Airbus SE (EADSY) CEO Guillaume Faury on Q4 2019 Results – Earnings Call Transcript

Airbus SE (OTCPK:EADSY) Q4 2019 Results Conference Call February 13, 2020 1:30 AM ET

Company Participants

Guillaume Faury – CEO

Dominik Asam – CFO

Thorsten Fischer – Head, IR

Conference Call Participants

Ben Heelan – Bank of America

Tristan Sanson – Exane BNP Paribas

Celine Fornaro – UBS

Christophe Menard – Kepler Cheuvreux

Jeremy Bragg – Redburn

Olivier Brochet – Credit Suisse

Andrew Humphrey – Morgan Stanley

Robert Stallard – Vertical Research Partners

Doug Harned – Bernstein

Carter Copeland – Melius Research

Harry Breach – MainFirst

Zafar Khan – Societe Generale

Thorsten Fischer

Good morning ladies and gentlemen. This is the Airbus Full Year 2019 Results Release Conference Call. Guillaume Faury our CEO; and Dominik Asam our CFO will be presenting our results and answering your questions.

This call is planned to last around 90 minutes. This includes Q&A, which we will conduct after the initial presentation. This call is also webcast. It can be accessed via our home page where we have set the special banner. Playback of this call will be accessible on the website, but there is no dedicated phone replay service.

Supporting information package was e-mailed to you earlier this morning. 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. The package you received contains the Safe Harbor statement, which applies to this call as well. Please read it carefully.

Now over to Guillaume.

Guillaume Faury

Thank you, Thorsten. Good morning ladies and gentlemen, and welcome to our full year 2019 result call. As you’ve seen our press release earlier on the increased holdings in the A380 program, we will come back to that later on. Our call today is about our full year release. I’m happy to be here with Dominik to run you through our 2019 results and provide our 2020 outlook.

In 2019, we made good progress despite industrial challenges and complex geopolitical environments. In Commercial Aircraft, we delivered a record 863 deliveries, ramping up our production by approximately 8%. Also, we adjusted the deliveries guidance during the year. We demonstrated strong underlying financial performance in 2019, we delivered on EBIT adjusted at 6.9 billion up 19% year-on-year and free cash flow before M&A and customer financing at 3.5 billion up 21% year-on-year.

We also addressed some key fines. First, compliance. Airbus has reached final agreements with the French PNF, Parquet National Financier, the U.K. SFO, Serious Fraud Office; the U.S. Department of Justice and Department of State is ordering investigations into Airbus and agreed to pay penalties of 3.6 billion plus interest and costs.

The corresponding charge has been recorded in our 2019 accounts. These agreements represent a very important milestone for us. Second, on the A400M while we baselined the program and make significant progress on technical capabilities, the outlook is increasingly challenging on exports during the launch contract phase, also in light of the repeatedly prolonged German export ban on Saudi Arabia.

We have reassessed our export assumptions on future export deliveries for the launch complex phase, and we have booked a charge of EUR 1.2 billion in Q4, once the agreement with the authorities and the charge for A400M have pushed our 2019 result into a net loss and will heavily weigh on our 2020 free cash flow, we remain confident about sustaining our operational improvements in EBIT and cash generation in the coming years.

Taking this into account together with good prospects in 2020 we proposed a dividend of EUR 1.8 per share, which is plus 9% versus 2018. In 2019 we had again a strong finish to the year, thanks to a tremendous team effort. But we generally satisfied again with the back-loaded delivery profile.

For 2020, we remain fully committed to take the necessary steps to position Airbus for a growth, which is more sustainable. At the same time, we are facing a heavy burden on free cash flow in 2020 from the penalty payments and the consumption of compliance related provisions.

But before we come to our 2020 guidance, let’s take a closer look at 2019. First I would like to kick off on Commercial with a short update on the WTO situation. Let me remind you that in October ’19 the USTR levied tariffs on Airbus Aircraft imported from the EU into the U.S., which impacts our U.S. customers. We continue working to manage the consequences of these tariffs. This year, the WTO is expected to authorize the EU to impose tariffs on U.S. quality.

The financial decision, whether in what amounts to impose tariffs would be made by the EU and its member States. I’m hopeful that the U.S and the EU will find a negotiated settlement to avoid further damage.

Now let’s take a look at our commercial positioning starting with Airbus. We continued to see a robust demand for products. Despite geopolitical and trade tensions, the global economy grew by about 2.5%, passenger traffic grew by more than 4%, passenger load factors were above 82% and airline profitability remains strong at about $29 billion. Of course we are closing watching how the coronavirus situation is evolving to anticipate its potential impact on customers, employees and stakeholders as well as on our aircraft production and deliveries and to define appropriate contingency measures to be applied if and when necessary.

In ’19 we booked 1,000 gross orders, underlying customer endorsements in all market segments, cancelation of 363 units reflects specific airline situations in 2019 as well as the A380 production stock. Net orders reached 768 compared to 747 in 2018 taking Airbus overall historical cumulative net orders, over the 20,000 mark.

While the book-to-bill was below one the value of the backlog has increased year-on-year by around EUR 12 billion. In unit our backlog reached 7,482 aircraft, on the A220 we booked 63 net orders including new customers, confirming the A220 as the leader in its category. Our backlog stands at 495 aircraft.

The A220 family continued its success with 654 net orders. The A321XLR, received an outstanding market response with the backdrop of more than 400 aircraft at the end of 2019. Our total single-aisle backlog of 6,068 aircraft supports our long term plan.

Now on the A330 where we booked 89 net orders, including orders from existing operators and the new neo-lesser, our backlog stands at 331 aircraft. On the A350 we’ve recorded 113 gross orders including some major campaigns. Net orders stands at 32 aircraft with a backlog of 579 aircraft. In Helicopters, the team achieved a book-to-bill of more than one value for the third consecutive year, a very good performance in a rather difficult market environment. Order intake amounts to EUR 7.2 billion, of which about EUR 3 billion from services.

So despite the current soft civil and parapublic market environment, we maintained our leading position in the civil and parapublic sector. We booked 310 net orders in 2019, including 25 Super Puma, 23 NH90 and 10 H160. Key services contract wins include a support contract extension for Australia ARH Tiger and support contracts for the French forces. In 2020, we expect the civil and parapublic market to remain soft particularly in the oil and gas and we continue to see good prospects in military.

