time quite far in the future where the manned capabilities will be, to a large extent, replaced by unmanned. And the belief at this stage is that there is still a need for a manned fighter besides growing capabilities in unmanned.
I think the question is on the table for a number of forces of whether they want to directly go to the next one, but then take the risk to be irrelevant for a certain point in time by a lack of modern capabilities of manned fighters or invest a lot of money on the manned fighters and then moving forward to the next capability. There's also the understanding that there could be a way to go to a capability that would be manned and/or unmanned either at the same time or in time moving from manned to unmanned. So these questions are on the table.
Technology is moving very fast on programs that take a lot of time to be developed. And what the Chancellor has expressed is a question that is in industry, that is in defense, and for which FCAS had found an answer. We want a sixth generation fighter. But obviously, this question will remain. And we see other players having not necessarily the same conclusion. I think that's what the Chancellor has reflected in his remark. That's my understanding at least. You should raise the question to the Chancellor directly.
Maybe to answer on the A400M, the most important thing for us is that in 2025, the cash flow of the A400M was positive and so that, I think, is a great success relative to what we have seen in the past years. That is what counts for us most. What you're referring to is a little bit more from the accounting side. You may know the A400M is accounted for as an estimate at completion, so we have to take assumptions for the entire remaining lifetime of the aircraft.
And what is reflected in the charges is twofold: one, assessment of the production cost that we have for the A400M, but also to a certain degree, certain developments, which we still are pursuing in light of the request of the customer. And so those things together, if you take them over numerous years and discount them today, that gives you the charge. But I think nothing really exceptional relative to what the program is delivering.
Thank you, Guillaume and Thomas. We have a question on our left here.
Hakan Celik from Posta and CNN Turk. My question for Mr. Guillaume Faury, in the context of growing transatlantic friction and visible erosion of strategic trust between the United States and Europe, how do you see this dynamic reshaping the defense and aerospace industry? On the other hand, with rising European defense budget and increasing cultural strategic autonomy, how is Airbus positioning?
Thanks for the question. The way we look at it, and we looked at it before the incremental investment of European countries on defense was that Europe was not spending enough money on defense. Data are available. I will not dive into the figures, but not by a small amount, by a huge amount, not enough money on defense, not enough money on defense from European defense manufacturers, therefore, buying by far too much from outside of Europe and not buying smartly in the sense of buying too fragmented and not enough jointly for common needs.
The move that is now visible in front of us is going in the right direction, clear increase of defense budgets, intent to rely much more in the future on European players for Europe to increase resilience, sovereignty of the defense system, and therefore, of the security of Europe and through the efforts that are made on a number of fronts to cooperate and work jointly. We think we are at the very core of this. We can bring military capabilities to Europe at scale through the duality of our products.
We develop technologies with civil and military applications that give scale and speed to our ability to come to the market. We are today the largest EU defense player by order intake, and I think, as well by turnover. And we have capabilities that correspond very well, that are well aligned with the capability needs that have been expressed by Europe looking at the overall picture.
So our strategy is to be there, is to be a defense player for military aircraft, for cyber, for helicopters, in space to provide the systems, the capabilities that Europe needs, but beyond Europe also to serve the allies and the partners of Europe, so therefore, having a growing business. And we believe roughly the speed of growth in defense will be similar to the speed of growth in nondefense activities, in civil activities, therefore, having on the next 5 years horizon a balance between civil and military that would probably remain around 80% for civil, 20% for military.
Thank you, Guillaume. We have a question at the front.
Sebastian Steinke from FLUG REVUE in Germany. I have a commercial aircraft question, please, concerning the 321. It is a huge success. Do you see a market maybe above it, just above it for maybe a bigger version or a separate program? Because the growth of the market in Asia seems to indicate there is a need for a slightly bigger one as well.
And speaking about the 321 and looking ahead to the next family, doesn't the 321 success create a sort of pressure for you to stay close to it? Because it's now like almost global standard. Everybody has it, everybody has pilots, spare parts, knows the family. Will -- can the next family be radical enough? Or does it have to be close to the success model of 321?
Thank you. So indeed, we see that the demand and the core of the market for the A320 family has moved from historically A319, A320 to A320, A321 to A321 and its upper versions, namely the XLR. We have a lot on our plate to deliver on those programs and deliver in terms of production. So we are focusing very much on stabilizing the design to be able to serve production at scale, at speed according to the expectation of our customers. And what I'm suggesting here is as the core of the A320 family market goes to the A321, we will see the percentage of aircraft being A321 or A321 derivatives increase significantly. We suggested it in the forward, but we don't intend to add a next member to the family. We just move the center of the family towards more A321.
When it comes to the replacement, to the successor of the aircraft, we do a transition -- I mean, every 20, 25 years. In that case, it will be more than 40 years. And even if we have increased very significantly the competitiveness of the aircraft, made upgrades, put new engines, new devices on the aircraft, it has to be a significant step. We're targeting 25% to 30% fuel burn improvement compared to the A320 family. And therefore, it will be a very significant -- it will be a very different aircraft, a very significant step. Still, we want to stay in the core of what make the success of the A320 family. So we will see similar philosophies and concepts, but new technologies, new performance and new characteristics. It will be very significantly different at the end.
Thank you. We have another question just in front of us here.
Lynn from Bloomberg. On the 870 target, you're obviously still in conversations with Pratt & Whitney. Could they potentially have bigger output? Are you hopeful that you could actually increase that number this year? Or is this the best it's going to get -- I mean, how elastic is that target?
We release the guidance at the moment we release the guidance, and we do it with the information we have. Pratt & Whitney has resiled from the orders we had placed, and they had accepted for the volumes in 2026. We have to base our guidance on what they tell us now they're willing to commit and deliver. We'll continue to work hard to enforce our contractual rights, which we believe are not respected in that case. But we also know that Pratt is facing a number of challenges. We are not happy with the outcome, but that's what it is today.
As I said earlier this morning, if things change over the course of the year, we'll take benefit of it if it changes, obviously, in the right direction, which we would expect. We have to adjust the production trajectory to at least at the beginning maintain opportunities and that creates complexity in the ramp-up trajectory in the level of inventories we would accept moving forward. We have also to take care of the suppliers, all the other suppliers, which have delivered and which continue to deliver on the ramp-up trajectory. So that creates complexity.
And we're also very much focusing on the 2027 volumes of Pratt & Whitney engines to be back on track at least in 2027 if 2026 is not better than what we see today. So we are where we are. We released the guidance at this point of the year with what we have that is disappointing from Pratt & Whitney, and we'll keep working.
Thank you, Guillaume. We have a question coming up online, which I will read out loud for the benefit of those in the room and on the call. It's a question from Reuters, Tim Hepher. So you mentioned, Guillaume, on the analyst call that Airbus is ready to enforce its contractual rights in the dispute with Pratt & Whitney. What does this mean in practice? Have you initiated? Or are you planning any kind of legal action?
We have a contract, obviously, with our friends from Pratt & Whitney, and we see that they are not respecting their contractual obligations. So we want to enforce our rights. And indeed, we have initiated a process according to contractual requirements of disputes. And I will not say more about it because then it becomes commercial in confidence relationship with them. But we indeed, I confirm, want to enforce our contractual rights.
I think we had a question from the room first over there, and we'll go back to the online questions after.
Yes. Wolfgang Borgmann, AERO International, Germany. I have a question about the future A320 successor. You have been very public about the RISE concept, engine concept that you're supporting. But what about the Pratt & Whitney SWITCH, for example, which you are holding as well, shares? So -- or any other engine option like maybe Rolls-Royce, I don't know? Are there any further developments you'd like to share? And also about the new wing that you're developing, it's very quiet about that, which you presented last year as a concept idea or other technologies that you would include into the new A320 successor?
And my second question would be about SAF. It's more general question, wouldn't it be about time to tell the public that SAF isn't there, that's just an idea? And now the U.S.A., I think, pulling out for the next 3 years at least in the development, maybe SAF will remain just a drop on a hot stone. So maybe 1%, maybe 5% of the fuel needed, but I can't see where it's going to be made, where it's happening and when the general public will benefit from it.
So 2 important topics for us. On the A320 successor, we had the Airbus Summit earlier this year. We've been very transparent and open on what we do. Indeed, there is a number of technology bricks. Propulsion is one of them. Wings is another one. The Wings is Airbus homework, and we're working hard. It's not just an idea or a project. It's a lot of research technologies. Now, we are at the test phase of production processes to prepare for high rate production of composite wings that will be with a very large wing span. And I mean, I don't want to enter into the complexity of the technology, but that's ongoing.
It's ongoing also on the propulsion side, where there's an important choice to be made later on whether we go for open rotor for ducted fan, obviously, in both cases, with gears, with transmissions to optimize the ratio, the propulsion ratio. And that's an important strategic choice that will impact the architecture. And we put these concepts in competition with each other. The open rotor technology is a more modern one, is a recent one. We are working very closely in a very positive way with CFM on what they call the RISE project, and we are their partner to develop this technology and to look at the integration, what it would mean for the plane.
We have important decisions to make later in the decade going to 2030, where we intend to launch the program. We're not at the point of decision, but we are at the point of collecting all data that are required to make an educated decision that will be the best one for the program. And indeed, we are working with all manufacturers that want to work on open rotor. There's one mainly, CFM, and others, including CFM on what alternatives could look like and what would the best traditional geared turbofan -- not traditional, would become traditional geared turbofan option for the next generation.
In both cases, you have pros and cons. They are not the same ones, but we want to make the decision having derisked, having understood, having tested as much as we can. And we are very happy to have this cooperation with CFM to go as far as we can before making a decision on the understanding of what an open rotor technology on a single-aisle aircraft of Airbus would mean and how we would deliver something competitive, we would certify, we would have something reliable in service. And I stop here. There's a lot I would be happy to share, but we have to be conscious of time.
Thank you very much. We have one right here.
Timo Nowack with aeroTelegraph. I've got a question about the A319, please. You don't have many orders for the A319. On the other side, you need the airplane for high altitude airports, as I understand. So the question is, are you thinking about discontinuing the program, the A319? And on the other hand, perhaps as a condition, how are you in developing the high altitude abilities of the A320?
So the answer is actually almost in your question. The specialized aircraft for high altitude used to be traditionally the A319, but we see more and more demand for longer versions, as I said earlier. So A320 high altitude is something we are looking at to bring the high altitude capability on the A320. And we want to respond to the demand of the market that is mostly on the A321, to a smaller extent on the A320 and less and less on the A319. So the high altitude should not stay alone on the A319. Now, we have so much demand that we are not obsessed with high altitude, but that's something we want to continue to retain in the future on the A320 most likely.
Apologies because we forgot the second part of Wolfgang's question, which was on SAF, if I remember correctly, the public acceptance and the public understanding of what SAF so can deliver, correct?
Yes, I'm sorry. I didn't try to escape the question.
No. It's -- I mean, there isn't any stuff, and it might be 1% of the fuel needed, kerosene needed. And we are talking since about 4 years about it, we are at the same level. Nothing is really improving. In Europe, the energy costs are prohibitive, and I can't see where else it would be producing huge numbers right now that would build up what the politicians want, so -- and the airlines and manufacturers hopefully.
So at Airbus, we strongly believe that SAF is a necessary part of the decarbonization roadmap and strategy. It's the one that is less in our hands than the others. The planes, that's very much something within control. SAF is not the case. On the SAF, we are trying to play the role of catalysts. We've been engaging with a lot of people around the world, regulators, governments, airlines, fuel manufacturers, airports, you name it. The progress is slow, it's too slow, but it's not 0.
In Europe, we have a mandate for 2% and then 6% in 2030. And we see the volumes starting to grow in Europe because of the mandates. There's a chicken-and-egg situation with demand and supply. And that's really the conundrum we need to overcome. That's why we, Airbus, want to help by pushing for the book and claim system, which we believe has the potential to help because today, it's not very relevant to produce SAF in a place of the world and then to use it in another place. We have to carry the SAF, and you waste part of the benefit of having a decarbonized fuel because the production of SAF around the world is indeed not where it has to be to fulfill the trajectory.
It's not hopeless. And we see that countries like China, like India, the U.S. with the IRA at a point in time. It's probably not going in the right direction at the moment, but still, there's production of biofuels in the U.S. that is growing in certain areas of the U.S. that there is potential for making this moving forward. But the tipping point of acceleration of SAF is indeed more difficult to pass than we were expecting.
There's a price challenge, an aircraft that burns less fuel is both more competitive and more sustainable. I say economy and ecology are aligned. On the SAF, it's the opposite. A fuel that is more sustainable is less competitive. And therefore, when you compare with your competitors, you're better off from a competitive standpoint with less SAF than the others. We need a global frame -- we need a global understanding at least with the main regions of what SAF percentage would look like. Unfortunately, with the fragmentation of the world at the moment, we are not there. And this is slowing down the SAF, but we should not give up on SAF.
