Ladies and gentlemen, thank you for standing by. Welcome to the Airbus H1 2025 Earnings Release Conference call. I am Sharon, the operator for this conference. Please note that for the duration of the presentation, all participants will be in a listen only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. At this time I would like to turn the conference over to your hosts, Guillaume Faury, Thomas Toepfer and Hélène Le Gorgeu. Please go ahead.
Thank you, Sharon and good evening ladies and gentlemen. This is the Airbus H1 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 homepage 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 slide which applies to this call as well. Please read it carefully. Now over to you, Guillaume.
Thank you, Hélène, and hello ladies and gentlemen, and thank you for joining us today for our H1 2025 results call. I'm happy to be here in Amsterdam with Thomas and Hélène. Let me start by saying that it was a real pleasure to see many of you last month in Paris at the occasion of our business update. It was indeed the opportunity to update you on how we're progressing in what I think we can call an increasingly complex and fast-changing environment. We updated you in particular on the commercial aircraft ramp-up, and when it comes to European defence, Bruno and Mike, the CEOs of our two divisions, Airbus Defense and Space and Helicopters. Bruno and Mike highlighted how our diversified products and solutions portfolio can and will contribute to bridging the so-called capability gap since we met.
Since then, NATO confirmed a budget increase during the Hague summit, and it constitutes an important step forward in that direction. On global trade, we have taken note of the agreements between the United States and the European Union that will bring our industry back to the tariff-free environment that we have enjoyed since 1979 and which has contributed so much to the success of our industry. The stable and predictable trade environment is essential for a highly integrated global aerospace industry. Before moving to the H1 results, let me mention the again strong commercial momentum that we have observed in the first half of the year across all businesses and notably during the very active Paris Air Show we had, as well as the progress made in the transformation of our Defense and Space division.
When it comes to deliveries, in H1 we delivered 306 commercial aircraft, and consistent with what we told you at Q1, the delivery profile is back-end loaded. Actually, we produced in the first half of the year in line with our plan, but in the absence of engines it resulted in 60 gliders at the end of June. So, 60 aircraft fully produced but with engines missing. This is reflected in our H1 financial results with EBIT adjusted standing at EUR 2.2 billion and free cash flow before customer financing at - EUR 1.6 billion. On that basis, our 2025 guidance remains unchanged. I remind you that it is excluding the impact of tariffs, and I will come back to it later. Now let's look at our commercial environment, starting with commercial aircraft.
Our latest GMS or Global Market forecast confirms the industry's fundamentals remain solid with a continued growth trajectory over the next 20 years. We observe strong demand for our aircraft driven by both growth and fleet replacements as airlines turn to latest generation aircraft offering around 25% fuel burn efficiency gain. This momentum was on full display at the Paris Air Show where we announced more than 2,240 orders and commitments including from new customers. During H1 2025 we booked 494 gross orders so close to 500. On the A220 we booked 40 gross orders and we are pleased to count LOT Polish Airlines as a new customer with their first Airbus order as part of its fleet modernization. Looking at the A320 family, we booked 291 gross orders. This brings our backlog to 7,185 A320 family aircraft out of which around three, four, around 75% are for the A321.
Moving to the wide bodies. On the A330 we booked 71 gross orders confirming the high demand for these very versatile aircraft. On the A350 we booked 92 gross orders underpinning the continued commercial momentum of this product. This brings our wide body backlog above 1,000 aircraft. Net orders amounted to 402 aircraft, including 92 cancellations which were largely anticipated and already embedded in our backlog valuation, t he financial backlog valuation as of December 2024. O ur backlog in units increased to 8,754 aircraft a t the end of June 2025, again 8,754 aircraft. Looking at Helicopters, in the first half we booked 171 net orders compared to 233 in H1 2024 and these 171 are well spread across the portfolio. We have recently announced an order from Greece for eight firefighting H215s and we also signed a contract with Norwegian Air Ambulance for up to eight H145s.
On the defense side, this quarter was marked by some key milestones, notably the French Framework agreement for the VSR700. It is an uncrewed aerial system, so a drone. As we launched with our partner Leonardo studies to define the long term evolution of the NH90, the so-called Block 2. While on the NH90 the first two Spanish Navy helicopters were delivered. W e also recently celebrated the H160M, so the military variant of the H160, we celebrated the first flight, the maiden flight of this militarized version of the H160. I would like to add a few words on drones as we have a clear strategy to propose a complete product range to our customers. This was presented by Bruno and Mike, you remember at the business update. The Australian startup Droneforge signed an agreement to purchase 17 Flexrotor uncrewed aerial vehicles.