Finally, in Defence and Space. Why we see significant opportunities in the long term, the book-to-bill was disappointing 4.8 in ’19. Our 2019 order intake of EUR 8.5 billion were supported by A400M services contracts and key contract wins in Space.

In Defence, we have seen some acceleration on major campaigns, but as communicated before, exact timing of contracts award is and remains difficult to predict. The FCAS, Future Combat Air System, which is first demonstrated contract which we call Phase 1A was finalized and approved by the German Parliament yesterday.

We’ve also submitted the order and proposal together with our partners in 2019 the contract negotiations are underway. And in Space, we focus on strengthening opposition in a competitive environment, we’ve seen some positive signs in terms of budget commitments at the latest IZA conference.

Now Dominik will take you through our financial performance for the year. Dominik.

Dominik Asam

Thank you, Guillaume, and good morning everybody. Our 2019 revenues grew to EUR 70.5 billion up 11% year-on-year, mainly driven by higher deliveries and the favorable product mix at Airbus, and for less extent a favorable exchange rate development.

As a reminder, throughout the year, we guided an approximately 16% increase year-on-year on EBIT adjusted. We actually exceeded that with EUR 6.9 billion up 19% year-on-year. Despite the revised delivery target we gave you in October showing approximately 20 aircraft less than we initially targeted.

The strong conversion of deliveries into profit was largely driven by the A320 ramp-up and EU premium, good progress on the A350 partially offset by Defence and Space performance and additional ramp-up costs.

We also continue to increase our investments in innovation and digitalization. Our earnings per share adjusted stands at EUR 6.07 per share using an average 777.0 million shares. We generated free cash flow before M&A and customer financing of about EUR 3.5 billion up 21% year-on-year despite higher A220 dilution and some initial progress on linearization, in particular on trade liabilities. This mainly reflects our recorded deliveries — record deliveries and our earnings performance.

Now turning to Page 7, on our profitability. Our EBIT reported was around EUR 1.3 billion, the level of adjustment was a net negative of EUR 5.6 billion of which EUR 0.7 billion were already booked in the nine months, it includes the following negative adjustments about 3.6 billion related to the penalties, about 1.2 billion related to the A400M charge, EUR 221 million related to the suspension of defense export licenses to Saudi Arabia, now prolonged to March, 2020, EUR 202 million related to the A380 program costs, 170 million related to foreign exchange and balance sheet evaluation and 3 million related to Premium AEROTEC restructuring plan launched to improve company competitiveness and 1 million negative of other costs including compliance costs, partially offset by positive capital gains from the sale of Alestis and PFW.

We are clearly not satisfied with this exceptionally high level of adjustment and we put a very strong focus on managing this down. While we believe we have put a lot behind us, we still at work to do in 2020 in terms of defensive space restructuring, A380 ramp-down and the consequences of the compliance settlements and obviously FX and balance sheet revaluation may continue to reduce some volatility in our adjustments.

EPS reported includes a negative impact from financial results, mainly driven by revaluation of financial instruments. The tax expense of minus EUR 2.4 billion is mainly due to the fact that adjustments were largely non-tax deductible for 2020 you should assume a tax rate of around 28% on the core business results. The resulting net loss of is about minus EUR 1.4 billion with loss per share of about EUR 1.75.

Now our hedging strategy provides good visibility for the coming years our annual hedge rates have significantly improved versus the prior year. In fiscal year 2019, we implemented $40.6 billion of forwards at an average rate of $120 per Euro, mainly for 2022 and 2023 while $24 billion of hedges matured at a rate of $1.24. We also adjusted the phasing of our hedges to better reflect our delivery profile. We rolled $4.1 billion of hedged into 2020 and about 7.1 billion out of 2020.

In addition, we continue to restructure our colors by converting them into forwards. In 2019, we restructured the total amount of 2019 colors and a significant portion of 2020 colors resulting the positive impact on the 2020 average hedge rate. We also started hedging British pounds versus Euro, which was progressively replaced our British pound versus U.S. dollar portfolio.

Our total hedging portfolio in U.S. dollar stands at $97.1 billion with an average exchange rate of 123 we will implement new hedges based on the overall foreign exchange environment in line with our policy.

Let’s look at our cash evolution in 2019. Our strong gross cash from operations of about EUR 7.0 billion up from EUR 5.5 billion in 2018 reflects our EBIT adjusted and record delivery. In 2019 the significant cash out from our linearization efforts both on single inventory and payment terms with suppliers has been partially compensated by healthy PDP inflows and disciplined inventory management on wide-bodies. As cash neutral in 2019 the impact from recognizing the penalties as the method in our cash bridge from both gross cash flow operations and change in working capital. A220 impact of the cash flow was around minus EUR 0.5 billion as expected.

The net cash impact was largely covered by the ACLP funding agreements by Bombardier. This funding was recognized as a financing cash flow and, therefore, outside free cash flow. A400M continue to weigh on our free cash flow before M&A and customer financing but less than in 2018, at around minus 2.3 billion CapEx was stable versus 2018 we expect our 2020 CapEx to be around 2.6 billion. Free cash flow reported was EUR 3.5 billion, customer financing contributed EUR 0.1 billion while M&A activities accounted for minus EUR 0.1 billion.

The 2018 dividend pay in 2019 amounted to EUR 1.3 billion, we contributed a total of EUR 1.8 billion to our pensions in 2019 thereof EUR 1 billion of top-up funding to reduce the deficit. The net pension deficit stands at EUR 8.4 billion at the end of 2019 and we are committed to further fund this deficit in the future to secure a funding ratio at benchmark level.

As the reminder on January 1, 2019 we adopted the IFRS leases standard, which increased financing liabilities by EUR 1.4 billion and reduced the opening net cash balance to 11.9. On a comparable basis our net cash position has slightly increased by EUR 0.5 billion to EUR 12.5 billion.

Before we move to Airbus business, I would like to give you a little heads up. Beginning this year we will adapt our segment structure to reflect our internal reporting as a result, you should consider that the bulk of our transversal activities will be included in the Airbus segments, eliminations will be recorded separately. We’ll start recording on that basis from Q1 2020.

Now back to Guillaume for a closer look at our business.

Guillaume Faury

Thank you, Dominik. Starting with Airbus, we delivered a strong set of results based on record deliveries and solid operational performance. Despite the challenging and steep ramp-up we are faced on the ACF, we delivered an industry record of 863 aircraft, which is 63 more than in 2018 and as I said, an 8% increase.