Thank you. We have another question coming up online, which again, I will read out loud. It's from Ben Katz at the Wall Street Journal. Hi, Ben. It's a twofold question on Pratt & Whitney. The first part is, can you explain what is keeping Pratt & Whitney from meeting its requirements? And is this related to the longer-running metallurgy issue?
And the second part is, do the Pratt & Whitney constraints complicate the decision on an A220 stretch? Could Airbus consider an alternative engine provider for a new variant?
I think I will not answer the latter part of it because we're not at that point, and the answer is mostly no, it doesn't impact what we are considering for the A220. I think the first part is indeed important one. I'd rather have Pratt & Whitney answering that question, but I give my understanding of it. They have the combined needs at the moment of serving the production for new aircraft and serving the MRO capabilities for the recall campaign linked to the metal powder and linked to the rather low durability of the engine. And that puts stress on a number of bottlenecks, supply of certain parts, which are too small in numbers to serve completely both needs and the MRO capability to retrofit all engines in service and reduce the number of AOGs. They're confronted to those challenges combined at the moment.
And we are very frustrated that they have decided to reallocate more to the in-service because they miss global capability and to the detriment of Airbus, where we think they should do more on increasing capabilities to serve both needs at the same time. We continue to work with them to make them change the way they manage this. And as I have explained earlier today, we are in those negotiations. So that's the combined needs of the ramp-up on production of aircraft on the retrofit of the metal powder issue and the need for material linked to the rather low durability of the current version of engine before the new version of the GTF, the advantage, comes to the market.
Thank you, Guillaume. We have a question in the room, just here, slightly to your right.
Tom Boon from Simple Flying. I wanted to go back to the open fan engine concept. And I know before you've talked about strapping it to the bottom of an A380 to test it. I wanted to know, is this still the plan? If it is still the plan, what does the timeline for flying it and testing it look like? And finally, do you see the A380 as like a longer-term test bed for you? Or do you think once the open fan is done, that will be it?
So yes, it's still the plan to fly the open fan -- the open rotor engine. It's still the plan to fly it on the A380, as it was indicated before and as we have explained. I don't have the detailed planning in mind, and I would be too incorrect. So I will not dare giving you a date, but we are preparing this. So it's starting to be something now close to us. And the future use of the A380, I'm not sure that we have yet taken a decision. It will be used for the open rotor testing. That's the use we are happy to do with it. Beyond this work, I don't know. But it's a convenient test bed because it's really big, and you can test large engines still remaining small compared to the size of the aircraft. So in terms of safety, in terms of capabilities of testing, that's really convenient. This being said, it's a very large and expensive aircraft. So we'll see moving forward what we do with our test beds in general. But short term, we do the test for the open rotor as planned.
Thank you. We're going to go to our online followers. Again, we have a question from Charlotte Ryan from Aerospace America. Charlotte, I think the first part, you've answered already regarding the Pratt & Whitney's -- the shortage situation. But taking the second part, does the failure to reach an engine agreement with Pratt mean that we should look at this year's delivery target as more of a provisional goal than usual?
Each and every time we give an outlook, we give a guidance that's based on the best and most reliable information we have and with certain risk-taking and prudence at the same time. At this point of the year and under the current negotiation that we have with Pratt, the current guidance reflects what they are telling us they are committed to deliver. And I think I have answered already a lot to the first part of the question. What's holding Pratt back is the -- some of the challenges they have to face and the fact that they don't manage to overcome all of them at the same time.
I'm not sure we can relate it to the supply chain challenges from the pandemic. It's really linked to the need to ramp up volumes for new aircraft, combined with a huge recall campaign, the retrofit plan that they have to manage and the MRO challenges that it is posing to them, both on the availability of material and on the size of the MRO network that needs to be mobilized to do this.
They still have -- we still have too many aircraft on the ground because of missing retrofits, and it's an objective that we support, but we think they can do and they should do better serving both needs. That's why we continue to work on this. If we have better outcomes later in the year, we would further adapt, but it's not the case at this very moment, and we have tried hard and not obtained what we wanted. So I would not take it as something that is very temporary. It's pacing -- at least the beginning of the year and what we think is likely to happen.
Thank you. And we have a question over there to your left.
It's Murdo Morrison from FlightGlobal. I wanted to come back on an earlier question that was asked about A400M and the prospects for that program. And how secure is that program in the medium term, do you feel given the lack of export orders compared to the competition?
And the second more broader question on European consolidation in defense. What do you feel needs to be done in Europe to -- in order for Europe to go forward stronger as a region able to source its own defense requirements rather than perhaps having to rely on U.S. manufacturers?
So first on the 400M, we are in a rather classical situation of going from initial contracts for launch customers to the export market and the second wave, I would say, of orders. We see a very strong and positive feedback from operators, from the air forces that are flying the A400M. A400M, used in operation in a certain number of places of the world, has been seen as very successful, and the Air Forces that operate the A400M speak very positively about it.
We are coming not far from the end of the launch contract. So we continue to have aircraft to deliver, but we see that this is for the next few years. And we're indeed engaged in a number of campaigns that are promising, but take time to materialize, especially in this overall environment. And we see that Europe has defined airlift needs as one of the capability gaps. So we hear very clearly that they will need -- there will be a need for additional A400Ms. But the timing becomes a challenge. So that's really the next use of when those new campaigns kick in and how low do we need to go and for how long on the assembly of aircraft before we see the second wave of aircraft being manufactured. So we think the product is strong, is competitive, is -- I mean, is from a military standpoint very effective, and we are optimistic about the mid-term and the long-term, but we have to navigate that transition. That's what we are doing currently.
What would it need to make Europe stronger? And what about consolidation when it comes to defense in Europe? I think we are probably the ones with the foot -- front foot forward when it comes to European cooperation in defense. That's what we are. That's what we do. And when we think there's a larger need for consolidation, cooperation, for instance, in space, in satellites, we do it, and we are happy to find partners that are doing it as well. I think the short answer to your question is we need consolidation of the supply, as I call it, industrial consolidation of players across borders. That's very often what is difficult. And we need also consolidation of demand, meaning government, customers, military customers coming together for common needs at the same time to trigger scale.
And when we work at scale in Europe, we are very competitive compared to our American colleagues. But when we are very fragmented and we have a smaller demand, not aligned in terms of timing across Europe, it's very difficult to launch and be successful on programs with the right scale. At Airbus, we are trying to be positioned where we can make collaboration in defense in Europe happen. And that's what the current programs we've been discussing this morning about, the A400M, the MRTT, and on the helicopter side, that's what they deliver.
Thank you, Guillaume. We have someone in the room, just in the center here.
Leonard Berberi from the Italian newspaper Corriere della Sera. I have a couple of questions. First one, 2025, after 7 or 8 years, Boeing surpassed Airbus on aircraft orders. How much is that a consequence of your own success in these years because you took a lot of orders in these years because of the -- also the Boeing's missteps? And how much is related to the fact that now Boeing has a new Head of Sales, Donald J. Trump?
And the second question is related to the spat between United Airlines and the engine manufacturer about the A350, if you want to give a comment on that?
Sorry, I missed your second part of the question.
The spat between United Airlines and the engine manufacturer on the A350 is -- I mean, in the last case.
I don't know how to comment smartly on that one. So I will use my joker. So when it comes to the order intake, it's quite unique that we had so many years in a row where our level of order intake was higher, and in some cases, much higher than the main competitor. This has led to a gap, a difference in backlog that is very significant. And as we have a backlog that is so big than what it is today, we have sort of 10 years plus of order intake. And taking, I mean, book-to-bill of 1 in that situation means we continue to extend by 1 year every year. So we're satisfied with it. It's difficult to do more than this. And there is a sort of catch-up effect that takes place and that we were, to some extent, expecting.
Now, it's true as well that the Boeing -- the Team Boeing has been well supported in a number of very large and important campaigns on a more political grounds, and that's something we have to live with. But we continue to believe that competitiveness of the product, relevance of our aircraft, satisfaction of customers, aircraft that deliver performance, competitiveness for the airlines will remain a criteria of choice, and we remain very focused on having the best aircraft, the best plane. We think that's what will protect us moving forward. We are not unhappy with the picture that we have created over the last years. It puts us in a very strong position.
Thank you, Guillaume. And indeed on your other questions, I think that's a question more for United and Rolls in this case. We have a question to the left, again over there.
Olivier Bonnassies with Airfinance Global. A question on commercial and specifically on the A220 program. No question on the 500, don't worry. I noted the amendment on the production rate to 13 aircraft a month by 2028. I think there was a previous forecast maybe 2 years ago on 14 aircraft a month by 2026. You mentioned in your remarks that the production rate will be affected by the integration of Spirit. Can you talk to us a little bit more about the performance of the A220 in terms of sales over the past 2 years because it's been a bit disappointing? And what is your forecast this year? So again, the production rate, is it a reflection of Spirit only or you'll see the performance of the sales on the A220 market?
So indeed, we have adjusted in the last 2 years, I think, the shape of the trajectory. We were initially targeting 14. Now, we say 13 for 2028. That's the result of what we call balance between demand and supply. We think we can stay at rate 13. We can sustain the rate 13 moving forward based on the demand we have. We want also to position the product at the right place when it comes to the price. And therefore, there is a price-volume discussion that takes place to go to profitability to the program, and that's something that is important to us.
So mid-term, that's more balance between demand and supply. Short term, we're navigating the difficulties of the ramp-up on Spirit and on the work packages coming from Spirit, namely the wings. So there's no big change on the short term. It's more tactical changes. And then, going to the rate 13, which we believe is a good balance.
On your comments -- or your question on demand, yes, we have good campaigns ongoing. You saw the news beginning of this year. We think the demand for the 220 is there. The product is making progress in terms of operational reliability, in terms of satisfaction of customers, and it's going to be really where it has to be. So we are very comfortable, and we trust the power of the A220 to continue to be ordered in the numbers we need to sustain the production rates.
Thank you, Guillaume. So we are reaching the end shortly, but we're going to take a quick one from [ Veronique Guermaig ] who's following us online. [ Veronique ], do you expect the Eurodrone program to be abandoned?
It's a bit digital. No, I don't think we are there. There's an ongoing discussion between customers on the way forward. And we have the majority of customers who really want to -- this product continue to back the demand, the program. So I think it's likely to continue.
Thank you. Yes. We have here one last...
Considering the Turkey's involvement in Eurofighter program, by the way, it will be the first non-U.S. jet for the Turkish Air Force and the long-standing partnership with A400M with Turkey, I mean, [Foreign Language] and how do you assess Turkey's deeper integration into the European defense programs in a changing defense in global environment as a NATO member and your partner?
Well, first, on the A400M, the cooperation with Turkey is excellent, and that's a very positive experience on the industrial side, but I believe as well on the cooperation of Turkey with European partners in the program, Turkey as a country and as a customer.
Indeed, the steps made on the Eurofighter are important because it means these European partners support -- agree, support the fact that Turkey will become a partner for this important military capability. And I think that's one more step of cooperation between NATO and Turkey as NATO allies. So that's a step in a broader cooperation with Turkey coming closer to the other European countries. We have to make Eurofighter for Turkey a success like A400M was a success to keep moving forward.
Thank you, Guillaume. And this is going to be the end of the question-and-answer session. Sorry, Stephane, we will discuss later. Thank you all for the great questions. And thank you, Thomas and Guillaume, for the answer. We'll bring our press conference to a close now.
Once again, a big thanks to all of you who joined us either physically or online. And a warm thank you as well to all the great communications colleagues who helped prepare and run the event today. If you have any follow-up questions, of course, please feel free to reach out to your usual contacts in the Media Relations team who will be obviously happy to support. So we wish you all a great rest of the day, and we thank you again.
Thank you very much.
Thank you very much.
Airbus Group — 2025 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for standing by. Welcome to the Airbus Full Year 2025 Earnings Release Conference Call. I am Sharon, the operator for this conference. [Operator Instructions] The conference is being recorded. After the presentation, there At this time, I would like to turn the conference over to Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.
Thank you, Sharon, and a very warm welcome to everyone joining us today. We are here to dive into the Airbus Full Year 2025 Results, and I'm thrilled to be with our CEO, Guillaume Faury; and our CFO, Thomas Toepfer, with us to break down the numbers and take your questions. This call is planned to last 1 hour and 15 minutes, including Q&A. If you're joining us via the webcast, a replay will be available for you on our website. Speaking about the website, you can already find the supporting information package there that includes today's slides and the detailed financial statements.
Before we start, let me remind you that we will be making some forward-looking statements today. I encourage you to take a look at the safe harbor statement in our presentation slides. It's important stuff, please have a quick read.
And with that, let's get things started. Guillaume, the floor is yours.
Thank you, JC, and good morning, ladies and gentlemen. I'm happy to be here in Toulouse with Thomas to run you through our full year 2025 results.