It's the single largest order for the Flexrotor to date and makes me very happy to see this product ramping up. The Flexrotor is indeed a pivotal component, fully integrated into our overarching strategy for advancing crewed uncrewed timing capabilities. These all are new words we have to learn as there's so much happening on that front and we continue to see positive momentum i n particular on the military markets. We remain focused on securing new business opportunities in both our home countries, but also on export markets at Helicopters. M oving to Defence and Space. The order intake, that's EUR 5.1 billion in the first half. Before detailing the main orders of the quarter, let me start by highlighting the agreement reached with OKAR on the A400M to advance seven deliveries for France and Spain and therefore further increase the visibility on the production for the program.
Through the agreements, both Airbus and OKAR will review the industrial status of the program on a yearly basis, giving the A400M production setup stability to pursue the evolution of the platform and open and secure hopefully export opportunities. While on the A400M we booked a contract to equip 23 German Air Force A400Ms with a protection system against infrared seeking missiles, further enhancing the capability of the aircraft. Additionally, NATO has ordered two additional MRTT aircraft, bringing the multinational MRTT fleet to 12. This enhances NATO capabilities for refueling, strategic airlift and medical evacuation. Turning to Eurofighter, we welcome the MOU signed between Turkey and the U.K. for the procurement of Eurofighters. This is a very positive development. As a key partner in the Eurofighter consortium, Airbus remains committed to supporting the program and its users, contributing to European defence cooperation. That's what we do.
Ensuring our allies are equipped with world leading capabilities. Moving now to Space Systems. As you know, we are currently in the middle of a turnaround plan, of a transformation plan aiming to restore competitiveness and I'm pleased with the progress made by the teams, really pleased by what they're doing. Our new Airbus Defence and Space organization has now gone live and will further support . This strategic change announced last October ensures better end-to-end responsibility and accountability across our three businesses and optimizes our cost structure, benefits we are already seeing today. On the other front, Airbus has been selected as prime contractor for the development and manufacturing of two new Earth observation so-called PAZ-2 radar satellites, further reinforcing Spain's sovereign space capability. We are also very pleased with the recent launch of the latest generation optical CO3D dual-use satellites, leveraging our OneWeb expertise of constellation production.
These satellites will deliver a cutting-edge 3D map of the Earth's landmass, providing high-resolution and high-revisit observation capabilities for both government and commercial use. In parallel, as you know, we are in discussions with Leonardo and Thales regarding a potential consolidation of our satellite activities. The due diligence phase is ongoing and we continue to believe, I continue to believe, this could be a major development enabling the creation of a unified and competitive European space player. Now Thomas will take you through our financials. Thomas?
Yes, thank you very much Guillaume. And hello ladies and gentlemen, thanks for joining our call. I'm now on page six of the presentation and as Guillaume said, I will quickly take you through our financial performance. As you can see on the slide, our H1 2025 revenues increased to EUR 29.6 billion, which is up 3% year- on- year, mainly reflecting the higher contribution from our divisions, the stronger services volumes across our businesses, but then again partially offset by fewer commercial aircraft deliveries. O n R& D a s you can see on the right hand side, our expenses stood at EUR 1.4 billion in H1, which is lower compared to H1 2024 and consistent with the lead initiative. On that note, let me remind you that our R& D expenses are expected to only marginally increase in 2025 with a back end loaded profile.
Now let's turn to EBITDA adjusted on page seven. Our H1 2025 EBIT adjusted increased to EUR 2.2 billion from EUR 1.4 billion in H1 2024. Of course you are aware that in H1 2024 we recorded EUR 989 million of charges in our space business, which of course did not repeat. Now the lower volume of commercial aircraft deliveries with a less favorable mix is reflected in our profitability and is partially offset by a more favorable hedge rate and lower R& D expenses. The number also reflects a stronger performance in Defence and Space. Now coming to the EBIT adjustments which were negative in the first half of 2025 and you have them on the right hand side of the page.
They included first of all a -EUR 391 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 EUR 378 million in Q2. It also contains a - EUR 105 million related to the Airbus Defence and Space restructuring which we recorded in Q1. Number three, it contains -EUR 57 million related to the stabilization of certain Spirit AeroSystems work packages mostly recorded in Q2 and finally a - EUR 34 million other costs including compliance and M&A of which -EUR 10 million in Q2. This all together takes our H1 2025 EBIT reported to positive EUR 1.6 billion.