Let’s take a closer look at where we spend on each of our programs, starting with the A220. In 2019 we delivered 48 aircraft our focus continues to be on constellation as well as growing the backlog to support the ramp-up plan to a max target rate of 10 Mirabel and 4 in mobile by the middle of the decade. At that rate we would be in a position we should be in a position to reach operational profitability.

In 2020 we target to deliver around 65 aircraft. A220 will continue to weigh on free cash flow in 2020 at a higher level than last year.

Now coming back to our announcement from earlier today, Airbus and Investment Quebec have agreed to acquire Bombardier’s remaining stake in the Airbus Canada Limited Partnership leading the A220 program.

Following the agreements, Airbus becomes 75% shareholder of ACLP with IQ holding the remaining 25% these agreements also includes the concept of the remaining A220 and A330 work packages, production capabilities to Airbus. Airbus will pay a total consideration of 591 million — net of adjustment, of which 231 [indiscernible] release of its future funding capital requirements to Airbus Canada.

Now on to the Page 20, we delivered 642 A320 family aircraft of which 551 new, within that overall A320 delivery number we are on set the ACF Airbus getting clicks by nearly 100 aircraft just this last term of which almost half were delivered in Q4. In 2020 we target to more than double our ACF deliveries, with ACF ETO versions increasing in 2020. Our teams are focused on securing the ongoing ACF convert and improving the initial flow on a sustainable basis to alleviate the burden in Hamburg.

Locally in Hamburg, we dedicated two lines out of the four lines for the ACF. We also integrated the new A320 [indiscernible] to add additional efficiency in our production system. In the U S we delivered our first ACF in 2019 we’d expand our industrial footprint by increasing the A320 family rates to 7 [indiscernible] by the beginning of next year start of this year as part of our plan to reach rate 63 in 2021.

And introduce, we recently announced the launch of a new digitalized A321-5 to rebalance the A320 A321 mix and further secure the global output. First aircraft delivery is targeted in 2022 our single item backlog of 6,068 aircraft, represents more than eight years of production at current rate. We are in discussions for further ramp up beyond rate 63 with our supply chain and we already see a clear path to further increase the monthly production rates by one of two for each of the two years after 2021.

Switching to the A330 we delivered 53 aircraft including 41 Neos. Given the current overall demand in wide body we have reduced our production planning and we’ll adjust the A330 deliveries beginning in 2020 to approximately 40 aircraft carrier. We will work with just of the time because the days of the program in line with this new production plan on the types of certification for the A330-800 we expect some news very soon.

Moving on the ACTC, we delivered 112 aircraft and now have 33 [indiscernible] — of the results we achieved our break even target n 2019 and we’ve continued to progress on recurring cost conversions as we improve the performance of the program. Rates given the current market environments, we plan to stay between rate 9 and 10. On the financials with renewed reflect higher deliveries, including 551 A320 new and 112 A350 — our 32% increase in EBIT adjusted reflects on A320 based on performance driven by higher deliveries and new premium as the new mix has increased to 86% for the full year 2019.

The improvement was partially offset by additional ramp up cost for the ACF. On A350 we delivered 19 more aircraft in total versus 2018, the R&D was higher at 2.4 billion as expected. The year on year increase reflects mainly the GGMS numbers. We’ll be putting into focus on execution as well as competitiveness and deliver on the commitments to our systems.

Now let’s move on to our Helicopter business. Stable revenues, well supported by growth in services of getting lower deliveries 4.6% margin essentially in EBIT adjusted many reflects an increased contribution from services and lower R&D reduced by less favorable delivery mix. Our 2019 performance confirms the resilience of our business and what remains the soft market and we continue to manage performance and the building blocks are in place in anticipation of a market recovery. Finally, in Defense and Space revenues were broadly stable with last year. Our EBIT adjusted came in at EUR 565 million, a decline of 40% versus last year.

This mainly reflects lower performance in Space and our efforts to support sales. As a reminder, 2019 EBIT reported includes an adjustment of minus EUR 221 million due to the prolonged suspension of Defense export licenses from Germany to Saudi Arabia and 2018 included, the net capital gain from the disposal of Airbus DS Communications, Inc. business in the U.S.

So what’s the status on the A400M? In 2019, we delivered 14 aircraft in line with the latest delivery schedule bringing the in-service fleet to 88 aircraft. In ’19 we achieved key milestones toward full capability. This include simultaneous deployment of paratroopers, certification of combat offload operations and helicopter air-to-air refueling dry contacts.

In 2020 we’ll continue with development activity towards achieving the revised capability road map. Retrofit activities are progressing in line with the customer agreed plan.

As I mentioned earlier, we have reassessed the export assumptions of the 400M in Q4 resulting in a charge of EUR 1.2 billion, the A400M is now expected to wait on cash by a total amount of approximately EUR 2 billion.

Over the past three years Airbus Defense and Space order intake and financial performance has been impacted and fallen short of our ambition. As a result, we are targeting future programs whether it’s cost pressure and restock profitability to high single digit margin. We started engaging with our social partners in December and expect a restructuring charge this year.

Guidance, as the basis for its 2020 guidance Airbus assumes the world economy and air traffic to grow in line with prevailing independent forecast, which is, you know, major descriptions, including from the coronavirus, the current tariff regime to remain unchanged, Airbus 2020 earnings and free cash flow guidance is before M&A. So Airbus targets around 880 commercial aircraft deliveries in 2020, on that basis, Airbus expects to deliver on EBIT adjusted of approximately EUR 7.5 billion and free cash flow before M&A and customer financing of approximately EUR 4 billion before and minus 3.6 billion for the tenancy tenants and negative needs to hide the [indiscernible] for the consumption of compliance related provisions for tax and legal disputes.

The Board of Directors, we propose a dividend of EUR 1.8 per share at 9% versus last year. This dividend reflects the positive evolution of the 2019 underlying performance and our 2019 cash generation. It also highlights our confidence in our future financial performance as well as ongoing commitments to what sustained dividend growth and increasing shareholder returns. So in 2019 we put a lot behind this compliance investigation A400M rebalancing A380 and programming any rate A350 order. A220 of them can now buy out of Bombardier stake. Formation of the future combat system, which is a major achievement for the future management condition and the launch of the transformation platform to prepare the next chapter of Airbus. We also progressed towards a more linear financial profile.

The cash regeneration 2020 from our underlying business with has satisfied the estimated compliance related obligations for the year with continued funds or pensions to benchmark and we need to explore opportunities for non organic growth. We will do all this while protecting our investment grade credit rating and while A400M, A220 in compliance will continue to weigh on our free cashflow, the business supports our cash condition targets of one. And now a few words to wrap up.