2025 was a landmark year, characterized by a very strong demand for our products and services in both civil and defense. While we successfully navigated in a complex and dynamic global environment, our primary focus was managing supply constraints that created a desynchronization between production and delivery throughout the year. Against this backdrop, the year was marked by both resilience and record financials.
In defense, we're observing great momentum and our large portfolio is perfectly aligned with the capability needs. We do this by delivering mission-critical solutions and being the long-term partner of choice for nations in Europe and worldwide. On the strategic front, we're advancing industrial consolidation with Leonardo and Thales to create a world-class space leader. This initiative is key to achieving the global scale and operational depth required in today's fast-evolving global market.
In commercial aircraft, sustained global demand continues to drive the expansion of our industrial footprint. A major milestone in this journey was the acquisition of certain Spirit AeroSystems work packages with the closing on the 8th of December, which allowed us to take control of this production flow, and Thomas will speak more about it later.
The A320 panel quality issue that hit us in December was also a significant event that put pressure on our ability to deliver in an already back-end loaded year. We took immediate steps to address the challenge, putting a strong focus on quality and therefore, unfortunately impacting 2025 deliveries. We expect the residual operational impact to be contained and spread mainly over the first half of the year.
That said, our operations do not function in isolation. While we have secured a critical portion of our trajectory, some supply chain tensions continue, notably with the engine maker, Pratt & Whitney.
On the A320 family, Pratt & Whitney's failure to commit to the number of engines ordered by Airbus is negatively impacting this year's delivery guidance and the ramp-up trajectory into next year. As a consequence, we now expect to reach a rate of between 70 and 75 aircraft a month by the end of 2027, stabilizing at rate 75 thereafter. In this context, I'm very proud of what team Airbus achieved. We delivered on our commitments, meeting our updated guidance with 793 deliveries. Our performance in the fourth quarter was particularly strong with 286 aircraft delivered, and we closed the year with a record year-end backlog. This result demonstrates our collective resilience and our unwavering focus on excellence in everything and everyone.
Now looking at our 2025 financial performance. Our EBIT adjusted stood at EUR 7.1 billion, reflecting our commercial aircraft deliveries and the performance at the Helicopter and Defense & Space divisions. This is also reflected in our free cash flow before customer financing, which stood at EUR 4.6 billion. These results led to a record net income of EUR 5.2 billion that supports our 2025 dividend proposal of EUR 3.2 per share.
With all that in mind, let's take a closer look at 2025. And moving to our commercial environment, starting with commercial aircraft. In 2025, passenger traffic expanded across all regions, while air cargo demand remained resilient. This year was another commercially successful year with repeat orders and key new customers in both the single-aisle and wide-body campaigns. We booked 1,000 gross orders, including 390 in Q4. On the A220, we booked 49 gross orders, and we see positive momentum.
Looking at the A320 family, we booked 656 gross orders. This brings our backlog to 7,163 aircraft, out of which around 75% are for the A321.
Moving to the wide-bodies. On the A330, we booked 102 gross orders, another strong year confirming the high demand for this very versatile aircraft. And finally, on the A350, we booked 193 gross orders, underpinning the good commercial momentum, and it was a record year for our freighter.
Net orders amounted to 889 aircraft, including the 111 cancellation compared to the 1,000, which were largely anticipated and already embedded in our backlog valuation as of December 2024. Our backlog in units increased to a year-end record of 8,754 aircraft. At group level, our backlog stood at EUR 619 billion in 2025, including a strong book-to-bill above 1 for all businesses as well as the weakening of the U.S. dollar.
Looking at Helicopters. In 2025, we booked 536 net orders compared to 450 a year earlier with a book-to-bill well above 1, both in units and value, including a strong contribution from the military segment as well as good order intakes from services. We celebrated orders of 100 Airbus helicopters by the Spanish Ministry of Defense, the largest helicopter purchase by this customer.
Additionally, we want to mention the Super Puma family for which we signed a contract with the Royal Moroccan Air Force for 10 H225Ms in the second half of the year. We also saw Germany reinforcing their commitment by exercising the contractual option for 20 additional H145M helicopters.
Finally, looking at unmanned air systems, Airbus has been awarded a contract from the French DGA for the production of 6 VSR700 systems, while also receiving a framework contract by the European Maritime Safety Agency for the Flexrotor, our modern vertical takeoff and landing uncrewed aircraft.
Overall, we continue to see very strong momentum, in particular on the military market, and we remain focused on our responsibility to deliver on expectations, including ramping up.
Finally, moving to Airbus Defense and Space. 2025 reflected one more year of record order intake, which stood at EUR 17.7 billion, corresponding to a book-to-bill of around 1.3. Key orders recorded in Q4 reflect several strategic wins, particularly in our Air Power and Space Systems business units.
Starting with Air Power, we observed a good commercial momentum with Spain, including contracts for 18 C295s, plus the development and implementation of the new integrated training system for the Spanish combat pilots. Let me also mention that 2025 was an excellent year for the Eurofighter program. Notably, we recorded an order for 20 aircraft from Germany, the activation of 8 options from Italy, and we also welcome Turkey to the program with 20 aircraft. To meet this growing demand, the program has already announced the first production capacity expansion, transitioning from rate 14 to rate 20 per year.
Moving to Space Systems. Airbus was selected by EUTELSAT to build a further 340 OneWeb low earth orbit satellites, LEO satellites, complementing the first 100 recorded in 2024. The 440 satellites will be produced at the Airbus Defense and Space Toulouse facility and will enhance the OneWeb first-generation fleet. In addition, we are proud to highlight a return to the market of OneSat satellites with an additional order from Oman's national satellite operator, providing its position in the telecommunications market, proving its position, sorry.
Finally, within our Connected Intelligence business line, we continued to observe good order momentum throughout the year, in particular, in defense, digital and cyber. The success of the division is the result of our transformation efforts, which ensured an improved performance. As we move into 2026, we remain focused on the division's long-term competitiveness and profitability.
Now let me say some words on FCAS, Future Combat Air System. The need for an ambitious European FCAS is unchanged. We believe an ambition of this scale can only be delivered through cooperation, fostering operational interoperability and life cycle synergies for European air forces. We believe that the deadlock of a single pillar should not jeopardize the entire future of this high-tech European capability, which will bolster our collective defense. If mandated by our customers, we would support a 2-fighter solution and are committed to playing a leading role in such a reorganized FCAS delivered through European cooperation.
Overall, I want to emphasize the commercial performance of both Airbus helicopters and Airbus Defense and Space that delivered record order intake in value in line with our ambition presented in June. Specifically, defense orders, excluding the joint ventures, MBDA, Ariane Group, the order, excluding those joint ventures reached more than EUR 20 billion, meaning around plus 50% upside year-on-year, ensuring robust future growth.
And now Thomas will take you through our financials. Thomas?
Yes. Thank you, Guillaume. Hello, ladies and gentlemen. I'm now on Page 6 of the presentation, and I'll take you through our financial performance. Now as you can see on the page, our financial year 2025 revenues increased to EUR 73.4 billion, up 6% year-on-year, mainly reflecting the higher contribution from our divisions, the strong services volumes across our businesses and a higher level of deliveries, partially offset by the U.S. dollar depreciation.
On R&D, as you can see on the upper right-hand side, our expenses stood at EUR 3.2 billion in 2025, slightly lower than in 2024 as we continue to benefit from the prioritization of our activities this year. And R&D is expected to increase in 2026 globally, in line with revenues, but notably to support the defense portfolio acceleration.
On to EBIT adjusted on Page 7 of the presentation. Our financial year 2025 EBIT adjusted increased to EUR 7.1 billion from EUR 5.4 billion in 2024. And of course, let me remind you that in 2024, after the completion of the in-depth technical review of our space programs, we recorded a total charge of EUR 1.3 billion.
In the full year of 2025, the higher commercial aircraft deliveries, together with a more favorable hedge rate and lower R&D expenses were partially offset by the impact of tariffs, of which the vast majority occurred in Q4. And the result also reflects a stronger performance in both divisions.
The level of EBIT adjustments totaled a net negative EUR 1 billion, and you can see this on the right-hand side in the box, and the adjustments include a negative EUR 624 million impact from the dollar working capital mismatch and balance sheet revaluation, mainly reflecting the mechanical impact coming from the difference between transaction date and delivery date, of which negative EUR 47 million in Q4. It also includes a negative EUR 188 million related to the acquisition and integration of certain Spirit AeroSystems work packages, of which EUR 100 million in Q4, and it includes a negative EUR 105 million related to the Airbus Defense and Space restructuring recorded already in Q1.
On top of that, negative EUR 73 million related to our A400M recorded in Q4 and finally, a negative EUR 56 million of other costs, including compliance and M&A, of which negative EUR 45 million in Q4. So all this takes our full year 2025 EBIT reported to EUR 6.1 billion.
Now let me take a moment to bring some more clarity on the negative EUR 188 million adjustment related to Spirit AeroSystems. This notably includes a EUR 738 million gain resulting from the settlement of the so-called pre-existing relationship as described in our financial statements. In other words, the termination of the favorable contractual conditions. And this is offset by provisions for onerous contracts and an impairment of EUR 500 million related to the A220 program. And this A220 impairment is primarily linked to the impact of the acquisition of certain Spirit Aerosystems work packages with a revisited or revised projected cost structure and ramp-up trajectory for the program. The financial result was a positive EUR 268 million and mainly reflects the revaluation of certain equity investments and revaluation of financial instruments, partially offset by the evolution of the U.S. dollar.
Now the tax rate on the core business continues to be around 27%. However, the effective tax rate is 21.9%, with positive effects from the revaluation of certain equity investments and from the settlement of the pre-existing relationship with Spirit AeroSystems, which both are not subject to income tax, and this is partially offset by the negative effects of the French surtax and the deferred tax asset impairments. For 2026, we expect the French surtax to be in the same order of magnitude as in 2025, and that is true for both P&L and cash-wise. So that the resulting net income is EUR 5.2 billion with earnings per share reported at EUR 6.61 and our full year 2025 EPS adjusted stood at EUR 6.89 based on an average of 790 million shares.
So this strong EPS performance marks a historical record for our company and supports our proposal for a dividend of EUR 3.20 per share for 2025, corresponding to a nearly 50% payout ratio in the very high end of our recently updated dividend policy, and it also reflects the confidence in our future financial performance.
Now on to our U.S. dollar exposure coverage, and I'm on Page 8 of the presentation. In the financial year 2025, $23.6 billion of forwards matured with the associated EBIT impact and euro conversions realized at a blended rate of $1.19 versus $1.21 in 2024. And in 2025, we also implemented USD 16.7 billion of new coverage at a blended rate of $1.19. As a result, our total U.S. dollar coverage portfolio in U.S. dollar stands at USD 75.8 billion with an average blended rate of $1.22 as compared to USD 82.8 billion at a blended rate of $1.21 at the end of 2024.
And in 2025, as in 2024, we continue to streamline our U.S. dollar coverage and continued implementing collars with an addition of USD 3.9 billion in the financial year 2025. And here, let me remind you that the collars will, at this stage, remain at around a single-digit percentage of the overall coverage. And in addition, I would like to say that these collars are reported at their least favorable rate and as a result, increase the total blended hedge rate of our portfolio, hence, providing a protected view.
And our portfolio is currently being adjusted by implementing some rollovers to reflect the delivery target for 2026 and the delivery profile. Now on to a more detailed look at our free cash flow on Page 9. Our free cash flow before customer financing was EUR 4.6 billion in the financial year 2025, and this mainly reflects the level of deliveries, the commercial momentum across all our businesses, resulting in healthy PDP inflows offset by the planned inventory buildup associated with the ramp-up across the programs.
The A400M was broadly neutral from a free cash flow perspective in 2025, which is a success. And our financial year 2025 CapEx was EUR 4 billion, and this reflects the investments in expanding and upgrading our industrial footprint. And to support the ramp-up and the successful integration of the Spirit AeroSystems work packages, we expect our CapEx to continue to increase in 2026.
The free cash flow was positive EUR 4.8 billion, including customer financing for EUR 0.2 billion, and we continue to see a diverse and competitive financial -- financing landscape. And currently, we expect sufficient liquidity to support our 2026 deliveries. Our net cash position, as you can see on the right-hand side of the chart, stood at EUR 12.2 billion as of the end of December, also reflecting a weaker dollar environment, and our liquidity is now at around EUR 35 billion. So in 2025, we delivered, in our view, very strong financials across the board in the context of many challenges.
And with that, I would like to hand it back to Guillaume.
Thank you, Thomas. And let's start with commercial aircraft. In 2025, we delivered 793 aircraft to 91 customers. And looking at the situation by aircraft family and starting with the A220, where we delivered 93 aircraft, reflecting a strong growth. The ramp-up is ongoing and still paced by the integration of Spirit AeroSystems work packages and the balance between supply and demand. As we continue to make what I would call tactical adjustments on this ramp-up trajectory, we are now targeting a rate of 13 aircraft a month in 2028.