As you can also see, the financial result was positive EUR 490 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. The tax rate on the core business continues to be around 27%. Now the effective tax rate is 31.5% in H1, including the tax effects on the revaluation of certain equity investments as well as a net deferred tax asset impairment. We still expect the French spare tax to result in an impact of around EUR 300 million in 2025, both P&L and cash wise. In H1 we recorded the part which is related to the year 2024 as well as the part which corresponds to the first half of 2025, and all of that resulted in a net income of EUR 1.5 billion with an earnings per share reported of EUR 1.93.
Our H1 2025 EPS adjusted stood at EUR 2.15 based on an average of EUR 789 million shares. Now with that, let's turn the page and look at our U.S. dollar exposure coverage. As you can see, in H1 2025, $9.1 billion of forwards matured with the associated EBIT impact and euro conversions realized at a blended rate of $1.18 versus $1.21 in H1 2024. In H1 2025 we also implemented $7.7 billion of new coverage at a blended rate of $1.14. As a result of that, our total U.S. dollar coverage portfolio in U.S. dollar stands at $81.4 billion with an average blended rate of $1.21 as compared to $82.8 billion at a blended rate of $1.21 at the end of 2024. Now let's look at page 9 with a more detailed look at the free cash flow.
Our free cash flow before customer financing was -EUR 1.6 billion in the first half of the year. This outflow was mainly driven by the change in working capital. It notably reflects the planned inventory buildup to support our ramp-up across our businesses, and of course the high level of gliders that Guillaume was mentioning. Finally, it also includes a phasing effect of cash receipts and payments. The A400M weighted negatively on our free cash flow in the first half of 2025 as the deliveries are back end loaded. We continue to expect it to be broadly neutral from a free cash flow perspective in the full year of 2025. As you can also see on the slide, our H1 2025 CapEx was EUR 1.3 billion.
As we told you at the occasion of the business update, we expect it to continue to increase in 2025 to support our industrial ramp-up. With that the free cash flow was -EUR 1.6 billion with nearly no impact from customer financing. On that note, the aircraft financing environment remains strong and competitive and we expect sufficient liquidity to finance our 2025 deliveries. We keep on closely monitoring the possible impact of tariffs. With all of that, as you can see on the slide, our net cash position stood at EUR 7 billion as at the end of June, also reflecting the dividend payment as well as the weakening dollar environment. Nevertheless, our liquidity remains very strong with around EUR 30 billion. With that I would like to hand it back to Guillaume.
Thank you, Thomas. Looking at the businesses, starting with commercial aircraft, in the first half we delivered 306 aircraft to 65 customers and by family on narrowbodies we delivered 41 A220 and 232 A320s, of which 143 A321s representing 62% of A321 deliveries for the A320 family. On A320, no change. We continue to ramp- up towards the rate of 75 A320s per month in 2027. After delivering the first XLR or XLR from the Hamburg file, we delivered in June of this year the first one from Toulouse. The integration of XLR capabilities into existing files is part of our global strategy of increasing the flexibility and capacity of the entire production system. It is all about resilience. We are also very pleased that Qantas Airways became the launch operator of the A321XLR in Asia PAC following the delivery of its first aircraft in June.
We delivered 33 widebodies in the first half, of which 12 A330s and 21 A350s. On the A330, we are currently stabilizing at a monthly production rate of four. I n order to meet customer demand, w e now target to reach rate five in 2029, and that is a change compared to previous calls. As mentioned earlier, specific supply chain challenges, notably with Spirit AeroSystems, are putting pressure on the ramp-up of both the A350 and the A220. On the A350 on the target rate, there is no change. We continue to target rate 12 in 2028, and on the A220 here as well, no change. We continue towards the monthly production rate of 14 in 2026 next year. Overall, with the exception of engines on the A320 family, we produced in line with the plan.
The challenges for the year have not changed, notably with the persisting tensions on engines for A320 resulting in 60 gliders at the end of the first half of this year. By end of June we were at 60 gliders. We expected to peak over the summer, and before it normalizes, we continue to work closely with our engine partners to recover in the second half of the year and to deliver on our 2025 commitments. I am counting on them. Engine partners, if you listen to me, I am really counting on you. Now let's look at the financials f or commercial aircraft business. R evenues decreased 2% year- on- year, mainly reflecting the lower number of deliveries.