2019 was a year where we’ve progressed on a number of topics in an environment that has become more complex with Brexit, tariffs and trade bans, which should carry into 2020. We laid out the foundation of our next chapter for a stronger and more sustainable Airbus and we’ll continue to build on it.

In 2020, we further enhanced the efficiency of the [indiscernible] delivery flow including the ACF program to leverage the full consumption of the program in the future. Linearizing our production is a key priority, we know the coronavirus could make it a bit more difficult.

We also continue to improve the efficacy product profitability while at the same time we’re going to address the A330 cost base given the rates are efficient in line with wide body customer demand. The A220 focus will remain on commercial momentum and securing additional cost reduction, in helicopters we’ve continued to leverage our military and services business while positioning the company for future civil and parapublic market recover. In Airbus defense and space and [indiscernible] we take the necessary measures to restore profitability.

We will continue investment in digitalization and innovation to prepare the future our focus is and will remain on program execution and delivering on our commitments to our customers, paving the way for stronger, financial performance, and free cash flow growth always with quality, safety, integrity, and compliance in the fore front. Now let’s turn to your questions. Thank you.

Question-and-Answer Session


[Operator Instructions] First question from Ben Heelan, Bank of America. Your line is now open. Please go ahead.

Ben Heelan

Morning everyone. Thank you for taking my question. My first one was on A320 rate rises. Can you help us understand where these aircraft are going to be produced and how should we be thinking about the mix of A320 versus A321 within those rate rises, and then secondly on Defense and Space, I think in the statement you flesh out that it’s, it’s space, which is where you’re seeing primarily the weakness. How should we be thinking about this going forward? Thank you.

Guillaume Faury

I’ll start with the, the first one, well, A320 family will continue to be produced in our main sites where they are produced today. You know, we have four final assembly lines in Hamburg capable of A320 and A321. We have two assembly lines in Toulouse, they are A320 only and as we have announced earlier we said the new final assembly line that will be a A320, A321 assembly so we get flexibility on our ability to grow as a mix of A321, and moving forward in the assembly lines. And we have the two assembly lines in Tianjin and Mobile and we continue to raise the rates as well on those assembly lines. That’s why and that supports the plan to go to rate 63 per month overall for the A320 family by 2021 and as well to increase the rates, as I said, by one of two points of rate in 2022 and again in 2023 so I hope it answers your question, on the mix between A220 and A321, Dominik under your control, we were around 30% A321 deliveries in 2019 and we have in the backlog much higher percentage of A321. So we keep growing the percentage of A321 moving forward.

Dominik Asam

Sure. I mean you’ve seen that the profitability in defense and space has significantly declined and you’ve also seen that the order intake was again, significantly below the revenue line. So the plan is currently to say, let’s assume that many white elephants we have in the pipeline would not materialize just as a stress test and assume that the kind of 8.59 billion levels would be kind of rock bottom where we could end up, how do we need to adjust the cost base to bring the return on sales back to a high single digit margin. And that will take a couple of years. So this year you will not see a lot of improvement on that because the restriction is just starting next year, gradual improvement. And thereafter in the year three, so to speak, we want to be back to that kind of high single margin we’ve seen in the past because of the restructuring.


The next question is from Tristan Sanson, Exane BNP Paribas. Your line is now open. Please go ahead.

Tristan Sanson

So will limit myself to two questions. The first one would be on the ability to provide midterm visibility to the markets. Remember that the Paris air show last year, you commented that you needed a few conditions behind like Brexit, the settlement of the SFO case and the completion of a great operating planning exercise before you can probably meet them to, midterm EBIT to the streets. Um, I suspect the environment has evolved quite a lot since then. Can you tell us which would be the new conditions required for you to be able to use these kind of commitments? That, the first question, the second is, can you provide to us an update on the cash flow pattern of the [indiscernible] program going forward?

Dominik Asam

On the capital allocation question, I think it’s worthwhile first looking at the cash flow development or I should start with, with the kind of target capital structure. And we really liked the rating position we are in — we think it’s a little bit of a slippery slope to go back down to a triple B type rating in such a business as ours with a lot of PDPs from the customer. We really have to be a safe haven for our customers. And also in case ever capital markets, which drag a little bit on the vendor financing we really would like to be able to also support that if needed. And for that reason, we really liked the rating category we are currently in. Now in terms of the cash flow you’ve seen last year, bringing in 2.5 billion and we had also mentioned this is the 1.8 billion funding of pension liabilities to be deducted.

And then we’re going to pay a dividend for last year. So if you take that together, you see that basically, and that is already kind of washing it out. And then for next year we are extremely prudent. So sorry, the current year, 2020 now I’m talking your experienced burdens by the fine and the consequences of this fine and the 4 billion guidance on the operating side is already kind of eaten up by that. And of course you want to also continue the dividend policy, which is very much geared around the net income and the 30%, 40% cut of an income. And as we have now all the fine related topics in our balance sheet already, it means that of course you would like to sustain a dividend policy so that the clear commitment to sustain the dividend policy increasing dividend, but it’s also clear from the kind of cash bridge I gave you. And then we have no room for 2022 to think about shareholder returns in terms of share repurchases.

The second question was on, you know, for last year 2019 we had previously guided that you want to go into about half a billion and that kind of half billion is now slipping into next year.

Last year we did more than that or less than 1 billion in 2018 but kind of in between the two numbers. So I think it will be a half a billion for a couple of more years, maybe three years. And then tapering off. So this gives you the round about 2 billion we’ve mentioned.

Tristan Sanson

Okay. Thank you so much. If I may, the first answer was very helpful. Actually, not exactly my question. I’m wondering when you would be able to hold the capital market day, that would be and allow us to get a bit more visibility on the earnings trajectory of veto or your program. And the mid term ambition that you have for the group and I’m looking for timing, but for the conditions that need to be there for you to keep it system [indiscernible].

Guillaume Faury

That’s why I cannot say your question precisely. As you have seen, we put a lot behind us in 2019. Brexit remains a risk unfortunately. We thought the no-deal Brexit was off the table with the new negotiation situation. It’s not completely sure. We have the WTO situation as well quite dynamic. SFO, PNF all of this is behind us, I think it was a very important objective we had in the team to come to an end move to the next phase and this is done. So, I think, we owe you a more precise answer on that question as — as we move forward in this year, we think we have a lot of things again to put behind us. But we see a clear trajectory on operations, on the linearization, on the ramp-up of the line and profitability of our program. So we take the question maybe to be on answered a bit later it’s understood Tristan. Thank you.