Our teams continue to work on the road to reach breakeven, and we remain focused on engine durability improvements while ensuring operational efficiency. On the A320, we delivered 607 aircraft, of which 387 A321s, representing 64% of deliveries for the A320 family, 64% of A321s. We are very pleased that our newest aircraft, the A321XLR continued attracting new operators. This aircraft with its unique capabilities is proving to be a key asset, acting as a route opener for our customers. The ramp-up towards the monthly production rate of 75 aircraft is ongoing.
In 2026, we see shortages of engines from Pratt & Whitney, not matching our needs nor our orders that will limit our aircraft deliveries, and this is really disappointing. In 2027, they must significantly step up their deliveries, which we expect. And as a result, we expect to reach a rate of between 70 and 75 aircraft a month by the end of 2027, stabilizing at rate 75 thereafter. So there were 93 A220s, 607 A320s. That makes a total of 700 single aisle and then again, 93 on the widebodies, easy to remember. So on widebodies, we delivered 93 aircraft, of which 36 A330s and 57 A350s, including the first deliveries to new operators. On the A330, moving forward, no change. We target to reach rate 5 in 2029 to meet customer demand, and you see this is a strong demand. And on the A350, no change either. We continue to target rate 12 in 2028.
In a nutshell, we continue to work with all of our stakeholders, such as cabin suppliers, but more importantly, with our narrow-body engine suppliers, particularly Pratt & Whitney, to fully enable the ramp-up trajectory. Now let's look at the financials for our commercial aircraft business. Revenues increased 4% year-on-year, mainly reflecting the higher number of deliveries and growth in services, partially offset by the U.S. dollar depreciation. EBIT adjusted increased to EUR 5.5 billion from the EUR 5.1 billion in 2024, driven by the increase in deliveries with a more favorable hedge rate and lower R&D expenses being partially offset by the impact of tariffs.
Page 12, looking at helicopters. In 2025, we delivered 392 helicopters, that's 31 more than in 2024. Revenues increased around 13% to EUR 9 billion, reflecting a strong performance from programs and services growth. EBIT adjusted increased to EUR 925 million, reflecting the higher deliveries as well as growth in services, as I said already. And let's complete the review with Defense & Space. Revenues increased 11% year-on-year to EUR 13.4 billion, driven by higher volumes across all 3 business units. This resulted in EBIT of EUR 798 million, also supported by improved profitability in line with the midterm trajectory and the results of the successful transformation plan.
On the A400M program, a contract amendment was signed with OCCAR in the fourth quarter of 2025 to advance 7 deliveries for France and Spain and to further increase the visibility on the program's production. In light of uncertainties regarding the level of aircraft orders, Airbus continues to assess the potential impact on the program manufacturing activities. Risk on the qualification of technical capabilities and associated costs remain stable.
And before we move to our guidance and key priorities, Thomas will go through the acquisition of certain Spirit AeroSystems work packages, which was completed, as we said, in 2025.
Absolutely. As you have seen in December, we successfully closed the acquisition of certain Spirit AeroSystems work packages and transitioned to day 1, and we have begun consolidating the 5 new sites that are located in the United States, Europe and North Africa in order to secure operational stability and continuity.
Regarding the financial outlook, our assessment has evolved as we gained control of this production flow. And while the 2026 EBIT adjusted impact remains consistent with previous guidance, the headwind in 2026 is slightly higher than what we had initially anticipated. And on free cash flow, we expect a further deterioration in 2026, mainly due to the transaction closing shift and the investment needed to support the ramp-up. And from now, these figures will be included into the broader program performance. The strategic rationale remains clear. The integration is fundamental to derisking the A220 and A350 ramp-up and to make sure that we are on a competitive trajectory.
And with that, I would like to hand it back to you, Guillaume.
Page 16, on to our guidance. And as the basis for its 2026 guidance, the company assumes no additional disruptions to global trade or the world economy, air traffic, the supply chain, its internal operations and ability to deliver products and services. The company's 2026 guidance is before M&A and includes the impact of currently applicable tariffs.
On that basis, the company targets to achieve in 2026 around 870 commercial aircraft deliveries. And EBIT adjusted around EUR 7.5 billion and a free cash flow before customer financing of around EUR 4.5 billion.
And to conclude, I want to look forward. Our primary focus remains on the ramp-up with no compromise on the highest standard of quality in everything we do. On defense, the priority is to continue to strengthen our global leading position by leveraging our unique portfolio of products and our international footprint. It means playing a leading role in a fighter project, continuing the good momentum on military products and services as well as strengthening sovereignty and competitiveness in space. We are committed to reinforcing a strong commercial position across all our businesses, continuing on our leadership in commercial aircraft, defense, space and helicopters alike.
Finally, we remain committed to leading the future of aerospace with a focus on the next single-aisle generation. Our vision for the future is anchored to our sustainable aerospace ambition, while we continue to deliver profitable growth. And before taking your questions, allow me to say a word to welcome this year, Lars Wagner and Matthieu Louvot to lead, on the one hand, our commercial aircraft and on the other one, our helicopter businesses. They bring deep operational expertise, industrial knowledge and a real strategic vision. And a big thank you and my sincere gratitude and congratulations to Christian Scherer for all he did over his 40-plus years at Airbus and to Bruno Even for what has been achieved at Helicopters under his leadership. All the best to you both.
And now we are ready to take your questions.
Thank you, Guillaume and Thomas. We are now ready to open up the floor for your questions. [Operator Instructions] All right Sharon, let's get the ball rolling. Could you please explain the Q&A procedure for participants?
[Operator Instructions] We will now go to our first question. One moment, please. And your first question today comes from the line of David Perry from JPMorgan.
2. Question Answer
I'm not used to being first. I just had one question, please. The guidance probably implies that the margin will be down in Commercial Aircraft in 2026. And I'm just wondering if that is due to any one-off items, maybe the spirit integration and how you see the margin kind of evolution thereafter, if you're willing to comment.
So David, on that question, what we are seeing is that the margin in commercial is not particularly affected on a per aircraft basis, of course. But what we do see is that the delivery trajectory is lower than what we had originally anticipated absent the issue that we're having with Pratt. And on top of that, you're making a correct remark, we are having 2 headwinds that we have to keep in mind.
One is the FX headwind, which is roughly EUR 0.02. You know the math. It's roughly EUR 150 million per EUR 0.01. So that gives you a rough EUR 0.3 billion of headwind. And secondly, we said we would face a low triple-digit headwind from the spirit integration. You can attach a number to that. And of course, those 2 items do play a role when you build the EBIT bridge from 2025 to 2026.
Absent than that, you know that we said for R&D, we would expect an increase in 2026 as well. So of course, we're continuing our lead program. But on the other hand, we have to make the necessary investments in R&D for the future programs that we have on the agenda. So I would say those are the building blocks that you have to take into account for 2026. The margin on a per aircraft basis is healthy, and we're happy with what we have achieved in terms of order intake in 2025.
Your next question today comes from the line of Benjamin Heelan from Bank of America.
The first question for me is on free cash flow. It does come across a lot weaker in 2026 than I was expecting. So could you go through the bridge a little bit? What are the big moving pieces that we can expect there? And then second question is the situation with Pratt. What can you actually do with this situation? And how is it impacting your thinking of engine supply and engine suppliers going forward?
Let me maybe start with the free cash flow bridge. So the main item that you should keep in mind here is Spirit. And again, I'm coming back to what I said in the presentation. We see a deterioration relative to what we assumed before. Remember before, we said it could be up to a mid-triple-digit negative amount. We see this is going to be more negative, mainly because of the late closing of the transaction.
So it's a spillover effect between 2025 and 2026. But of course, now with that effect, we're more talking high triple-digit amount in terms of CapEx and investments that we have to make into Spirit. That is the main item that you should keep in mind for the 2025, 2026 bridge. Other than that, there is continued investments into inventory that we have to make to make sure that our trajectory is intact.
And finally, of course, the impact of Spirit is also negative on free cash flow because we are not excluding that we might have to build gliders depending on the visibility that we have on engine deliveries. So this is also a negative that we face. Other than that, I would say the positive come, of course, from the positive development of our divisions and the, as I said, good margin that we have on a per aircraft basis in commercial.
Maybe on the engine side. Well, that's the one difficult thing we have to face looking at 2026 is that we have a shortage of engines from Pratt & Whitney compared to what was expected and compared to accepted orders from Pratt & Whitney for deliveries of engines in 2026 for 2026 deliveries. That's the one significant thing we have to manage. We want to enforce our contractual rights, but that will obviously take some time. and we had to significantly reduce the number of aircraft planned for deliveries in 2026 due to that situation with some implications, obviously, on profitability and free cash flow.
Our understanding is that it's an issue that will mainly impact 2026, probably to some extent, 2027. We are discussing with Pratt, obviously, as you can imagine, on a daily basis on those topics, and that should go away most likely after 2027. That's why we had to adjust slightly the perspective for reaching the rate 75. We believe we continue to pursue reaching rate 75 by end of next year.
But due to the uncertainties on engine volumes remaining for 2027 from Pratt, we said that we will now reach between 70 to 75 A320 aircraft per month by the end of next year. So we have to sort of bite the bullet in 2026 of that very painful and unsatisfactory situation with impact on 2026, but working hard to restore a good situation moving forward, and that's the work ongoing with Pratt.
Super clear. Just a very quick follow-up for Thomas. How should we think about the Spirit cash flow drag in '27 and into '28. Is there any color that you can provide how that high triple digit will evolve?
I would say in 2027, with the guidance that we originally gave to you was the same as for 2026. So up to a mid-triple digit. There might be a small deterioration also in 2027. But again, I think the visibility is not super high for that. We're working hard to not make it too negative of a drag. The important thing is the focus on '26.
Your next question today comes from the line of Ross Law from Morgan Stanley.
So maybe a bit of a kind of bigger picture question. And just on why engine supplies are impacting the ramp-up. Obviously, I understand the impact deliveries, but not necessarily the manufacturing of aircraft. So is the softening of the ramp-up reflecting risk around Pratt & Whitney engine supplies medium term beyond 26? Or are there other bottlenecks that are driving the slight sort of ramp-up delay on A320. And then just one on Defense & Space. Good margin in the full year, especially in Q4. How sustainable should we view this?
I'll start with the first question. So the shortages of engines are impacting 2026 and to an extent that looks more limited, but still to be completely understood also 2027. That's the reason for slightly changing the moment of reaching rate 75, the fact that we intend to reach between 70 and 75 by end of next year is the Pratt & Whitney engine situation that is not limited by other supply issues where we have a ramp-up trajectory that is well supported. And beyond that point and the Pratt & Whitney issue, we continue to target the same rate 75, the stability and being supported by the supply chain. So it's really this one issue, unexpected issue, at least in the dimension and the timing where it comes that is impacting '26. We think to a more limited extent, 2027 and most likely not beyond.
And on the margin of Defense and Space, you know our view is never over interpret the margin of a single quarter. So I would rather look at the margin of Defense & Space for the full year 2026 -- '25, which we found very satisfactory, and we think it is sustainable and will be improved. So my comment would be, you know we said Defense and Space will achieve a mid- to high single-digit margin by 2028. And I would say we are absolutely on track to achieve that and very pleased with what we have achieved already in 2025.
Your next question comes from the line of Chloe Lemarie from Jefferies.
Apologies, I was on mute. I have 2 questions, please. The first one is on the 2026 delivery guidance, which seems to imply A220 slightly below 60 per month. Despite commentary that production rate had been exceeding that level last year. So how are you dealing with suppliers, which were likely prepared for further ramp. Is just glider production the way to think about it. Or any other measures you're taking to mitigate this? The second one would be on FCAS. Could you remind us of the current revenues that you are generating from the program? Is it all NGF related? And beyond the NGF, what would be your involvement and the opportunity set there?
Yes. On the 2026 A320, we are in a ramp-up, and we'll continue to grow production rates compared to 2025. We will have to adjust the level of production and the expected number of gliders over the year as we navigate the discussion and the difficult negotiation with Pratt & Whitney on the volumes. We don't give up as we are not satisfied with the low level of volume on engines that they are committing on now, which is insufficient. And as I said, already below the order they had accepted for 2026.
And it's very much also a function of the entry into 2027. So we're on the ramp-up on the A320. It's indeed a difficult situation to manage with the other suppliers that are ramping up according to the design, the designated trajectory. But again, we expect to grow significantly in 2027. And therefore, the long-term ramp-up or the midterm ramp-up is not challenged and reaching the rate 75 is in the cards, and we continue to count on our supply chain to deliver on this objective as we have the demand, as we have the industrial system in place and as the very vast majority of the supply chain is in line with this objective.
And on FCAS, I mean, remember, it is a project in the early phase of the development. So there's no material revenues attached to it. The order of magnitude that I would give to you is a low triple-digit number, but that is, of course, mainly covering the cost that we're having in the development phase. So therefore, it's not a material revenue item in our OP period.
Your next question today comes from the line of Sam Burgess from Goldman Sachs.