Against the backdrop of those gliders, EBIT adjusted was lower at EUR 1.7 billion in the first half, with a decrease of deliveries and unfavorable mix as well as the excess workforce being offset by a favorable hedge rate and lower R&D expenses. The company Airbus is making good progress on the acquisition and stabilization of the Spirit AeroSystems work packages. While the expected closing date is now shifting into Q4 due to the ongoing regulatory approvals, all parties are putting all necessary efforts into the closing process and on the route to operational readiness for what I would call day one. Looking at Helicopters, in H1 we delivered 138, it's 14 more than in the first half of 2024. Revenues increased around 16% to EUR 3.7 billion, reflecting a solid performance from both programs and services.
EBIT adjusted increased to EUR 249 million, reflecting growth in services as well as higher deliveries, but with a less favorable mix. Let's complete our review with Airbus Defence and Space. Revenues increased 17% year- on- year to EUR 5.8 billion, driven by higher volumes across all business lines. EBITDA adjusted stood at EUR 265 million, supported by higher volumes and improved profitability across all businesses, including our two main joint ventures. On the A400M program, we are engaged in positive and forward-looking discussions with the launch nations and OKAR. This was notably marked by the agreements reached in June with OKAR 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. Moving forward to our guidance, which remains unchanged as the basis for the guidance of this year, the company assumes no additional disruptions to global trade or world economy, air traffic, the supply chain, the company's internal operations and its ability to deliver products and services. The guidance continues to exclude the impact of tariffs on the company's business and we are obviously cautiously monitoring the implementation of the recently concluded agreements between the United States and the European Union on tariffs.
The guidance includes the impact of the integration of certain Spirit AeroSystems work packages based on preliminary estimates and now assumes, as I told you earlier, a closing in the fourth quarter of this year and on that basis the company targets to achieve in 2025 first, around 820 commercial aircraft deliveries, second, an EBIT adjusted of around EUR 7 billion and third, a free cash flow before customer financing of around EUR 4.5 billion. The anticipated impact of the integration of certain Spirit AeroSystems work packages on the company's guidance remains in line with previous estimates. I will conclude with our key priorities as detailed during the business update. We are obviously focusing on our ramp-up across all businesses while relying, I like to repeat it, on the core pillars of the company that underpin everything we do, s afety, quality, integrity, compliance and security.
These are our five core pillars. When it comes to the commercial aircraft ramp-up, we continue to work closely with our suppliers while actively preparing the integration of the Spirit AeroSystems work packages. On Defence and Space, we continue executing our turnaround plan to restore competitiveness in the division and we pursue the workforce adaptation as per the agreement reached with our social partners while looking at different scenarios to create scale in the European space business and in particular the one in consolidating with Thales and Leonardo. Finally, European Defence is at an inflection point. We are engaged with Airbus Defence and Space and Airbus Helicopters to contribute to bridging the capability gap that Europe has to bridge. I turn back to you, Hélène. I guess we are in the Q& A.
Absolutely, Guillaume, thank you very much. 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. This includes sub questions. Also, as usual, please remember to speak clearly and slowly in order to help all participants, particularly ourselves, to understand your questions. Sharon, please go ahead and explain the procedure for the participants.
Thank you. We will now begin the question and answer session. If you want to ask a question, please press star one one on your telephone keypad. We will now go to our first question and our first question comes from the line of Chloé Lemarié from Jefferies. Please go ahead.
Yes, good evening, Guillaume, Thomas and Hélène. I have two. My first one would be on Defence and Space.
Your performance year on year in Q2 is pretty much the full impact of the EUR 1 billion charge that you had last year. The messaging has consistently been that only two-thirds of those charges was nonrecurring. How should we think of the impact of the non repeat of that charge from last year versus the underlying margin improvement in the division? The second one is on Spirit with the closing kind of pushed out to Q4. Does that affect in any way your plan for Section 15 production improvements and does that still support the stable delivery target for the A350? Thank you.
Thank you. Chloé . Thomas
Yes, Chloé . Yes, let me try to answer your question. First of all, yes, you're right. We said it would be correct to reverse two-thirds of the charges that we incurred in 2024, t wo-thirds of the 989. If you do that, you will find that Airbus Defense and Space actually had a very pleasing performance if you compare it with the underlying operational performance in 2024. Our interpretation of that is we are on a good track and we do see good momentum in the business with the transformation program being in full swing and also specifically with the restructuring in space going as expected. We are very pleased with it. I think the short message is, yes, we do believe that the underlying performance of Airbus Defense and Space has been strong in H1. On your second question, Spirit.