The next question is from the Celine Fornaro, UBS. Your line is now open. Please go ahead

Celine Fornaro

Yes, good morning, gentlemen. Thanks for taking my questions. So I would start with the first one, which is coming back to one comment that Guillaume made at the end where you said that you can still see that the business supports a cash conversion target of one time. And, I guess you were talking about group level. So should we infer from that Airbus commercial?

Dominik Asam

Yes, it’s Dominik here, hi Celine. So the cash conversion of one is clearly the target for the group. And there are two caveats and we have highlighted, one is the A400M we gave you now the sizing of the cash and that’s weighing still going forward and it’s clear in 2020 year the compliance topics ahead of us, which is also depressing cash version in 2020, and then there is J-curve of the A220, and the program is launched is ramping. I mean you’ve seen that we’ve delivered 48 aircraft last year, if you think about the rate potential, you see that it should go up of mid of the decades to 160, 170 ish. That’s a very big ramp and that ramp is cash so there is also significant cash requirement which will actually for 2020 be in the high triple digit millions dollars.

So these two are the ones we have to still bring behind us, but then we should have as a group on a cash conversion of one.

Guillaume Faury

Celine sorry, the line was disconnected. So operator may be you can go to the next question.


Sure. The next question is from Christophe Menard, Kepler Cheuvreux. Your line is now open. Please go ahead.

Christophe Menard

Yes. Good morning. Two questions. The first one on the A330 production rate decrease. Can you explain the reasons? I guess it’s probably the demand, but the reason why you move from a 50 to 40 and how sustainable is this beyond this? And second question is on the timing, the pension funding and the amount yet that you intend to actually pay or fund in the coming years or so, kind of the timing you envision.

Guillaume Faury

Yes. So I take the first one, and Dominik you take the second one. Yes on the A330 behind the delivery figures it’s important to have in mind that a lot of the planes that were delivered in ’19, were actually produced in ’18. You’ll remember that we had delays on the entry into service of the Neo linked to engine issues. So the underlying production is more linear, is more stable than what we’ve seen the deliveries. Now, back specifically on your question for 2020 and moving forward to 2021, yes, that’s basically driven by the demands. We want, and we said it already a couple of time in the past to have a level of production that is reflecting the demand moving forward, not to be in a situation of other capacity on our side and which we have stayed on the A350 and on the 330 reflects our understanding of the capacity of the market and many are effecting the backlog capacity of the backlog and the market to take off planes in good conditions. That’s basically what we think is the right level of deliveries to fit within a current market environment and the success of our products because we had a very good booking record last year on those products. So we remain very confident that we want to be. I mean according to market expectations. Dominik, on the pension.

Dominik Asam

Yes, on the pension, we now have a pension liabilities DBO defined benefit obligation of about 21 billion as of the end of the year and deficit of about 8 billion. We said we want to bring that to benchmark level. If you take the kind of benchmark levels in a blend of our countries, it should be maybe 80% funded. So if you do the math and give them the funding ratio, we currently have you will require another 4 billion or so at current interest rates. Of course, interest rates can move and in case they ever move up again the deficit would close quickly. But if they don’t, we need to fund. So the idea is now to basically, gradually over several years do that. I mean the kind of rate at which we do that you’ve seen last year was 1 billion. And in case interest rates stay where they are, it could be a similar rate going forward until we have that gap close to the 80% funding ratio.


And we have Celine Fornaro back on the line. Your line is now open again. Please go ahead.

Celine Fornaro

Hello? Can you hear me okay? Well, I could hear you nice and clear. Guillaume, so I heard that the answer on the free cash flow conversions, thank you for that. And I suppose on that one, Dominik, you were assuming a neutral defense contribution if you exclude A400M, which probably is already a progress from the situation that we generally had?

Dominik Asam

I mean, if you think about the cash we mentioned, it should be better than neutral over time. I mean, restructuring to also bring defense and space gradually, we’ll take a time to a much better cash conversion.

Celine Fornaro

Okay. And then my second question would be regarding, an update on the A320 delays that were mentioned by some airlines in the U.S. last week and also the progress on the A321 ACF and in terms of Head of Versions, how much is that increasing in 2020 compared to 2019? And on the A320 delays maybe you want to comment on some GTF issues that have been flagged as well. Thank you.

Guillaume Faury

So a lot of questions in one. Celine I do my best to answer. On the A320 ACF, you remember that this was considered by us as a major risk or challenge in 2019. Well, basically we have managed to do the ramp-up of ACF in the second half of 2019 according to the revised plan, I have to say. And we delivered sort of 100 ACF more in 2019 compared to ’18. So that’s a very, very significant ramp-up. And we had a lot of head of version. So I feel by far more comfortable on that challenge for 2020, but still it’s a — it’s another wave of ramp-up as we intend to sort of double the number of ACF planes we’ll deliver in 2020 compared to 2019. So in terms of mix, in terms of complexity, in terms of standard of the planes we deliver actually receive much higher. We increase as well as the rates of, sorry, the share of the A321 in the family. So this is going, I mean quite well compared to where we were a year ago obviously. And we are getting a lot of consults which we want to further ramp-up the A320 family at a pace that enables fulfilling our plans and delivering as we expect. We run actually around six months late on the production of the new compared to a large number of contractual commitments to customers. And we expect to recover this overall the next year or year and a half. So this is not something that will be over in 2020, but will progressively get better.

We are a victim of our success on the products and the complexity of the ramp-up. But we think this is something we are really focusing on efficiently, and I have to say, I’m satisfied with what the team has delivered, especially in the second half of 2019. We continued to have difficulties with the engines and service. The GTF situation is known and transparent and this is weighing on our capacity to deliver most planes in H1 as there is a lot of the production that goes to MRO who supports our customers and make sure we keep, we give priority to planes which have been already delivered to customers and our customers that need to fly. That this is something that is also be normalized over time and we’re making progress on that front too.


The next question is from Jeremy Bragg, Redburn. Your line is now open. Please go ahead.