Firstly, just to return to the Pratt & Whitney conversations you're having. I mean what are the company actually telling you about the real bottlenecks that they are dealing with and their concrete plan to rectify them? Just any color there would be really helpful. And then the second one would be just around the Defense business, clearly performing very well and just continuing to see very high demand. I mean a lot has changed in the world and in particular, in European defense since you presented at the Paris Air Show. Have your expectations for that business evolved?
So on the Pratt & Whitney, which is the single more important topic we are dealing with. I think Pratt & Whitney have explained their situation and the challenge that comes from the number of aircraft so-called AOGs with their airline customers. This number has not gone down as fast as they were targeting and expecting and as the customers were expecting. And Pratt & Whitney want to allocate a large part of their efforts of their material and engines to supporting the fleet, negatively impacting Airbus in its ability to ramp up.
We are very dissatisfied with this. We don't agree with this. They have to increase output more than what they've done so far to be able to serve both needs, but in particular, the needs of Airbus and residing on volumes on orders that have been accepted in the short term as obviously very negative consequences for us on managing the situation with impacts on our own ability to deliver our own profitability, of course, and managing the inventory and therefore, the free cash flow that goes with it.
Therefore, the guidance we are delivering for 2026. As you can imagine, we're in dispute with Pratt & Whitney on this. We want to enforce our contractual rights, but this will obviously take time. And maybe for defense, Thomas?
I mean for defense, yes, I would agree with you. Things are accelerating, and I would just reiterate what Guillaume said also in the speech, we had an order intake for Defense, if you take the defense part of helicopters and the pure defense part of Airbus and Defense and Space, excluding civil satellites, and it was over EUR 22 billion in '25, an uplift of 50% relative to the previous year. So I think that shows the good momentum.
I would say we are at least on the trajectory with Defense and Space that we had laid out in Paris, but of course, it would be premature to give some new guidance, but we're very pleased with the trajectory that we currently have.
And maybe we can say that in our business in Defense and Space, on large systems, it takes time from order intake to delivery and therefore, generating turnover and profits, but it supports very much the long-term trajectory we have for Defense and Space and with the competitiveness of our products. So it's really putting us obviously on the high side of the trajectory.
[Operator Instructions] And your next question comes from the line of Ian Douglas-Pennant from UBS.
It's Ian Douglas-Pennant at UBS. First on -- you made some comments on your -- in your prepared remarks on the panel issue having impacts in H1. The delivery rate that we've seen in January and from what we can see from data providers from February seems to be tracking reasonably slow. Is that related to the panel issue entirely or in the vast majority of that slow, is that the panel issue? Or should we read other issues into that, including Pratt & Whitney?
And my second question is, have you communicated with suppliers to lower their production rates for 2026 already? Or is that something you plan to do? Or will you not lower your communication to them, and that's why your free cash flow guidance is where it is because of inventory build?
So the January and February deliveries are indeed quite low. It is driven by the management of the panel issue, not only but primarily. It's not related to engine topics at the beginning of this year. Indeed, we have to manage the supply chain situation. It's a bit of a case-by-case, supplier-by-supplier adjustment as we want to continue to fully support the ramp-up in the outer years for the A320 as we want to best manage the situation with the supplier to not have shocks in their production rates or 2 nonlinear situations with the suppliers to maintain the reliability of the supply independently from the Pratt & Whitney situation.
As we will navigate and continue to manage the relationship with Pratt and that discussion, we also want to preserve the possibility to have better news at a later stage and to get from Pratt more than what they're telling us today. That's the complex tension between ramping up with uncertainty on engines, but still the need to be there in 2027 and beyond with the right level of volume, the reliability of the supply chain that has done the investments, the ramp-up.
So that's indeed the difficult tension that is reflected in the few numbers we give for the guidance that makes the operational management of the ramp-up trajectory for the 320 in 2026 and probably beginning of 2027 quite challenging. We want to smoothen these difficulties for the supply chain, but we have obviously to adapt here and there, case-by-case, supplier by supplier to optimize the situation.
Could I just ask a follow-up on that? So if Pratt & Whitney do not change what they've committed to or they're promising you today and continue this disappointment, how many gliders do you expect you'd end the year with? I don't know whether you want to give a precise number or just kind of rough indication, that would be very helpful.
I will not give a number, but what I'd like to say is we don't plan gliders for gliders. We do gliders when we are surprised in the short term by an issue and we can't put engines on planes that were already in the production pipeline or when we strongly believe or we reasonably believe that the engines we don't get at the point will come later. And in that case, we produce gliders voluntarily.
But when we are in a planned trajectory of deliveries of engines in that case, with a little hope for change, we don't produce gliders for producing gliders. So that's why the ongoing negotiation, the ongoing discussions we have with Pratt are very important as we need visibility to plan.
And today, we have given a guidance to the market for 2026 that relies on what we -- on the current status of the negotiation and the impact it has on inventory, on buildup of planes. And we'll see later in the year whether we want to end up 2026 with a strong limited number of gliders and how we anticipate some upside and the risk we're taking, that's today with a reasonable prudence in the guidance we're giving, but it's obviously something that will be managed over the year. We are just in February at the moment.
Your next question today comes from the line of Douglas Harned from Bernstein.
First question is on the A350, and we've only seen 2 deliveries so far this year. Could you help us understand what rate you want to be at for the year? And are the -- is the shortfall primarily due to Spirit issues, interior certification or just interiors falling behind? So first question on the A350. And then second, if we go back to last year on the A320 family, the problem was engines from CFM. Can you update us on how things stand right now with respect to the LEAP?
Yes. Maybe I'll start with this one. So the issues we had last year with CFM were linked to the sequence of deliveries over the year. As you remember, they had some industrial challenges. There was a 7 weeks strike at Safran as far as I remember, and we found ourselves with the shortage of engine on the short term with the understanding that came through later in the year that CFM would recover and finally deliver on the number of engines we were expecting by around mid of November. This is what happened.
That led to a very backloaded year in terms of delivery or contributed to a very backloaded year of delivery, but this is now behind us, and we are with the LEAP on a nominal situation where we get engines when we need and when we expect to get in 2026 the number of engines that were committed by CFM, and they have not modified their outlook, their projection for 2026.
So we think we have a reliable source of engines from Pratt & Whitney -- sorry, from CFM from the LEAP this year contrarily to Pratt & Whitney. So the engine issue that we're expecting for 2026 are solely on the Pratt & Whitney engine when it comes to the A320 family.
On the A350, no, I have no specific warning when it comes to the ramp-up. You know that we had a lot of deliveries in the last quarter and in the last month of 2025. So we focused very strongly on those deliveries, and we have now to resume a normal pace of deliveries for the planes in general for the A350. The very backloaded and very challenging industrial situation we had end of last year is negatively impacting the beginning of the year. So we have a rather slow start. It's not very satisfactory, but it doesn't impact the ability to deliver the rates and the number of planes we expect for this year, at least from what I can see today.
[Operator Instructions] And your next question today comes from the line of Olivier Brochet from Rothschild & Co.
I would have 2 questions, please. The first one, continuing on the previous one on the A350. Can you share a bit more about the signals that you see for production. Seats have been an uncomfortable spot for the industry. Spirit is a challenge to integration. Engines have been so far no problem at all for A330 and A350. Do you have any concerns there? Any comfort on the contrary that you could share? And the second question is, you mentioned that you would be happy to have 2 aircraft for NGF. Do you have any view on what the French position is on that topic, please?
So starting with the A350. So 2026 is a year of ramp-up of the A350. Indeed, we had difficulties with interiors, mainly with seats in the past 2 years that has impacted the ability to deliver engines, but not impacting the ramp-up itself. It's not impacting the ability to produce an A350 aircraft. It's impacting the ability to do the customization, the cabin and interiors and then to deliver to customers with the full cabin completed.
We find solution one by one in that case. And in many cases, it's also between the airline and its interior or seat supplier in the frame of what we call BFEs, so buyer furnished equipment coming directly from the equipment supplier to the airline. I don't have specific warnings when it comes to the ramp-up of the 350 contrarily to what we had 2 years ago, where we had to actually postpone by sort of a year the start of ramp-up because of the Spirit situation.
What we have from Spirit going from last year to deliveries this year is supporting the plans we have. So it's all about execution, obviously, this year, and I'm not suggesting there's no complexity in what we do on a wide-body aircraft. But I don't have, at this point in time, significant warnings when it comes to our ability to ramp up on the A350.
On the FCAS, well, we have not said that we would be happy with 2 fighters. What we've said is, would it be the demand of our customers. That's a scenario that we could live with and that we would support in the frame of European cooperation. We are deeply convinced of the need and the relevance of European cooperation in this future combat air system capabilities. That's what -- that's what we think we do reasonably well. We're here to serve cooperation programs, and we are ready to take a leading role if the program has to move in the direction that is not the one of today. So we are a bit in a wait-and-see mode to see how things will move forward on the NGF.
Your next question comes from the line of Ken Herbert from RBC.
Two questions. My first question is, how confident are you now that you've owned the Spirit assets for just a few months here that the guidance fully reflects the downside risk on both EBIT and free cash flow? Or could there be incremental risk as you continue to invest and dig into that business? And then my second question is, again, just on the A350, can you give any more specifics on what kind of ramp we should see this year in deliveries as you think about still hitting 12 in 2028?
So maybe let me start with the Spirit question. I would say we have a reasonably good visibility because as you said, it's only been 2 months that we really own the business, but we have been in -- at the Spirit side with many people already before. So I would say the assessment that we have made is mainly a deterioration for free cash flow, and that is because of the late closing and the spillover of things that already should have been done in 2025, but that now have to be done in 2026.
So therefore, I would say that deteriorated number is part of our guidance, and I see limited downside risk with respect to a further deterioration of Spirit because our visibility is reasonably high into where we are with respect to CapEx needs, but also other things that we have to invest, be it people, be it systems, be it processes. So therefore, I would say the downside risk from Spirit on the financials should be maintained.
On the A350 question, well, we give a guidance of around EUR 870 million for 2026. And as usual, we don't split it by family. You can think of the A350 coming from the rate of 5 to 6 in the past 2 to 3 years as far as I remember, to 12 ideally in a sort of quite linear way. And we want to see a material increase on that trajectory already as soon as in 2026.
We will now go to the next question. And your next question comes from the line of Christophe Menard from Deutsche Bank.
I had 2. The first one, going back to Spirit, can you also give us an update on the EBIT impact on Spirit in '26 and '27? And also, my understanding was you got the compensation in 2025, so the kind of the bridge approach in a way on Spirit at the EBIT level. My understanding was it's EBIT adjusted, not necessarily EBIT reported impact or actually, I mean, the -- it's within the EBIT adjusted also if you could mention or give some details on this. And the other question, it's a rather candid question, but you're mentioning the issues with Pratt deliveries. Is there any way to actually increase the volume of LEAP deliveries in 2026 and 2027 to kind of offset the current situation? Or it's, so to say, already set in stone the production schedule?
I'll start with the second one and give a bit of time to Thomas to tell the story of spirit, which is not an easy one moving from '25 to '26 and '27. On the engine issue, we have obviously discussed a lot with CFM on the possibility to get more engines already in the past. They have accepted already to increase the volume of LEAP. They don't want to do it more now for 2026 than what they had accepted because they have their own challenges and constraints to manage.
They have also the in-service fleet support to provide. And I guess they have also to respect their commitments to other customers. So that's not something that will help, unfortunately, for 2026, at least that's not something CFM is ready to commit on now. We'll continue to have that discussion with them as we move forward in the year. And I told you that we are managing production with the hope that we could improve the picture at a later stage. But I think CFM has been quite clear that 2026 comes with little hope. That's something that could play a role in 2027.
You saw that we said from 70 to 75 by end of 2027. I continue -- we continue to target 75 by end of 2027. And would CFM be capable of providing a bit more in '27 compared to what they have committed to us that could contribute to reaching that objective. Spirit?
Spirit. So again, back to what have we said on the EBIT adjusted impact for Spirit in 2026 and '27. We said it would be a low triple-digit impact negative. And I can fully confirm that for 2026. So plug in a number that is in that range. For 2027, it might be slightly more negative than that, but still within, let's say, a low triple-digit range.
We will now take our final question for today. And the final question comes from the line of Robert Stallard from Vertical Research.
A couple of final questions for you then. First of all, on staffing levels, you've talked about this in the past, how you've been hiring in advance of the ramp. Does that change in 2026 given the 320 adjustment? And then secondly, on foreign exchange and the weakness in the U.S. dollar. At what point does this become a structural issue for operating margins and could require mitigating action?
Starting with the staff. Actually, we have already adjusted the staff hiring, the speed of growth in 2025 for 2026 to stay slightly ahead of the curve, but probably a bit less than what we had done before, being satisfied with the way the staff was serving the ability to ramp up. Indeed, we are currently reviewing, that's an ongoing discussion at Airbus, what needs to be adjusted for 2026. Obviously, slightly lower volumes than we were expecting or significantly lower volumes than we were expecting.