It'S.
True that the closing is shifting, but the underlying impact both for the 2025 financials should be negligible. Secondly, we believe that we are sufficiently working well with Spirit to also make sure that the Section 15, which of course is critical for the ramp-up of the A350 next year and the year after, is on track. In our view, no change to our expectations for next year.
Very clear. Thank you.
Thank you. Your next question comes from the line of Benjamin Heelan from Bank of America. Please go ahead.
Yes. Evening, guys. Thank you for the question. Guillaume, I think in one of the earlier remarks you made some comments maybe to the media about delays with Pratt & Whitney. I was just wondering if you could give us some color on this. Is this a new issue since the air show? I do not remember it being talked about at your investor day. With regards to CFM, obviously the deliveries have continued to be relatively slow that we see in terms of A320. Could you just give us some color? How are you seeing the situation play out at CFM and your level of confidence that you are on an improving trajectory around the CFM LEAP 1A deliveries? Thank you.
Thank you, Ben. So indeed, the Pratt & Whitney issue is, if I call it an issue, I mean, the gap is a new one.
Again, the vast majority of missing engines are CFM engines on the 60 gliders. It is mainly a CFM problem. There are Pratt engines missing. It is mainly coming from the strike. They had perturbances and disturbances on the flow. We have been impacted and we expect recovery by the end of this year. When it comes to CFM, which again is the lion's share of the missing engines, the situation is improving. You know that we had two issues in a row. They had, I mean, CFM had two issues in a row. One at GE at the beginning of the year that delayed the deliveries of their core to Safran. Then Safran having a long seven weeks or eight weeks strike that delayed significantly a large number of deliveries. This is behind them. They are ramping up.
Ideally we would like them to ramp up faster so we carry some risk. They have a plan that is consistent with what we need. It will be very backloaded. We do not like to be in that situation of backloading because it is increasing the risk of not getting there. As of today , mentioned Pratt & Whitney already, but the plan from CFM is consistent with what we need to be at zero glider by the end of this year and deliver according to our guidance. I do not want to hide that. It will not be a walk in the park and it is more backloaded than what we like.
Very clear. Thank you.
Thank you. Your next question comes from the line of Ross Law from Morgan Stanley. Please go ahead.
Hi everyone. Thanks very much for taking my questions. Two please. The first just on gliders. You mentioned that you had 60 at the end of H1. What is that number today and what do you expect that to go to before it starts to reduce? The second question is just on the risk of a potential strike at your wings factories in the U.K. Can you just maybe give us an update on the status there and your ongoing discussions and how should we think about the potential impact going forward? Thanks.
My answers will be a bit disappointing. I do not know what is the number as we speak for the gliders and it is changing by day as we are delivering, receiving engines, and I do not think that is worth commenting on within a month or even on a monthly basis.
Directionally, it is plateauing now and is supposed to reduce after the summer and moving to zero by end of this year. The strike in the U.K., I was discussing it with my Head of HR earlier today. I do not have a clear view of the implications. The team is on it and we want to find a resolution, obviously, and we think that is possible.
Okay, thanks very much.
Thank you. Our next question comes from the line of Christophe Menard from Deutsche Bank. Please go ahead.
Yes, good afternoon. Thank you for taking my question. I had one on the deliveries and the phasing of deliveries in Q3 and Q4. How many planes can you realistically deliver per month or per quarter? I mean, do you have also some capacity bottleneck in terms of administration or first flight? The second question was more on your strategy in UAVs. There was an agreement or there was an announcement with Kratos. What is your strategy? I mean we've heard that in Paris Air Show , that you were also partnering with, I think, quantum. Do you adopt a strategy of partnership in that field or do you intend to develop your own solutions? Thank you very much.
Thanks for the questions. On the deliveries, there is no bottleneck on deliveries.
Sometimes we have, if I take the extreme case of a missing document or a financial topic, we have aircraft ready already, technically accepted, t hen you wait for something to be resolved and you have a large number of deliveries. The flow of production is limited. The flow of deliveries can go up and down. As far as I remember, since I was appointed as CEO, I think we peaked at something like 137 or 138 deliveries in one month of December, maybe by the way, in 2018 or 2019. You see we can go significantly beyond 100. These are deliveries. It does not mean that we are efforting, that we are producing at that pace, obviously. It will be very backloaded this year. We expect a very strong Q4 and therefore a Q3 that will put us in this backloading situation for Q4.
