The Airbus Group, in a report of its 2013 performance, saw a surge in the sales of its passenger jets, but its military unit suffered a drop in the face of shrinking European defense budgets. The Toulouse, France-based aircraft manufacturer reported a full-year net income of 1.5 billion euros ($2.1 billion) or an increase of 20 percent compared to 2012’s 1.2 billion euros ($1.6). This came from the revenue of its Airbus passenger jets totaling 40 billion euros ($54.7 billion) which is a 6 percent increase compared to last year’s figure. However, the group’s military unit continues to suffer, forcing management to eliminate 5,800 jobs in the next three years.
The restructuring of the Airbus Group’s underperforming military business unit was announced last December, including the reduction of its global workforce by 5 percent. The Airbus Group was previously known as the European Aeronautic Defense and Space (EADS). This employee reduction will affect the group’s division in Germany, formerly known as Cassidian. This military and electronics division is a major shareholder in Eurofighter, the consortium that builds the Typhoon combat jets.
Based on the company plan, Cassidian will be merged with the group’s space unit called Astrium to form a new division to be called Airbus Defense and Space. Although Cassidian’s sales and operating profit increased in 2013, its request for new orders decreased by 1 percent compared to last year’s figure.
However, with the good performance shown by its passenger business unit, Airbus announced a 10 percent increase in its monthly production of its best-selling 150-seat, single-aisle A320 airplanes. This means that from the normal production output of 42 planes per month, Airbus will increase it to 46 planes per month starting 2016.
The demand for Airbus A320 airplanes will come from Southeast Asia and from U.S.-based carriers, several of which have recently emerged from bankruptcy and are now ready to replace or complement their existing fleet. With regard to the Southeast Asia market, there is currently a strong demand for air travel especially coming from the region’s rising middle class. Carriers are thus scrambling to supply this demand and placing more orders for airplanes. Industry experts estimate that the Asia Pacific region alone would have an airplane demand totaling to $1.9 trillion in the next 20 years.
The sales of jets by the Airbus Group surged in 2013, with a total of 1,503 jets valuing $225 billion. On the other hand, its American rival, Boeing, sold a total of 1,355 new airplanes with a total value of $198 billion. These results allowed Airbus to grab a 53 percent share in the global large passenger aircraft industry, even while its military unit was suffering a drop in sales.
The good news does not end there for Airbus Group. Right now, the company has a pending order of more than 5,500 commercial jets which is equivalent to about nine years of continuous production. This justifies the production increase of its Airbus A320 which represents 75 percent of the company’s total placed airplane order. The Airbus chief of aircraft programs, Tom Williams, said “We have a solid case to increase our monthly output to satisfy our customers’ requirement for more of our fuel-efficient aircraft.”
Airbus Group also mentioned that it will deliver to Qatar Airways its first A350 jet before the year ends. The company also predicted that the commercial passenger aircraft orders will still be above delivery levels and that the revenues generated from these transactions will remain stable over the next few years.
The Airbus Group will take advantage of the strong demand for its A320 jets as well as the strength of its 2013 sales surge. However, its military unit, which suffered a drop in sales in the face of shrinking European defense budgets, hopefully will not dampen the bright prospects the company has for the future.
By Roberto I. Belda