Jeremy Bragg

Firstly, on A350 where the rates of 9 to 10 a month versus 10 previously and you’ve kind of made the comment Guillaume, about the market conditions. I just wanted to ask the question, how do you feel about the long-term margin that you can achieve on that program? Kind of vis-à-vis lower rates and the market conditions please? And then the second question was a bit of a geeky one on A220. I mean, previously the losses were backstopped but you’ve bought the rest of the program or bought a high stake in the program at a phenomenal price. But, I’m guessing that the backstop arrangement no longer continues and that program as you hinted will be loss making on a cash basis until the middle of the next decade because of the J-curve that you talked to. Just wondered if you could help with those two things please. Thank you.

Guillaume Faury

Thank you, Jeremy. I take the first one and Dominik you take the second one on the A220. Well on the A350, I would like to say we keep moving forward and maintaining our project already on the cost reduction. It’s not, I mean, the rate increase, we touch the rates and last year we want to maintain between 9 and 10. So that’s in the same ballpark. And we continue to see strong demand for the A350 as a plane in this market environment, which is more difficult. You’ve seen the civil announcements from our main competitor, bringing their rates down significantly on their own wide-body. So we think it shows that it’s strong resilience and performance of the CPC, and as I said, it doesn’t change; significantly it doesn’t change our project around costs. We keep going at the same pace.

Dominik Asam

So on that A220 funding, yes you mentioned that Bombardier aspects of some of the cash consumption in the joint venture. There was some left two type of shares, there were two types of shares and the very interesting one for us was the so-called B shares. The funding commitments still outstanding was now to $50 million. So it was quite limited given what is still ahead of us. And of course the purchase price and you referred to one of the components embark on that was the fact that we let Bombardier of the hook for the funding.

Now going forward, the joint venture will fund everything. We have agreed with the other shareholder, IQ and the joint venture that they will first try to write funding on a joint venture basis. But of course we have also the option to fund out of our own treasury and for anything that Airbus would support in terms of guarantee of a joint venture, there would be a fee associated with that. So basically this will be on our balance sheet right now. And don’t forget, the whole joint venture has already been consolidated before the transaction we announced in overnight.

Jeremy Bragg

Right. Thank you very much guys, very clear. Thanks.


And the next question is from Olivier Brochet, Credit Suisse. Your line is now open. Please go ahead.

Olivier Brochet

Thank you very much. Good morning, gentlemen. Olivier from Credit Suisse. I have two questions. The first one on the coronavirus is to understand if there are any impacts on airlines or lessors behavior, as you can see today, like deferrals or things like that already? And the second one is, you mentioned at the end of your presentation non-organic growth opportunities. Can you maybe put a bit of color on the, how you think about these in terms of financial discipline and what sort of things are you could be looking at? Thank you.

Guillaume Faury

Okay. Coronavirus, so it’s a very dynamic situation. We are very much looking at it. We have organized a couple of clients to try to better understand the situation and the likely scenario moving forward. The traffic in China, inside China or from or to China has been very significantly reduced in the last weeks, seems to pick up a bit now. There was the Chinese New Year holidays where we had most of our plants that were closed, and that this has been extended by a week, by the authorities. So we have respected the guidance of the authorities and the recommendation for the — from the World Health Organization. But these goals, we started to work beginning of this week and we are monitoring that the restart is efficient and this is the case we do these for our own plants and probably one of our suppliers. So that’s on the supply side. Obviously we are very much focusing on the safety on the health on the protective measures against the coronavirus in the plants for our employees and our partners. It’s super important for us. And we as weighted in complex with our customers.

On the customer side, well on the very short-term that has to defer the deliveries very short term. So it’s very significant to us to give an indication and just to know whether this, we lost a bit or not. We are all monitoring that very dynamic situation that seems to be going better from an industrial perspective. But still this is working products I should say. And obviously we are very much looking at it and carefully monitoring and anticipating to define the appropriate mitigation measures. And this is where we are at this very moment. The second point the non-organic growth.

Olivier Brochet

The question was on the non-organic growth opportunities that you mentioned, if you could put a bit of color on how you think of them in terms of financial discipline and the areas that you could be interested in.

Guillaume Faury

Well, we have clear priorities when it comes to developing our business. We have a lot on our plate and the main priorities for Airbus, I think on the other commercial side on the digitalization, on the transition to more automated and robotized production systems, and on the preparation of the technologies for the future which are around environments, decarbonization of the flight. And we are very disciplined on focusing on those priorities. So when we have needs or opportunities to go faster on our strategy, this is something we would consider, but we are mainly focused on those priorities, which are mainly internal priorities when it comes to the defense and space where we’ve been rather clear on our trajectory of restructuring and turning around the business to make sure it delivers the profitability we expect from that business moving forward. So basically, that’s the situation and we will look at all opportunities to be performing in that direction. There was no specific intent in my comments in a way or the other. But, what remains important for us is the strategy of the existing pillars of business of Airbus.

Olivier Brochet

Okay. Thank you very much.


And the next question is from Andrew Humphrey, Morgan Stanley. Your line is now open. Please go ahead.

Andrew Humphrey

Hello. And thank you. A couple of questions for me. The first is a clarification. Just looking at 2020 guidance. Can you confirm EUR 4 billion of free cash flow includes both some additional cash costs from the A220. I think you highlighted that could be high triple-digit million longer term. Some A400M costs in the region of maybe EUR 500 million that obviously excludes the unwind of the additional provisions you’ve taken today in relation to regulatory issues. I’m sure, I misunderstood parts of that but I’d be grateful for clarification? And then the second one is around, the rate increases that you’ve highlighted. Would it be fair to assume that those are really coming from optimization and the supply chain? Does the level kind of view hard investment will be pretty limited and maybe we’ll include some reallocation from other programs?

Guillaume Faury

The answer to your first question is shortly yes, you’re absolutely right. How we defined it when we guided EUR 4 billion, we of course fully include consolidated business and both A220 and A400M are part of that we just wanted to kind of separate the impact of the compliance issues and this is why we kind of put it into pieces in the guidance.

As far as the rate increases concerns. And you understood my statement beyond the rate 63 for 2022, 2023. This is coming from the existing supply chain and at the level of increase that is sustainable by the supply chain. It is very important for us. We’ve seen the challenges on that front. It’s a rate that supports regularity and predictability in deliveries that’s very important. We had our challenges in the last two years. We want to put this behind this. There is a new final assembly line that we are putting together and that we’re creating in Toulouse for the A320, to A321 to be able to produce more A320, A321 and debottleneck Hamburg, so that’s part of our plans to be able to manage that ramp-up and what we call the linearization of the production on the A320. Don’t underestimate the change of mix. I mean, we have close to 50% of 321s in the backlog, so we are ramping up the 321 overall. And we intend to increase the CapEx in 2020 compared to 2019 sort of EUR 300 million more in 2020 compared to 2019. So we continue to prepare including with investments, the ramp-up of the single-aisle in numbers, in mix, and in efficiency.