But as I said earlier, with a view that 2027 should be very much -- pretty much similar to what we had expected, maybe with some adjustments. And therefore, the need to manage that dent into the production ramp-up on the A320 this year as we want at a later stage or not to create opportunities, would we get more engines or create -- accept to have gliders by the end of this year as we enter into 2027 to support the 2027 deliveries. So it's an ongoing discussion. We will adjust. The extent to which we will adjust and the timing is still something that we are working on.
And on the U.S. dollar, I mean, let's distinguish between the short term and the long term. Obviously, in the short term for 2026, we are well hedged, and therefore, it's not an issue for 2026. And I would say almost the same is true for 2027 because we do have sufficient hedging in place. I think your question is more in the long term. My answer to that would be, of course, let's look at the current spot rate, which is still more favorable than what we have in our hedge book.
So there is still quite a bit of headroom that we have before the spot rate actually becomes worse than what we have in our book. And secondly, yes, we're actively looking at what are mitigation actions. One is, of course, the general efficiency. This is why we continue to work on the lead program and make sure that we have sufficient headroom in terms of the margin that we produce.
And secondly, of course, we're constantly revisiting how can we better balance the dollar revenue/euro cost mismatch. However, we don't want to run into the risk of mitigating maybe the FX exposure, but then running into other exposures, be it suppliers or other things. And so therefore, it's a careful balancing act when it comes to incurring more dollar costs that we don't run into other dependencies that we don't want to have. But the question, how can we mitigate a potential long-term dollar depreciation is certainly something that we're looking at operationally.
That concludes our Q&A session. I will now hand the call back to Jean-Christophe for closing remarks.
Thank you, Sharon. That brings our session to a close for today. We really appreciate you taking the time to join us. If you have any further questions, please don't hesitate to reach out, just drop an e-mail to Olivier Vitor or myself, and we'll get back to you as quick as we can. Thanks again for your interest in Airbus. We are looking forward to catching up with you very soon again. Q1 '26 earnings release will take place on the 28th of April. Have a great day, everybody.
Thank you, everyone. Bye-bye.
Thank you. Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.
Airbus Group — Q3 2025 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for standing by. Welcome to the Airbus' Nine-Months 2025 Earnings Release Conference Call. I am Sharon, the operator for this conference. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to your host, Guillaume Faury, Thomas Toepfer and Helene Le Gorgeu. Please go ahead.
Thank you, Sharon, and good evening, ladies and gentlemen. This is the Airbus' Nine-Months 2025 Earnings Release Conference Call. Guillaume Faury, our CEO; and Thomas Toepfer, our CFO, will be presenting our results and answering your questions.
This call is planned to last around an hour. This includes Q&A, which we will conduct after the presentation. This call is also webcast. It can be accessed via our home page by clicking on the dedicated banner. Playback of this call will be accessible on our website, but there is no dedicated phone replay service.
The supporting information package was published on our website earlier today. It includes the slides, which we will now take you through as well as the financial statements. Throughout this call, we will be making forward-looking statements. I invite you to refer to our safe harbor statement that appears in the presentation slides, which applies to this call as well. Please read it carefully.
And now over to you, Guillaume.
Thank you, Helene, and hello, ladies and gentlemen. Thank you for joining us today for our nine-month 2025 results call. We are here in Amsterdam with Thomas to run you through our results.
Our operating environment remains complex and dynamic. Navigating strong demand combined with the specific supply chain tensions, and that have not changed, still requires continuous operational discipline and agility, in particular, in the environment of changing trade policies. We welcome the U.S.-EU trade agreement, which restores a stable and tariff-free environment for trade in aircraft and parts since the start of September. This is a crucial step that allows our global industry to move forward with the predictability it needs to invest and innovate. Yet the still unstable geopolitical situation remains an area of continuous vigilance.
In that context, we are rolling out our plan to reach the A320 family production target of rate 75 per month by establishing 10 A321 capable final assembly lines across four global sites. The recent addition of a second line in the United States and the second line in China marks a critical milestone in our global industrial growth strategy, but also enhances our overall business resilience. We are scaling up our operations and expanding capacity as we move forward with the commercial aircraft ramp-up.
We're also committed to contributing to European defense and remain focused on delivering more competitive and innovative products and services with our two divisions, and we see a growing momentum. When it comes to European strategic autonomy, we have made significant progress towards the consolidation of our space activities together with Leonardo and Thales aiming at establishing a leading European company, and I will come to this in a minute.
In Q3, we delivered 201 commercial aircraft. And as the engine situation is showing signs of recovery, the number of gliders is now at 32 as of the end of September. This brings our year-to-date deliveries to 507 aircraft as compared to 497 last year. Deliveries continue to be back-end loaded as we navigate the engine situation. We have a strong year-end rally ahead of us, and our teams are in the sprint.
Our EBIT adjusted stood at EUR 4.1 billion as of nine months 2025. This reflects the commercial aircraft deliveries and the solid performance at both Airbus Defense and Space and Airbus Helicopters. Our free cash flow before customer financing was minus EUR 0.9 billion. It notably reflects the inventory buildup that supports the Q4 deliveries and the ramp-up. On that basis, we maintain our 2025 guidance, which now includes the impact of currently applicable tariffs, and we'll come back to this later.
Moving to space. We've made a major strategic step forward. We are very pleased with the recent announcement of signing a memorandum of understanding an MOU with Leonardo and Thales to form a new European space player in 2027. If you recall last year, I was clear we needed to focus on fixing our foundations and restore profitability. The turnaround plan is in full motion, and we are pleased with the first results. In parallel, we've been working on strategic options to create scale and increase competitiveness facing global players. The new company aims to unite and enhance capabilities in space by combining the three respective activities in satellite and space systems manufacturing and space services. The MOU is a collective industry commitment to strengthen the European space sector. The next steps include launching the social consultation process with our social partners, preparing to carve out the space businesses and addressing regulatory needs. We have a busy journey ahead, and we are fully committed to this major and exciting project.
Let's now look at our commercial environment, starting with commercial aircraft. Passenger traffic continued its growth momentum, while air cargo demand remained resilient. During the nine months '25, we booked 610 gross orders, including 116 in Q3. On the A220, we booked 40 gross orders. And looking at the A320 family, we booked 371 gross orders. This brings our backlog to 7,105, out of which around 75% are for the A321. And the 7,105 is just for the A320 family, of course.
Moving to the wide-bodies. On the A330, we booked 90 gross orders, confirming the high demand for this versatile product. Finally, on the A350, we booked 109 gross orders, underpinning the continued commercial momentum of what has become the reference in the market. Net orders amounted to 514 aircraft, including 96 cancellations, which were largely anticipated and already embedded in our backlog valuation as of December 2024. Our backlog, total backlog in units stood at 8,665 aircraft at the end of September.
Looking at Helicopters. In the nine months '25, we booked 306 net orders compared to 308 in the nine months '24, so very similar, and this is well spread across the portfolio. We continue to see positive momentum, in particular on the military market, and we remain focused on securing new business opportunities in both our home countries and export markets.
A new Airbus final assembly line will be established in India to build H125 helicopters in collaboration with Tata Advanced Systems, aiming at capturing the full potential of the civil, parapublic and military markets in South Asia.
Let me conclude by highlighting that we have streamlined our small and medium tactical uncrewed aerial systems, UAS, the drones offering into a single comprehensive portfolio managed by the Airbus Helicopters division. This aims at delivering a focused market approach for defense and security customers and provides customers with cutting-edge capabilities for surveillance, intelligence and operational flexibility. Finally, in Defense and Space, order intake stands at EUR 6.8 billion for the nine months. On Air Power, this 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, introducing innovations from the A330neo as well as upgraded military capabilities. So, in particular, the new engine of the NEO that is now on the MRTT+.
While 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 Manching and to be delivered to the German Air Force starting from 2031. The order intake will be recorded once all contractual conditions are met. So the order intake is not yet recorded in the Q3. The momentum for the Eurofighter is also strong on the export market outside of the home countries of the Eurofighter, and that was also demonstrated by this week's commitment from Turkey, Turkey to acquire 20 units.
The Eurodrone program is making progress as we successfully completed the CDR, the so-called critical design review earlier this month. This officially concludes the design phase and paves the way to prototype production and ground tests ahead of first flight.
On FCAS, we remain convinced that Europe needs to have its Future Combat Air System in order to meet its security challenges and further develop its critical skills and know-how in this field. Given the level of effort and investment required, we are convinced -- I am convinced of the benefits of a collaborative approach, and we intend to play a leading role in making it happen in a way or the other.
Overall, on what concerns the defense part of our Airbus Defense and Space and Helicopters businesses, we are observing a growing momentum, and we expect it will continue in the foreseeable future.
And now Thomas will take you through our financials. Thomas?
Thank you very much, Guillaume, and hello, ladies and gentlemen. I'm now on Page 7 of the presentation. And as Guillaume said, I will take you through our financial performance. So, as you can see on the chart, our nine months 2025 revenues increased to EUR 47.4 billion, which is up 7% year-on-year, and it mainly reflects the higher contribution from our divisions with stronger services volumes across our businesses and a higher level of deliveries, partially offset by the U.S. dollar depreciation. And as you can see on the right-hand side, our R&D expenses stood at EUR 2.1 billion for the first nine months of the year, lower compared to the nine months of 2024, and we continue to benefit from the prioritization of our activities, and we now expect that the R&D expenses will be slightly lower in 2025 than in 2024 when we talk about the full year.
Now let's look at EBIT adjusted on Page 8. As you can see, our nine months 2025 EBIT adjusted increased to EUR 4.1 billion from EUR 2.8 billion in the nine months of 2024. And of course, let me remind you that in the nine months of last year, we recorded EUR 989 million of charges in our space business, which obviously did not repeat themselves. As of the nine months of this year, the higher commercial aircraft deliveries embed a less favorable mix, which is offset by a more favorable hedge rate and lower R&D expenses. And it also reflects a stronger performance in both divisions.
So, let me just clarify the impact of the currently applicable tariffs at this point. We expect this to represent anything between EUR 100 million and EUR 200 million for the full year, of which, however, the vast majority will be recorded in Q4. And as you can see on the right-hand side of the page, the level of EBIT adjustments totaled a net negative EUR 0.8 billion, and I'll just walk you through the items. It has in a negative EUR 577 million impact from the dollar working capital mismatch and the balance sheet revaluation, mainly reflecting the mechanical impact coming from the difference between transaction date and delivery date, of which negative EUR 186 million occurred in Q3.
Secondly, it has negative EUR 105 million related to the Airbus Defense and Space restructuring, which we recorded already in Q1, and it has negative EUR 88 million related to the stabilization of certain Spirit AeroSystems work packages, of which EUR 31 million recorded in Q3. And finally, negative EUR 11 million other, including compliance costs and also M&A. So this takes our nine months 2025 EBIT reported to positive EUR 3.4 billion, and the financial result was positive EUR 374 million, and it mainly reflects the revaluation of certain equity investments and the revaluation of financial instruments, partially offset by the evolution of the U.S. dollar.
The tax rate on the core business continues to be at around 27%. However, the effective tax rate is 32.4%, including the tax effect on the revaluation of certain equity investments as well as a net deferred tax asset impairment. And we still expect the French surtax to result in an impact of around EUR 300 million in 2025, both for P&L and cash. And in the nine months of this year, we recorded the part that is related to the year 2024 as well as the part corresponding to the first nine months of this year. And so the resulting net income is EUR 2.6 billion with earnings per share reported of EUR 3.34, as you can see on the chart, and the nine months 2025 EPS adjusted stood at EUR 3.97 based on an average of 790 million shares.
Now with this, let's turn the page to Page 9 and look at our U.S. dollar exposure coverage. Consistent with what we said during our business update, we began to implement a limited number of 0 cost collars, exactly EUR 2.1 billion in the quarter into our hedge portfolio. And the EUR 2.1 billion is dollars, not euros, obviously. Now this strategy aims at addressing the longer-term horizon with an acceptable level of volatility and to potentially capture the favorable evolution of the U.S. dollar, while at the same time being protected against a material weakening of the dollar. And let me just be clear, we do not aim at replacing our forward, but rather to complement our coverage with a limited amount of colors. And as indicated, the collars will, at this stage, remain at around a single-digit percentage of the overall coverage.
Now with the integration of colors, the blended rate now includes the least favorable rate of our colors. And so hence, it provides you with a protected or conservative view. And with all that being said, as you can see on the page, in the nine months of 2025, USD 14.8 billion of forwards matured with the associated EBIT impact and euro conversions realized at a blended rate of $1.18 versus $1.21 in the nine months of 2024. And we also implemented USD 12.7 billion of new coverage at a blended rate of $1.18. And as a result, our total U.S. dollar coverage portfolio in U.S. dollar stands at $80.7 billion, with an average blended rate of $1.21 as compared to $82.8 billion at $1.21 at the end of 2024.