When it comes to Kratos and the drones, we have a strategy of speed, which means we are doing and we are buying, we are cooperating and we are investing. The agreements that we have signed with Kratos to investigate the possibility of using their platform is part of this opportunity or this strategy to use opportunities to be much faster to the market, putting our mission packages on existing platforms when we do not have the platform, waiting for the platform to be developed, or signing a long-term agreement for availability of platforms coming from others. As you have seen if you were present at the Paris Air Show, we have now a very comprehensive lineup of UAVs, of drones, with commonalities on ground systems and communication systems. We are developing a strategy to go to market with a broad and competitive lineup of UAVs.
Thank you very much.
Thank you. Your next question comes from the line of Ian Douglas-Pennant from UBS. Please go ahead.
Thanks very much for taking my question.
I'm afraid I'm going to ask more about gliders.
Dominating the question, dominating the call. First one's really about inventory levels more than gliders itself. Great to hear you plan to reduce the glider number down to zero at.
The end of the year.
Will inventory levels remain elevated despite this? Given that you said in Paris that your strategy with respect to the supply chain has seen some nuance change, I guess in the last year or so, providing more financial health to them. Does that mean that you need to keep more inventory on your balance sheets, you know, stable state longer term?
Secondly, 60 gliders today is a large number. I mean, in the alternate reality that.
You had taken delivery of the engine.
On time and also that you delivered.
These to the airline, we'd all be.
Asking you whether there's upside risk to your guidance. Is that a rational way to think about it?
Is there just always some semi finished or finished inventory just sitting around.
That can't be delivered for one way or another?
Therefore we shouldn't be asking you whether there's in fact upside risk to your guidance. Thank you.
Let me try to answer those questions. First of all, on the inventory, obviously our inventory for the half year is inflated by the number of gliders, as you correctly said. That is also the key explanation why the cash flow is -EUR 1.6 billion.But i t is also clear that should normalize over the second half of the year because we want to bring the gliders down to zero. Nevertheless, on the specific question of inventory, as you know, we are still in a ramp-up phase. We are still in a situation where the supply chain is under stress, it is improving, but it is still of course a limiting factor. Therefore, we do not foresee that we will reduce inventories before we have reached a stable state of production.
Therefore, even if you strip out the effect of gliders, you should expect that inventories will continue to slightly increase in 2025 and then potentially beyond, and they will only reduce once we are in a stable state of production. Secondly, on the upside risk,
Thomas.
Just quickly, just to round off that question, when you say inventory day, sorry.
Inventory would increase, do you mean inventory.
Days or do you mean euro terms?
In euro terms.
Thank you.
On the upside risk, I think that is not what we wanted to bring across. In our view we will be able to reduce the gliders to zero. With that we stick to our guidance of around 820. I would say no further interpretation around that.
Thank you very much.
Thank you. Your next question comes from the line of Olivier Brochet from Rothschild & Co . Please go ahead.
Yes, good evening, Hélène, Guillaume and Thomas. Two questions for me. Could you update us on the A320 assembly line extensions in Mobile, Tianjin and in Toulouse, please? The second one on Spirit. What approvals are still outstanding and what are the key ones outstanding at the moment, please?
I will give the second one to Thomas and I take the first one. All on track. What does that mean, on track? By next year we will have those three final assembly lines, additional final assembly lines in operation. Actually, Tianjin will be inaugurated later this year. That is what we expect. In Toulouse, I say three because one is already producing at rate, as you know, and the second one is in its completion with first deliveries planned for next year. It is all on track. That supports very well the rate 75 that we are targeting for 2027.
Spirit.
Spirit. It is regulatory approvals, as I said that. Therefore I will not make too many comments on it that are related mostly to the Boeing Spirit transaction. You know that our transaction is contingent on theirs. That has to go through antitrust. For that the final scope has to be known. You know that there was still a little bit of back and forth on some sites. I think that has to be resolved. Once that is clear, I think the FTC approval in the United States should be relatively straightforward. Therefore we are confident that we will close in Q4 and find quickly a solution to those regulatory things that, yes, have to be done relatively quickly. Again, it is not so much on our side, but our transaction hinges or is contingent on the Boeing Spirit transaction.
Okay, thank you. Can I ask on Mobile, when do you think it's going to be online?
As I said, it will be producing planes and delivering planes next year.
Next year, 2026 . Thank you.
Thank you. Your next question comes from the line of Doug Harned from Bernstein. Please go ahead.
