|Airbus deliveries||up to 2008 level|
|Airbus gross orders||up to 300|
|EBIT* before one-off||down compared to 2008, significantly positive|
The first quarter of 2009 confirms the trends described at the beginning of the year. The Group's bottom-up analysis of the order book still shows overbooking for the coming years. Nevertheless, this order book and the overbooking are challenged by the deterioration of the macroeconomic and traffic indicators. Therefore, EADS is continuously monitoring the market, its customer base and its suppliers and continues to apply a rolling plan concept. Besides the commercial order book, the Group's solid defence and institutional order book provides a certain level of protection and stability.
EADS expects Airbus to capture up to 300 new gross orders in 2009, even if it is becoming more challenging in the current market environment. Based on a stable delivery assumption and a US dollar rate of € 1 = US$ 1.39, EADS revenues should be roughly in line with the 2008 level.
Under these assumptions, EBIT* before one-off should be down in 2009 but significantly positive supported by robust underlying performance. Compared to 2008, EBIT* will be negatively impacted by increased Research & Development (R&D) expenses, by significant hedging deterioration, price deterioration, increasing customer financing and support activity costs, partly offset by further Power8 cost savings. Concerning one-off impacts, revised industrial plans to complete the A400M programme could lead to a substantial charge in the first half of 2009, weighing on EBIT*. If and when EADS has an accurate view of the costs in H1, the Group will revert to the cost-at-completion methodology. Any potential positive outcome coming from the negotiation with customers and suppliers will need to be substantiated before being taken into account.
Free Cash Flow for 2009 will reflect some negative impacts from lower customer advance payments at Airbus and some build-up of inventory in the fourth quarter of 2009, reflecting the reduction of the single-aisle production rate. The recently announced cut in A380 deliveries will equally challenge the Free Cash Flow through a build- up of inventory which will be mitigated by production optimization and supply chain management. EADS expects to support its customers in financing their deliveries on a discretionary basis in 2009. The cash consumption of provisions taken over recent years will also weigh on the cash flow. At this stage, with the current level of visibility, EADS is not expecting to consume more than around € 1.5 billion of Free Cash Flow after customer financing in 2009, excluding any potential negative impact of the A400M programme.
* EADS uses EBIT pre-goodwill impairment and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to income or expenses of a non-recurring nature, such as amortization expenses of fair value adjustments relating to the EADS merger, the formation of Airbus S.A.S. and the formation of MBDA, and impairment charges.