Andrew Humphrey

Very helpful. Thank you very much.


The next question is from Robert Stallard with Vertical Research Partners. Your line is now open. Please go ahead.

Robert Stallard

Just a couple for me. First of all, on the Asian market. Before the coronavirus outbreak, we had already seen a slowdown in RPM growth versus what we’ve seen in recent years. And I was wondering if you have seen any pickup in airline deferral discussions or airlines adjusting their airline capacity plans going forward in terms of new aircraft requirements? And then also a falling out on the last question, have been conversation in the supply chain about the A320 family going to 70 a month. Is that still a possibility or is that rate too high? Thank you.

Guillaume Faury

On the 70, I answer later. So I start with the Asian market. I mean you’ve seen our booking record in January it was a very strong one. And we continue to see a lot of demand for Airbus products, including from all regions. Also for the coronavirus and if it has an impact, I mean it’s really premature. The only — I mean effect that is visible is the one of two weeks of the Chinese airline, just telling us that they would like to postpone the deliveries, but it was more for logistical reasons and the situation we had in the first two weeks of the outbreak. So, I’m not able to answer on that more specifically. And you remember that all what we say today and I mean before coronavirus, because coronavirus is really too new, too recent to be able to fully understand the magnitude of and the consequences of that situation.

But we’re very active on managing that situation with suppliers, with partners and customers. This is obviously something we’ve continued to discuss and monitor as the situation develops. Now on the A320, you remember that in 2018, we assessed the capacity of the supply chain to move to different rates and we assessed the capacity to the rate 70. At that time end of ’18, we had a very strong pullback on the supply chain on that rate, and that’s why we decided to move from to reach the rate 60 in 2019 then goes to rate 63 in 2021. We have reassessed the capacity of the supply chain last year and that’s why we guide on one of two points of additional rate for each of the years after 2021 and this is supported by the results of the supply chain assessments. And we keep looking at the ramping of the product balancing between demand and supply — on demand and supply chain capacity.

Now on the — on the symbolic 70 per month. I don’t want to answer your question in a very specific way, but basically if you take 63 plus one of two for two years, it brings between 65 to 67 by 2023. So we are not far and this is what we are in our plans now. So I would do like to remain on those figures which are moving progressively upwards at to pace, which we think is sustainable and we’ve put sustainability which we do very high on our agenda.

Robert Stallard

That’s great. Thank you.


And the next question is from Doug Harned, Bernstein. Your line is now open. Please go ahead.

Doug Harned

Good morning. Thank you. Going back to single-aisle. When we look at Hamburg you’ve got a complex variant mix there, which seems to add to the ACF challenges. And so how are you thinking about addressing that complexity? And when we get out into 2021 when presumably a lot of the issues around the ACF are resolved, should we expect to see a margin benefit come in? That would be the first question.

And then second, you talked about guidance assuming that the tariff regime stays in place. And what is — what are you seeing as the cost of those tariffs now? And what are the prospects that you see for getting that resolved?

Dominik Asam

I mean, I first would like to point out that you see the kind of margin potential of the ACF to a certain degree in what we delivered in 2019. Then you see that in the guidance also now is for 880 and EUR 1.7 billion or EUR 2.7 billion of EBIT adjusted on that number which is significantly higher than what was previously discussed on a similar level. So you see that viral, it’s a kind of slow ramp in units for 2020. There is margin expansion from a single-aisle and we think it’s not the end of it because as Guillaume already highlighted, the mix shift is just starting. So yes, we think there is potential there.

Guillaume Faury

Yes. And on Hamburg, well, they are heavily loaded with 321, and the opportunity to share a bit better the 321 between Hamburg and other sites and namely Toulouse later when the new plant will be in place. We’ll obviously simplify, help ease the situation, and should help the — having the better flow and more efficiency. Now the margin itself, I mean, we’re developing with the product, and the mix that Dominik mentioned before.

On the tariffs, well that’s a very dynamic situation. We could expect by the way changes in the situation from the U.S. in the next days potentially. But what is very important for us the, May-June ruling from the WTO where the EU is expected to be granted the rights to put tariffs on U.S. goods coming through Europe. This we finally rebalance the situation. I think you have the history of these long lasting claims, across the Atlantic and this will be the moment where we will be able to in our perspective come to the table of negotiation and put these behind us, because honestly, it’s nonsense and it’s a lose-lose situation that is just slowing down the industry. So we manage that situation for the moment, we keep managing it. The burden is on our side for the moment. It might be on the other side moving forward. We think 2020 is the year to put this behind us and move forward as an industry with good competition and no tariffs.

Doug Harned

Is it possible to give us a sense of what that cost is for Airbus with this current tariff regime?

Guillaume Faury

The cost is mainly in the managing the situation and the relationship with the airlines and the complexity and how we deal with the situation this is for planes going from Europe to the U.S. it’s a customer-by-customer. And it’s a — I mean, it’s not nil, but it’s something we have managed to keep it quite reasonable level for the moment so that for 2019 and 2020, we see it still dynamic as well. Okay.

Doug Harned

Thank you very much.


The next question is from Carter Copeland, Melius Research. Your line is now open. Please go ahead.

Carter Copeland

Thank you and good morning. Dominik, I wonder, if you might give us a little bit more color on the year-over-year cash bridge. I think you gave us most of the pieces on A400M and pension and 220, but some weren’t there that the D&S restructuring cash cost. And what I’m really just trying to get to is, what sort of growth do you expect in the core cash flow year-over-year? I think with those pieces it looks like it’s still pretty strong, high triple-digits or billion? And how should we think about the pieces there? 320 family versus 350 versus working capital or something else we can’t see. Thanks.

Dominik Asam

Okay. I think, I’m wanted to make the caveat first that we put the whole compliance related cash flows out of the equation. So we only talk about EUR 4 billion and here and it’s a EUR 0.5 billion increase relative to what we have done in the last year. And there are some — some headwinds. I mentioned the A220, I think we mentioned that as of about $0.5 billion cash in 2019, which will increase further, and I think that’s because of top of J-curve in the ramp of the A220. And then there is continued effort or linearization and if you look at our balance sheet you’ll see that there was some strong improvement already in accounts payable meaning that in 2019 we’ve actually had some adverse impact on the free cash flow from accounts payable. I think that piece of the equation is now behind us and now it’s all about the inventory linearization and making sure that we end 2020 in a way that we can start with higher rates in the first quarter of 2021, and that will also require some cash. So this is — I think these are the major changes which are weighing a little bit on the cash and kind of dampened the increase. But I don’t want to comment exactly in all when your EUR 1 billion more, but I gave you some hints so you can calibrate it.