Good evening. Thank you. Two questions. The first one is let's assume that the engine delivery problems are resolved by the end of this year. When you look at that 75 a month rate in 2027, what are the next things that you look at in the supply chain in your internal operations? Basically, what are the watch items you would have following the engine issues? The second, one of the great things Airbus achieved almost 10 years ago was breaking through the national silos in the organization and the ownership, making it into a strong, unified company, but r ight now you're working through JV on FCAS, potentially one on space.
What do you need to be in.
Place to make these JVs successful? Given that we've seen many cross border JVs run into a lot of issues.
What are the three priorities for the RAID 75 to succeed? Engines, engines and engines. We'll keep working with engine makers in 2026. We need their support. They have to deliver on the ramp-up both for us and for the aftermarket as the number of aircraft flying, the NEOs flying, is increasing quite fast. That will remain the priority and the pacing supply that will support the RAID 75. When it comes to the JVs, we are in a different situation when it comes to FCAS and when it comes to space. In space, we are actually working with Thales and Leonardo on a project that consists of putting together our space activities in a joint venture, a bit like MBDA.
We have experience in running those JVs, successful experiences, international joint ventures where we are one of the minority partners. We are defining the guidance and we have agreed on most of the guidance, the governance principles with our partners as we, by the way, partner with them on other projects. I'm confident that what we have in mind will work. It will be a normal company with shareholders being Thales, Leonardo and Airbus. When it comes to FCAS, each and every pillar of the future combat air system has a different setup and situation. When it comes to the pillars where we are involved, the combat cloud, the remote carriers and the fighter jets, there's no JV. We are not involved in joint ventures. These are early coperations mostly on technologies. At a later stage we might want to change the setup. Not even sure.
For the moment these are so-called program cooperations that don't imply the creation of JVs.
Thank you.
Thank you. Your next question comes from the line of David Perry from JPMorgan. Please go ahead.
Yes, good evening gentlemen. Thanks for taking a question. It's just one question I'd like to ask. It is a bit philosophical and it is about your relationship with the aero engine companies. A lot of them have reported in the last few days.
Two big ones will report tomorrow.
But the ones that have reported have had quite strong results and part of that is because they're continuing to deliver quite high numbers of spare engines. I'm just curious, what leverage do you have over them on this? What agreements are in place not just for this year but for next year that they're not only ramping production but allocating engines to you ahead of selling them as spares. Thank you.
Thank you, David. I'm happy that our engine partners are in good shape because we need them in good shape. Maybe the first statement. T he second one is the majority of their support and services business goes to the in-service fleet, meaning the COS, the aircraft powered by the CFM56 and the V25. When it comes to the LEAP or the GTF, they have to serve the growth of Airbus.
I mean the ramp-up and also the ramp-up of aircraft in service. A s we deliver new aircraft to airlines, w e have the size of the in-service fleet of NEOs that is growing quite quickly, probably more quickly than we have ever done in the past. It comes against the backdrop of technical and industrial issues that they've had slowing down on the way to ramping up production and against the backdrop also of shorter times on wings compared to what was expected, requiring more spare parts than was expected. They are actually benefiting and suffering from the service business of those engines which are not at the level of performance that was expected.
When it comes to us, what is important is that we get the share of engines that they have committed to us and that is supporting the ramp-up. O n top of the midterm long-term volumes we've had in 2025, in the end of 2024, beginning of 2025, operational issues hindering the engine makers on their ability to deliver short term to us and to airlines. We should not draw too many conclusions of the situation we're in with gliders that are really related to short-term issues other than production capabilities and investments supporting those ramp-ups.
I'm not suggesting, I'm not looking at their ability to further support the ramp-up when we are in 2026 and 2027, because indeed, the number of engines that they will have to deliver to Airbus will continue to grow and at the same time they have to continue to support their airline customers. That's why we're communicating very closely with them on the size of investments on their equipment, their ability to serve both line fit and support and services of engines in the market. They are actually struggling to do the two at the same time. We know we'll continue to work hard with them and monitor very closely the priority they give to linefeed to Airbus and their ability to serve both aircraft OEMs like us and the airlines because at the end it should not be either or, it has to be both.
It is not the case today, unfortunately.
Okay, can I just sneak one more in as well, please? Just before we all go on holiday, a lot of your staff take a holiday in August and it is usually a very low month for deliveries. Given how much you have got to do this year, is there any efforts or moves to try and do more overtime or more people to work through August?
