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Heavy Restructuring Charge Forces Q3 Loss For Airbus, Sets Quarterly Cash Goal

Heavy Restructuring Charge Forces Q3 Loss For Airbus, Sets Quarterly Cash Goal
Ever since the novel coronavirus pandemic begun in March and the global aviation industry was instantly severely hit, the first glimpse of how the European airplane maker Airbus will perform in the future was given by the company as it said on Thursday that it expected to reach cash breakeven in the fourth quarter. The company also said that it had managed the bleeding of cash during the third quarter.
A 1.2-billion-euro ($1.42 billion) restructuring charge was also taken by Airbus which resulted in a loss for the company despite it reporting better than expected underlying operating profit, said the European plane maker which is cutting down jobs to address the economic impact of the collapse of air travel demand because of the pandemic.
The company reported a 49 per cent drop year on year drop in its underlying or adjusted operating profit which came in at 820 million euros against revenues of 11.2 billion euros which as a drop of 27 per cent year on year.
Analysts were expecting quarterly adjusted operating profit of 708 million euros on revenues of 11.439 billion, according to a company-compiled consensus.
Despite still grappling with cash outflow in the third quarter, Airbus said it had managed to narrow a gap between production and deliveries to airlines which has come to a virtual halt since the start of the pandemic crisis.
This quarterly performance report was announced by Airbus even as new restrictions to try to contain a resurgence of the Cvoid-19 pandemic were announced in France and Germany where Airbus has its main factories.
A backlog of about 145 airplanes is currently lying with Airbus because of airlines, hit by the slump in air travel demand, has postponed or cancelled deliveries of new planes and not to absorb them into their fleets to reduce costs. By end-September, the overhang of undelivered jets had shrunk to 135 planes, the company said. 
By striking storage agreements with airlines unable to put jets directly into service, the company has been able to partly shore up deliveries. But new questions about the ability of the company to deliver planes were raised after a new lockdown in France, said some industry sources.
Its planning reflects talks with customers, Airbus has said.
The company might also need to reassess its restructuring plans dependent on the negotiations that Airbus is having currently holding with unions over job cuts of 15,000 employees. The company however said that the talks had "advanced well".
As air travel failed to rebound as quickly as hoped, the first compulsory redundancies at Airbus could be included in the cuts, Airbus Chief Executive Guillaume Faury warned staff last month.

Christopher J. Mitchell

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