So now let's look at our free cash flow on Page 10. Our free cash flow before customer financing was negative EUR 0.9 billion in the first nine months of the year. And as you can see on the chart, this outflow was mainly driven by the change in working capital, and it notably reflects the planned inventory buildup to support our ramp-up across our businesses, and it also includes a favorable phasing effect of cash receipts and payments.
On the A400M, the aircraft slightly weighted negatively on our free cash flow in the nine months of 2025 as the deliveries of the aircraft are back-end loaded However, we continue to expect it to be broadly neutral from a free cash flow perspective in the full year 2025. As you can also see on the chart, the nine-month CapEx number was negative EUR 2.3 billion, and we continue to expect it to increase in 2025 to support our industrial ramp-up so that the free cash flow was negative EUR 0.8 billion, including customer financing of a positive EUR 0.1 billion. What we can say is that the aircraft financing environment remains strong and competitive, and we expect sufficient liquidity to finance our 2025 deliveries.
So with that, our net cash position stood at EUR 7 billion as at the end of September, also reflecting the dividend payment as well as the weakening dollar environment, but I should stress that our liquidity remains very strong at around EUR 30 billion. And in September, as you might have noticed, Moody's upgraded our credit rating to A1 with a stable outlook, and we think this is underlining our consistent strong credit management and the strength of our balance sheet.
And with that, I would like to hand it back to Guillaume.
Thank you, Thomas. Very clear. So now let's start with commercial aircraft. In the nine months 2025, we delivered 507 aircraft to 79 customers. Looking at the situation by aircraft family. On narrowbodies, we delivered 62 A220s and 392 A320s. And out of the 392 A320 family aircraft, 250 were A321s, representing 64% of the deliveries for the A320 family. We are very pleased that Air New Guinea has taken delivery of its first A220, becoming the 25th global operator of the aircraft, which is now flying with carriers on five continents. The A320 family reached a major milestone, becoming the most delivered aligner in history. There's a bit of pride here, as you can feel. And we continue to ramp up towards a rate of 75 A320 family aircraft per month in 2027. That's no change compared to previous assumptions.
On the A220, the current balance between supply and demand has led to an adjustment of the ramp-up trajectory and the ramp-up ahead of us. We are now targeting to reach rate 12 in 2026, allowing time for the integration of the Spirit AeroSystems work packages, mostly the wings and the progressive introduction of engine durability improvements for our customers. This means more work to reach breakeven, and our team are actually on it.
In the nine months, we delivered 53 widebodies, of which 20 A330s and 33 A350s. On the A330, we're currently stabilizing at a monthly production rate of four. As previously introduced, we are now targeting to reach rate five in 2029 to meet the customer demand for the A330. On the A350, there's no change. We continue to target the rate 12 in 2028. When it comes to the A350 freighter, I'm pleased to say that we started the assembly of the first flight test aircraft in Toulouse with the first flight planned next year. In a nutshell, we continue to produce in line with the plan. The challenges for the year have not changed, notably with cabin and for the A320, the persisting tensions on engines, resulting in 32 gliders at the end of September. The engine situation is showing signs of recovery, and we continue to work closely with the engine manufacturers to deliver on our 2025 commitments.
Now let's look at the financials for our commercial aircraft business. Revenues increased 3% year-on-year, mainly reflecting the higher number of deliveries and growth in services. EBIT adjusted was at EUR 3.3 billion in the nine months, driven by favorable hedges rates and slightly lower R&D expenses, while the increase of deliveries embeds an unfavorable mix.
Looking at helicopters. In the nine months, we delivered 218 helicopters, 28 more than at nine months of 2024. Revenues increased around 16% to EUR 5.7 billion, reflecting a solid performance from programs and Services growth. EBIT adjusted increased to EUR 495 million, reflecting growth in services as well as higher deliveries, as I mentioned earlier.
And let's complete our review with Defense and Space. Revenues increased 17% year-on-year to EUR 8.9 billion, driven by higher volumes across all business lines. EBIT adjusted stood at EUR 420 million, supported by higher volumes and improved profitability, in line with the divisional midterm trajectory.
On the A400M program, we engaged in 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. In light of 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.
And now on to our guidance, which, as you have seen, is maintained. On the basis of its 2025 guidance, the company assumes no additional disruptions to global trade or to the world economy, air traffic, the supply chain, the company's internal operations and its ability to deliver products and services. The guidance now includes the impact of currently applicable tariffs. The guidance also includes the impact of the integration of the certain Spirit AeroSystems work packages based on preliminary estimates and an assumed closing in the fourth quarter of 2025. On that basis, the company targets to achieve in 2025 around 820 commercial aircraft deliveries, an EBIT adjusted of around 700 -- sorry, of around EUR 7 billion. We're not yet there. And the free cash flow before customer financing of around EUR 4.5 billion. Just to clarify my statement on EBIT, it's -- we target an EBIT adjusted of around EUR 7 billion. The anticipated impact of the integration of certain Spirit AeroSystems work packages on the company's guidance remains broadly in line with previous estimates.
But maybe, Thomas, you want to be more precise on some of those elements?
Yes. Let me just add a couple of precisions and details to what you said, Guillaume. So, first of all, on tariffs, as I said earlier, we expect this to represent anything between EUR 100 million and EUR 200 million for the full year, but the vast majority of the total amount will be recorded in Q4. And secondly, on Spirit AeroSystems, when we say broadly in line, what do we mean is that the closing date is now expected before the end of the year, and all parties are putting all necessary efforts into the closing process, and this is on track for the operational readiness for day one. But of course, it is later than what we had anticipated at the beginning of this year when we put out the guidance.
Now this shift of the closing into Q4 comes with a partial relief to free cash flow because we didn't own the business, and therefore, we did not record any negative operational result in our free cash flow. On the other hand, you have also seen in our financial statements that we, of course, provided credit lines to Spirit, which are recorded below the free cash flow line. So in total, this remains broadly neutral in terms of the net cash position for the company. But everything else being equal, you could take this slight free cash flow positive adjustment in the range of a low triple-digit number into your models, if you want. But obviously, the order of magnitude is not such that it led us to change the guidance.
And with that, back to Guillaume.
Thank you, Thomas, for those precisions. And I'll conclude with our key priorities, and they have not changed. We are and we remain fully committed to executing the next steps of our commercial aircraft production ramp-up together with our suppliers. Our focus is twofold: addressing the remaining specific supply chain tensions, in particular, on narrow-body engines where durability remains a headwind as well as cabin while also preparing the integration of the key Spirit AeroSystems work packages.
As we focus on our production goals, we're also maturing the critical technologies that will define the successor of the A320 family in line with our ambition to pioneer the next generation of commercial aircraft. When it comes to Airbus Defense and Space, we are progressing on our transformation and contributing to establishing a European space leader. On European defense, the industry is clearly in motion. We are embracing this challenge by leveraging the combined expertise of our Defense and Space and Helicopters divisions to drive scale and cooperation in Europe.
And now let's turn to your questions in the Q&A.
Thank you, Guillaume. Thank you, Thomas. We will now start our Q&A session. Please introduce yourself and your company when asking a question. Please limit yourself to two questions at a time, and this include sub questions. Also, as usual, please remember to speak clearly and slowly in order to have all participants, particularly ourselves, to understand your question.
So, Sharon, please go ahead and explain the procedure for the participants.
Thank you, Helene. We will now begin the question-and-answer session. [Operator Instructions] We will now go to our first question. And our first question today comes from the line of Benjamin Heelan from Bank of America.
Ben, we don't hear you.
2. Question Answer
Can you hear me now?
Yes.
Yes. Sorry about that. First question was on the margin. Margin, I think, in Q3 looks pretty positive. Could you just talk through some of the drivers? It looks to me though as a very positive mix in commercial, but any comments there would be helpful.
Well, Ben, I think we're repeating ourselves a little bit when we say that the margin of a single quarter should not be overestimated or over interpreted, I would say. So the margin in commercial indeed was, let's say, positive. That does not necessarily come from the mix. The mix was actually not specifically helping us in Q3, but it was more driven by, let's say, cost discipline in terms of SG&A, R&D, where the LEAP program that we have started is now really showing its full effect. So we're pretty pleased with, I would say, the efficiency that the company has shown over the course of the year and specifically in Q3. So the things that we have done are not, let's say, of short-term nature, but we expect them that we can actually keep them in our trajectory.
And secondly, I would say, in Defense and Space, all divisions are showing a good performance. There's two drivers for it. One, that our improvement program for space is actually showing good effects, and we're very pleased with the results that we see, not only in terms of measures that they take, but first outcome, which is rather better than what we had expected. And secondly, as Guillaume pointed out, a good momentum in defense in general, where we see not only good order intake, but also, let's say, good margins for the first nine months of the year. So, I would not specifically point to the mix, but rather some self-help measures and operational discipline that are helping.
Okay. And then a follow-on. I know you won't give us a delivery number for 2026 today. But are there any building blocks that you can provide to point us broadly in the direction of where we should be headed for next year from a delivery perspective in commercial?
I would say not more today than what you know already in terms of ramp-up trajectory for the A320, the 330 and the 350. There's change, as you have seen on what we target for next year on the A220, where we target to reach rate 12 instead of rate 14. So nothing new on that horizon except this slight modification on the 220, and we'll be targeting rate five for the A330 a bit later. So that's basically a lot of stability in the ramp-up trajectory compared to what we had shared earlier in the year.
Your next question comes from the line of David Perry from JPMorgan.
So, two quick ones from me. Just on this tariff impact, Thomas, if it all falls in Q4, do we annualize that impact going forward? And then on Space, can you just clarify exactly what you're putting in? Unless I'm mistaken, I think you're putting a little bit more than just the manufacturing business, but maybe I've misunderstood on that. And maybe any other comments you want to make in terms of like is this going to have a meaningful impact on the ADS margin going forward, this transaction? Are you making any equalization payments or receiving any?
So, on the two questions, the tariff impact, let me repeat what I said. So the total full year impact will be between EUR 100 million and EUR 200 million. Why is the majority of that occurring in Q4? Because the material that we have shipped or that is necessary has already been shipped into the United States, but we hold it as work in progress so that we will only record the impact of the tariffs once the material is actually built into the aircraft and the aircraft is sold. So therefore, to your question, you should not annualize the Q4 effect. It's a specific, let's say, impact of this year where a lot of the pre-September 1 effects are currently captured in our WIP and will then only materialize when the aircraft is delivered. That is the mechanic behind it.
And on your second question, if I understood correctly, you're referring to BROMO. So what are we bringing into that cooperation? Two businesses essentially, our Space Services business, which is currently mainly in CI and our Space Systems business, which is also a subdivision of Defense and Space. And obviously, what has nothing to do with it is the launcher business, which is completely separate. But we're bringing in both Services and Space Systems.
Okay. And does the transaction have a big impact on the sort of future margin of ADS?
Well, I mean, we do expect that there will be mid-triple-digit synergies five years after the closing of the transaction. So I would say in the medium term, it should be clearly accretive to the margin, and we will then hold a 35% stake in something which is more efficient and more profitable than what we have today. But let's be honest, in the very short term, I would not put in a big impact in the model that you probably have.
Your next question comes from the line of Ross Law from Morgan Stanley.
So the first one on your full year delivery guidance. So given that the engine suppliers have essentially said that they're getting you the engines that you need, what are the main challenges or bottlenecks outstanding from here into year-end?
And then looking ahead to 2026, obviously, engines seemingly becoming less of an issue compared to '24 and '25, supply chain overall performing better. Is there any reason why you won't be able to deliver a double-digit increase in deliveries in '26, which is the growth rate you previously referred to?
Maybe I'll take the questions. When it comes to 2025 and the full year around 820 aircraft, the main challenge is the volume of aircraft that remains to be delivered in the fourth quarter. And what we will have to deliver in the last month is indeed quite unprecedented. We are not yet at the point where we will have all what we need to secure all deliveries. We are still expecting engines in the weeks to come that will support some 2025 deliveries. But the main challenge is indeed volume, backloading of the year and making sure that there's no mishap or no challenge ahead of us that would postpone aircraft and cross the line of the end of '25. So a lot of work the supply chain and the engine situation looks like we're going to make it. But again, still a lot on our plate.
About the engine tensions, they will persist. There is indeed a bigger backdrop of airlines needing more engines for their in-service aircraft on the Pratt & Whitney side, but as well on the CFM side. And the engine makers need to continue to ramp up the production of parts and engines to serve both the manufacturers, the aircraft manufacturers and their airline and lessor customers. So we are not out of the woods when it comes to tension on engine availability. We think we have -- we will have what we need for the trajectory we have sketched out for 2026. But again, we are not at the point of guiding for 2026. But I confirm and I maintain what I said earlier, we are consistent with the ramp-up trajectory that we have given previously this year and next year, namely the reaching the rate 75 on the A320 in 2027, the rate 12 on the A350 in 2028 and the rate on the A330 in 2029 as far as I remember.