Of course, we are dealing with both, I would say, national culture, regulatory obligations and commitment to deliver. We are not limited today by availability of staff, David, we are limited by supply. We have produced by far more planes than engines. We have to deliver those planes. Actually the production rate is working. We are on track on the production. It is not that we need overtime or specific management of the situation now.
We will need a lot of availability of people in the back end of the year to continue to produce and deliver what we have to deliver normally and on top, deliver the aircraft that will get their engines late and that we need to go through the end of the pipeline, the podding, the installation of the engine, then the test, the flight test and the delivery. We are not limited by availability of people or by capability of the production system at Airbus this year. We are limited by availability of engines.
Very clear.
Thank you.
Thank you. Your next question comes from the line of Milène Kerner from Barclays. Please go ahead.
Yes, good evening, hope you're well. Thank you for taking my question. My first question is a follow- up to your comment, Thomas, on the Defence and Space. Could you provide some additional color on whether the higher volume absorbed across all the business lines in the first half is sustainable through the remainder of the year? How should we think about the division profitability trajectory given that it's typically weighted towards Q4? My second question relates to your working capital requirement. Following the strong performance you had in H1, how should we think about the phasing of your customer advances over the remaining of the year? Thank you.
Let me start with the first one on Airbus Defense and Space. I mean, of course you cannot project it linearly from H1 to the second half. What I wanted to suggest is that indeed they have a strong performance in all the business units that they have. I think we're on the right track for them to achieve their target. What are the targets? We said they should achieve a mid to high single digit margin and I think they were quite concrete when we were in Paris to say that we should achieve more than EUR 1 billion of EBIT by the year 2028. That is the guidance and trajectory that we foresee for the division. I think we are clearly on track to achieve that. H1 I would say was a good start onto that trajectory and onto that transition for the division. F or the working capital.
We still believe that the company will generate positive working capital or will have a positive impact from working capital as we grow, which is contrary to many other business because of these PDP payments that we receive. You've seen that the order intake was strong and therefore, if you take it together, I would say despite the fact that we're expecting inventories to increase by the end of the year, overall working capital effect should be rather positive also in 2025.
Thank you. We will now take our final question for today. Our final question comes from the line of Ken Herbert from RBC. Please go ahead.
Yeah, thank you very much.
Guillaume and Thomas, two questions, please. First, you know, if we do give you credit for the glider deliveries in the first half, it does imply a delivery rate based on our math of sort of the low 50s a month on the A320. Just curious how you reconcile this with stated production rates that you call out.
As significantly higher on that program.
I did just want to follow up on the Spirit AeroSystems investment. You have pushed the closing to the right. You continue to see, it sounds like, a $500 million free cash flow impact this year. It also looks like you are making additional investments now in Spirit . It sounds like, are you able to accelerate your investments today or should we expect perhaps a smaller number than what you called out as the actual $500 million free cash flow impact this year just based on a delay in the closing?
Thank you.
Let me take the one on Spirit again, just to be clear, it's not us pushing out the closing. It is the regulatory hurdles, which are not even so much on our side, that push it into Q4. We obviously would like to close as quickly as possible. On our side, all the operational preparations that we're taking in terms of taking over management control, in terms of all the transitional service agreements, I think we're making very good progress. What I said is that the financial impact, though, of the delayed closing for 2025 should be limited in the sense that, as we said, it should have a negative impact on the free cash flow of roughly $500,000,000, which will be compensated, though, by the consideration that we receive.
Therefore, we said the overall impact on the net cash position of the company should be roughly neutral in 2025. That is still what we're expecting. The impact of the delayed closing on our EBIT is minor, if at all. It should be rather slightly positive. Finally, also to reiterate what I said, because we are already very closely working with Spirit in terms of joint improvement programs, we also think that the impact on the Section 50 and also on the wing production is not negative. Therefore, we stick to our view that the ramp-up that we foresee for the A220 and for the A350 next year and the year after should not be negatively impacted.
When it comes to the question on production rates, not being fully sure I have understood, maybe the short answer is that we've produced in H1 on the single I program exactly in line with the production planning we had end of last year. It has not changed and we have not adjusted anything to the supply chain because we have produced according to the plan and we intend to continue to do it for the second half. Getting the engines in the meantime will bring us to delivering on the guidance. That's basically what we see for the first half.
Thank you very much, Guillaume and Thomas. This now closes our conference call for today. If you have any further questions, please send an email to Olivier, Victoria or myself and we will get back to you as soon as possible. Thank you and we are looking forward to speaking or to seeing you again very soon.
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.