Carter Copeland

Well maybe — maybe just another way. Do you expect, can you give us a sense of what the cash costs of the D&S restructuring are? And if you expect any material a year-over-year change in PDPs.

Dominik Asam

Okay. So first of all the cash out PAG restructuring is a little bit ahead of defense and space and we have booked EUR 103 million. You see that in the adjustments for PAG. As the defense and space restructuring is likely to be higher than that, significantly higher. And from a cash flow point of view this will affect 2020 and 2021.

Carter Copeland

And PDP’s? Thank you.

Dominik Asam

Sorry. PDP’s you know that we have been blessed by a very strong year already, and also as Guillaume said, there was an extremely strong January where we had a very high order intake, which compares very favorable to our competitor. And that of course drove also PDP to some degree. We have a healthy ramp ahead of us, but the kind of PDP delta, which has been a tailwind now for many years and will most likely not be sustainable as a tailwind going forward. So it will be a little bit of kind of turning and not be such a tailwind as in the past or do more of a headwind, I’d say. But it’s also something that’s already fully embarked in all these numbers we gave.

Carter Copeland

Great. Thank you for the color.


And the next question is from Harry Breach from MainFirst. Your line is now open. Please go ahead, sir.

Harry Breach

Hello. Good morning, Guillaume and good morning Dominik and everyone. Thank you for taking my questions. Can I just ask my two on firstly A321 ACF, Guillaume, I think when, we spoke in October you mentioned that the first 30, 40 or 50 heads of versions were going to be the most challenging. Are you able to share with us how many heads of versions were achieved last year 2019? And this is a pacing of how you’re going to get through those this year in 2020?

And then secondly, can I ask just on the A400M? Today you’ve spoken about the adjustment in the estimate completion due to changes in the export assumptions. Can I just ask are there any export deliveries left in the plan that drives your estimated completion on A400M? Or are they now completely out of that plan?

Guillaume Faury

I’ll answer for the ACF. I mean, we have achieved in ’19 what we wanted to achieve and this is true that it was very challenging. It’s a couple of dozens of Head of Versions that we have achieved, order of magnitude and we keep doing more Head of Versions in 2020. I said we’ll double the number of ACF planes that we deliver in 2020 compared to 2019. But maybe giving a bit more color on the, not the figures but with the situation as the main challenge with this big increase in the second half of 2019. And it was something I was a bit depressed about. We had a plan that it was full of challenges. This has been achieved and we feel much better moving forward on the ACF. So I would say we will probably, let’s speak about ACF in 2020 as such, we’d speak about 320, 321 deliveries. This is the industrialization of the ACF was the challenge. You remember in ’18 we were very focused on managing our engine situation and we started ’19 being behind the curve on the ACF, I think we are back on track and this is what matters in my perspective.

So on the estimated completion, the first of all we have to underline that this is really unique during the contract period at the operation and nothing beyond that. And if taken down the number now very significantly, and I don’t want to give precise data, but what I can say is that we’ve taken them down by a much larger amount than what is still left in our calculations. So it has been significantly derisked.

Harry Breach

Okay. Thank you very much.


And the last question is from Zafar Khan, Societe Generale. Your line is now open. Please go ahead.

Zafar Khan

Thank you very much. Good morning, everyone. Two questions from me please. First one is on A380. Could you tell us what the contribution was from the program at the operating level in 2019, I imagine probably a negative contribution? And what this year next year, contributions are going to be? Should we be looking for losses from the program in ’20 and ’21 through the operating profit line?

Second question just on the cash fluctuations — working capital fluctuations during the year. Obviously, with linearization, hopefully the working capital strings third quarters should become much less. Can you give us some idea of what you’re targeting? When you achieve linearization in terms of working capital strength through the quarters?

Dominik Asam

Okay. So on the A380, you might’ve seen that we adjust the A380 impact in our adjustments so you find it in the bridge there, and I would hope to drive that down going forward because it’s kind of protected by some loss making contract provisions. And but there are still some open pieces but it should be kind of a diminishing topic in the adjustments over the next couple of years, and then as the program ends, that would be out of the equation. So on the working capital, I think the way I want to speak to is to say for the group, if you look at 2021, we want to achieve the cash conversion of one before the A400M complete consumption here and the A220 J-curve funding.

And then you can basically say on the working capital, there should not be any huge impact anymore in such a more linearized topic. There will be gradual increase, but as the customers and are also funding PDPs. And I mentioned it will become more difficult going forward, but it should not be such a big factor anymore. If you look at the prior years and you look at the changes in the working capital, they have been very huge. I mean really mid-single digit billion swings over the year and that last swings should be maybe half or linearized to a degree like that in a much more stringent way.

Zafar Khan

And just on the — this one testing version that you’re looking at. Is that the adjusted net income that you’re hoping will be the conversion of one.

Dominik Asam

Well, there we talk about the EBIT adjusted multiplied with a certain tax rate, deducting financial items and yes, that’s the way we look at it. But again, I mean, we mentioned we really over time want to drive all these adjustments. They have been very, very material and a great source of frustration for us. And there are some topics which will be never really entirely out, like the volatility from the ForEx and the balance sheet revaluation topics. But of course it’s our ambition to make sure that the delta between EBIT and EBIT adjusted is kind of converging.

Zafar Khan

Okay, so its adjusted net income is what we should be looking at?

Dominik Asam

Yes, you can — you can say that more or less.

Zafar Khan

Thanks very much.

Thorsten Fischer

Ladies and gentlemen, this closes our conference call for this time. I would like to add a personal note, Nicholas, who has been working with us for almost five years is leaving the team for new challenge within Airbus. I thank Nicholas for his exceptional dedication and professionalism over the past year and at the same time, I’m happy to welcome Philippe Gossard, who will take over from now on. If you have any further questions, please send an e-mail to Mohamed, Philippe or myself. And we’ll get back to you as soon as possible. Thank you and I look forward to speaking to you again soon.

Guillaume Faury

Thank you, Nicholas and thank you everyone. Have a good day. Thank you.

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