On change A220, slightly lower rate for next year. We are in the steep ramp-up on the 220, and we now target to reach the rate 12 for next year, which is still a very steep ramp-up. But we believe this is the best balance between the different constraints we have next year and a lot of work actually on the A220 to get there by next year, including the integration of the wings and other work packages that will come from the integration of Spirit.
Your next question comes from the line of Chloe Lemarie from Jefferies.
The first one would be on the maintained guide. It looks fairly conservative for Q4 given the expected delivery growth. So I understand tariffs are a headwind, but any other moving parts you'd like to share to help us understand the building blocks for the Q4 year-on-year?
And the second one, I think, Guillaume, you commented on the press call about gliders being half of what they were. Could you just clarify whether this is at end Q3 or more recently? And maybe compare and contrast the situation between the LEAP and GTF-powered aircraft, please?
So maybe I'll start with the guidance and the remain to do. So starting from the EUR 4.1 billion as of the nine months. Let's start by saying last year, we did EUR 2.6 billion in Q4 of last year. I would say there's clearly a positive effect from the volume. You can attach roughly EUR 0.5 billion to it if all the deliveries materialize. But yes, then I would say there's at least two headwinds. One is the tariffs. And secondly, R&D, we're expecting that R&D will be slightly lower than last year, but that still could mean that in Q4, R&D would be higher than last year. So that is a headwind that you should have on your list.
On the other hand, yes, I do believe that the two divisions, Helicopters and ADS could be performing positively, and that would be then a positive. So if you take those together, that would bring me then to the around seven.
It all hinges on the deliveries. And as Guillaume said, it's a very, very steep ramp-up. The teams are on it. And if we make the deliveries, obviously, then I think the financial numbers should clearly be in sync with that.
Thank you, Thomas. When it comes to the question on gliders, we stood at 60 gliders by end of Q2, and we stood at 32 gliders by end of Q3, so by end of September, roughly a month ago. The situation obviously is dynamic as we are targeting to be with zero gliders by the end of the year. And as I said earlier, we still need to receive engines in the weeks to come to be fully sure that we will have what we need. But engine manufacturers have confirmed that they will deliver what we need to reach that objective of zero glider and reaching our guidance.
And when it comes to the situation LEAP versus GTF, actually, it's both. And as we speak, it's shared between the engine manufacturers, and I can't be precise enough, but it's not far from balanced between the two, not far from 50-50 between LEAP and GTF. But again, it's a dynamic situation almost by the day as we deliver a lot of aircraft those weeks. So I can't be more precise than this at this very moment.
We will now take the next question. And the question comes from the line of Sam Burgess from Goldman Sachs.
A couple from me. Thomas, can we just circle back on R&D. From memory, your initial expectation was R&D would be a bit above 2024 levels. I might have missed it, but what specifically is driving this trimming of R&D versus your initial expectations? And is that kind of sustainable going forward? Or do we get some catch-up in FY '26?
And the second question, I know you don't want to dwell too much on individual quarters. But in your press release, you do explicitly mention a less favorable mix on deliveries year-to-date. Do you expect that mix to become more favorable in Q4?
So, on R&D, we are roughly EUR 200 million below the 2024 numbers for the first nine months of the year, if I'm not mistaken. that is mainly a function of our lead improvement program where we're focusing on the things that really matter, but have the courage to also terminate some projects where we think they're simply not yielding the results that we feel they should. And that means less external consultants, that means less spending on all kinds of things. So it's not trimming R&D, as you said it, with a lawnmower approach, but it's really very specific and focused with a program where we think let's focus on the things that matter most to the company.
That was pretty successful in our view. And so therefore, while admittedly, we said at the beginning of the year that we would expect R&D to slightly increase, we're now of the view that with the successes that we have, which we think are sustainable, we should be slightly below previous year for the full year, but that still means that in Q4, as I said in my previous answer, there might be a slight increase in R&D. Now going forward, what is unchanged is that we do expect R&D to increase in line with revenue. So as a percentage of revenue, I think you should keep it constant in your model, but of course, starting from a somewhat lower base in 2025.
And then on the mix, it's simply a function that we have delivered more A220s, and you know that they have a lower margin than the rest. So it's just a function of all the ramp-ups and the numbers that we have given you.
Your next question today comes from the line of Ian Douglas-Pennant from UBS.
The first is another on the supply chain. Aside from engines and the acquisition of Spirit being delayed, are there any other pain points that you'd like to call out in the supply chain that are causing the changes to the schedules that you've talked about today or elsewhere?
Secondly, we've seen a number of A320neos being retired this year. I wonder, do you have any comments on why that might be happening? How sustainable you think whether they are edge cases or how we should interpret some very young aircraft being retired?
On the supply chain, of course, the main area of attention and concern are engines, as we mentioned earlier. The rest of the supply chain is actually doing much better than in 2024 and previous years. I mean, significantly better. The number of missing parts and the depth of delays is significantly better than it was before. We continue to have issues and delays on cabin equipment, interiors, seats, and that's probably more of a midterm issue than a short-term one, given the fact that this part of the industry has been since COVID or since the recovery after COVID, sort of overwhelmed by the combination of demand for new aircraft and retrofits and extension of the life of products.
When it comes to your question on the retirement of A320neo, I'm a bit surprised. That's not what I have in mind. Maybe there's a confusion with aircraft being on the ground because of missing engines, in particular, on the Pratt side, but that's not something that is consistent with what I have in mind. It's not retirement of aircraft as much as I know. But we look at your question.
We will now go to the next question. And the next question comes from the line of Douglas Harned from Bernstein.
The first question is, if you could update us on the A350. It looks like deliveries may be a little bit better in October, but this has been very slow. And maybe you could update us on progress with Spirit with interiors related to the A350 and getting those rates up. And then second question is, we've heard some cautious comments from CFM on getting out to 75 a month, particularly most recently from Safran. Where do you stand now in working with the engine providers on ensuring that you can get to that 75 a month at some point, hopefully by the end of 2027.
So, on the A350, we continue to believe we will be consistent with what we have indicated so far, meaning that the ramp-up has been sort of -- the start of the ramp-up on the A350 have been sort of delayed by a year given the challenges and the difficulties we had with the Section 15 of Spirit. So we don't expect an increase compared to 2024 in 2025, but there is indeed a phasing and a quite significant level of backloading in deliveries in 2025. The ramp-up then comes later, and we think we'll catch up in the sense of maintaining reaching the rate 12 by 2028. We are mostly challenged by difficulties and delays on interiors, on laboratories, on seats. That's mainly what we're suffering from on the A350. And it's not different compared to previous quarters and even compared to 2024, unfortunately.
When it comes to the ramp-up of the A320, actually, CFM is in line with us has confirmed regularly that they are in line with us on the need for rate 75 on the ramp-up trajectory. So I'm slightly surprised with the remark because the level of alignment with CFM is very strong. They had significant issues this year that has led to a lot of gliders and delays in delivering their engines, but they're catching up. And again, I'm comfortable that they will be back to where they have to be by end of this year to then deliver on the ramp-up trajectory to support us in '26, '27 until we reach the rate 75. I'm not suggesting they don't have their challenges.
So I don't know what was the nature of the comment precisely. They have their challenges, obviously, but we are moving hand-in-hand when it comes to ramping up the A320 with the CFM engine, at least that's my current perception, and that's consistent with the last weeks and months meetings and interactions with CFM.
Your next question comes from the line of Ken Herbert from RBC.
I wanted to pivot and ask about the A220, if I could. The lower guidance for deliveries still seems relatively ambitious considering sort of where you are today on that program. Can you talk more about challenges with that ramp and what gives you incremental confidence still at the 12 a month in '26?
And then as a second part, there continues to be speculation about maybe a third variant of that program. How do you view the investments in that and the potential return on that program considering what seems to be a more challenging ramp and some incremental comments about some demand pressure.
Yes. Thank you for the question. So, indeed, we are in a steep ramp-up for the A220. The team has a lot on the plate, and now they have on top to integrate the wings and other work packages of the A220. So that's indeed a lot of work to get to where we want to be. So we think the rate 12 for next year is the good balance between the different challenges and the demand and supply situation and the quantity of work to be delivered. Indeed, it's still a significant ramp-up, but what we learned from this year is that a rate 12 for next year reaching 12 next year actually is something we believe is well in the cards.
So, basically, that's all about the quantity of work, all what needs to be achieved, the ramp-up in both Mirabel and Mobile. We have two files, the number of variants with different configurations that we have to deliver and industrial optimization to be able to accelerate the pace of production to that level.
When it comes to the third variant, which is also nicknamed the dash 500, the first two variants being the dash 100 and the dash 300. That's something we believe the program will need and benefit from.
We have demand from airlines and from the airline customers for these variants that on paper looks really as a very competitive product. We have said that the dash 500 is not a question of if, but it's a question of when. And we're still with the same type of statement. But again, we are giving priority to the short-term work and the short-term challenges that we have to perform the ramp-up to move forward to breakeven with the program to digest the Spirit work package that will be now under our responsibility. So that's a bit the way we're looking at the year and the years ahead of us.
We will now take our final question for today. And the final question comes from the line of Olivier Brochet from Rothschild & Co Redburn.
The first one is very simple on tariffs. You mentioned a number. Should we think of the impact on cash to be similar for '25 and '26, please?
And second, on Space, on accounting and the deconsolidation that you might be doing. Should we think of a deconsolidation, sorry, for that? And will it lead to some separation costs, please?
So, the second question is too difficult and the first one as well. So, I hand over to Thomas.
So, the first one, obviously, is easy for me. The answer is yes. I mean, roughly the EBIT and the cash impact is the same. So you can put that into your model. On the space consolidation, so obviously, what we have to do is go from an MOU to signing and then from signing to closing. Closing means in order to be ready for that, we have to carve out the business. And currently, the business is spread over many legal entities and countries.
So to your question, yes, we do have the task as Airbus to create an operationally and legally stand-alone separate business until 2027, which can be then put into the new legal entity. That will come with not insignificant, let's say, separation costs. And we said, however, in the statement on BROMO that they would be in line with industry standards. So I think you can plug in a normal number into your models, but it's not insignificant given the size of it. For 2025, that will not have an impact on our financial results.
Thank you, Guillaume. Thank you, Thomas. This now closes our conference call for today. If you have any further questions, please send an e-mail to Olivier, Victoria or myself, and we will get back to you as soon as possible.
And Helene, I'd like to announce to the audience that you will actually move to new challenges still in the financial director of Airbus under the leadership of Thomas in the commercial aircraft team. And you will have Jean-Christophe Henoux as a successor. Jean-Christophe is joining from the strategic team and will take over on the 1st of December. So very soon, we will have JC, nicknamed JC with us.
And with this, Helene, I would like to thank you very warmly for the pleasure working with you for the quality and the precision of all you've been doing with us for your constant voice on the call and for your very good availability with all our investors and analysts and all the financial community. So I wish you -- we wish you with Thomas, all the best moving forward to your new job, and I'm sure there will be opportunities for you to answer questions on what it is and what you will be doing next. So, again, thank you, Helene, and welcome, JC. And bye-bye, everyone. Thank you.
Thank you. Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening. Goodbye.
Financial data from Airbus Group
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Free
| Jun '26 |
+/-
%
|
||
| Revenue | 76,986 76,986 |
10%
10%
100%
|
|
| - Direct Costs | 64,930 64,930 |
10%
10%
84%
|
|
| Gross Profit | 12,056 12,056 |
12%
12%
16%
|
|
| - Selling and Administrative Expenses | 2,632 2,632 |
2%
2%
3%
|
|
| - Research and Development Expense | 3,211 3,211 |
5%
5%
4%
|
|
| EBITDA | 10,086 10,086 |
28%
28%
13%
|
|
| - Depreciation and Amortization | 3,213 3,213 |
14%
14%
4%
|
|
| EBIT (Operating Income) EBIT | 6,873 6,873 |
35%
35%
9%
|
|
| Net Profit | 5,939 5,939 |
20%
20%
8%
|
|
In millions EUR.
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Airbus Group Stock News
Company Profile
Airbus SE engages in the design, manufacture, delivery, and provision of aerospace products, space, and related services. It operates through the following segments: Airbus Commercial Aircraft; Airbus Helicopters; and Airbus Defence and Space. The Airbus Commercial Aircraft segment develops, manufactures, markets, and sells commercial jet aircrafts; and offers aircraft conversion and related services. The Airbus Helicopters segment deals with the development, manufacture, marketing, and sale of civil and military helicopters. The Airbus Defence and Space segment covers systems and services in the field of defence and space for governments, institutions, and commercial customers. The company was founded on December 29, 1998 and is headquartered in Leiden, the Netherlands.
StocksGuide Free
| Head office | Netherlands |
| CEO | Mr. Faury |
| Employees | 166,876 |
| Founded | 1998 |
| Website | www.airbus.com |


