Airbus Defence and Space has frozen capital spending and urged its 34,000 staff to take "drastic measures" to save cash as it faces the prospect of missing 2017 cash targets by hundreds of millions of euros, according to a memo seen by Reuters.
"With the risk of missing our full-year cash targets by hundreds of millions, we need to do something extraordinary together," divisional finance chief Julian Whitehead told an internal forum, according to a summary distributed to staff.
Airbus has said it expects 2017 group-wide free cashflow to be similar to 2016, before mergers and acquisitions and customer financing. It does not publish cash targets for divisions. Due to the bumpy patterns of cashflows in aerospace, it often faces a dash to meet targets in the fourth quarter.
Airbus Defence & Space, which has warned of continued cash pressures from the troubled A400M military aircraft program, plans to set up a "Cash Crisis" team to improve the situation by end-year, with all its programs expected to participate.
Until those plans become clear, all capital expenditure is being frozen with immediate effect across all the division's activities and across all its subsidiaries, the memo said.
Airbus shares stumbled from record highs and fell as much as 1.6 percent. They were down 1.3 percent by 0945 GMT, making the stock the worst performer on France's benchmark CAC-40 equity index.
Airbus' stock price remains up around 30 percent since the start of 2017 on buoyant demand for passenger jets, although rival Boeing's shares are up 64 percent.
Asked to comment on the memo, an Airbus spokesman said: "We are currently in the traditional year-end race in the commercial and government business."
He added: "It is key to remind our troops at this important time of a business year on the importance of meeting our cash objectives. That's the current ongoing effort at Airbus and it is rather standard procedure to achieve our quarterly and yearly divisional targets at Airbus Defence and Space without deviation."
ALSO FACING PRESSURE FROM A400M DELAYS
Another person close to the group said the language used in the memo was typical of the purely internal battle cry used by managers at this time of year to focus on reaching targets.
On Wednesday, however, Airbus reminded European governments that the delayed A400M would continue to "weigh significantly" on cashflow in 2017 and 2018, especially.
It has been squeezed as Germany withholds some 15 percent in cash owed for the transport plane because of what it regards as systems failing to do what Airbus had promised. The company earlier this year entered talks with buyer nations to try to ease the penalties and get a new agreement on schedules.
At a group level, cash and profits have further been hampered by delays in delivering A320neo jetliners because of delays in receiving engines from U.S. supplier Pratt & Whitney.
Late deliveries delay payments from airlines and prevent workers learning through experience as quickly as planned, which drives up cost and eats up cash for inventory on assembly lines.
Airbus as a whole had 7.9 billion euros of net cash at end-June, down from 11.1 billion at the end of 2016.
While freezing spending, Airbus Defence & Space is also in the midst of a strategy overhaul that has involved selling its electronics activity and now puts faith in the growth of digital services to help it grow faster than the rest of the industry.
Reuters
Thu Oct 05 2017
An Airbus A400M aircraft flies during a display on the first day of the 52nd Paris Air Show at Le Bourget airport near Paris, France on June 19, 2017. - REUTERS
Saya masih setia dengan UMNO, kritikan hanya untuk bangkitkan semangat parti - Tengku Zafrul
Ahli Majlis Kerja Tertinggi (MKT) UMNO, Tengku Datuk Seri Zafrul Abdul Aziz menegaskan beliau masih lagi setia bersama parti itu walaupun pernah mengkritik kepemimpinan UMNO Selangor sebelum ini.
AWANI Tonight: How will Iran-Israel situation evolve after tit-for-tat attacks?
Iranian officials and media are playing down the Israeli attack on Isfahan, saying it was limited to three small drones. Analyst Jonathan Lord discusses the Iranian response as concerns grow over a possible war with Israel.
AWANI Tonight: India: voters head to polls in world's biggest election
India’s 2024 general election kicks of today with over 969 million eligible voters. Rahul Mishra from Jawaharlal Nehru University shares what to expect as voters head to polls in the world’s biggest election. India, election, Narendra Modi, Rahul Mishra
Ringgit terus meningkat berbanding dolar AS semasa ditutup
Pada 6 petang, ringgit mengukuh kepada 4.7810/7855 berbanding dolar AS daripada 4.7840/7870 semasa ditutup pada Khamis.
Tidak perlu terlalu terkesan dengan lawak perkauman - Belia
Wakil Malaysia Southeast Asia Youth Leadership Program, Amira Aliya Abd Aziz berkata tidak perlu ambil hati dengan jenaka bersifat perkauman selagi mana ia tidak melibatkan isu-isu yang sensitif. Jelasnya, masyarakat berhak untuk membuat pendirian tersendiri terhadap jenaka-jenaka yang dibuat tetapi tidak perlu sehingga dipanaskan secara keterlaluan. #DialogAnakMuda
Raikan perbezaan selagi tidak menggunakan kaum untuk meraih perhatian - Mahasiswa
Setiausaha Agung Demokrat Universiti Malaya, Krishan Renganathan berkata perbezaan pandangan dalam sebuah negara demokrasi adalah suatu yang lumrah. Jelasnya, batas dalam perbezaan itu adalah tidak menggunakan sensitiviti kaum untuk meraih perhatian dan memancing isu. #DialogAnakMuda
Pupuk sikap mendengar tanpa bersifat emosional, reaksi terburu-buru - Belia
Graduan undang-undang Taylor’s University Malaysia, Faith Ling berkata masyarakat perlu amalkan sikap mendengar dari semua pihak secara terbuka tanpa bersikap emosional dan memberi reaksi secara terburu-buru demi menyantuni perbezaan pendapat yang wujud. Jelasnya, isu seperti konflik Israel-Palestin adalah terlalu kompleks dan perlu diamati dengan berhati-hati demi menjaga keharmonian. #DialogAnakMuda
Minda individu bawah 25 tahun lebih mudah dilentur hormat sensitiviti kaum - Pemimpin GSL
Pengurus Program Pemimpin GSL, Bernard Ow berkata minda generasi bawah 25 tahun lebih mudah untuk dilentur dan dilahirkan sebagai agen perpaduan dalam masyarakat. Jelasnya, perkara utama yang perlu ditekankan adalah aspek menghormati perbezaan pandangan yang rencam dalam konteks Malaysia. #DialogAnakMuda
Perpaduan bukan bermakna tiada pergaduhan - Undi18
Alumni Program Undi18, Khairun Sofea berkata mencapai status masyarakat bersatu-padu bukan bermakna mencipta komuniti yang tidak ada perbalahan. Sebaliknya, ketegangan akan terus berlaku tetapi masyarakat yang hidup dalam perpaduan akan cuba saling hormat dan faham, seterusnya mengekalkan keharmonian. #DialogAnakMuda
METMalaysia terus pantau perkembangan letusan Gunung Ruang
Pihak METMalaysia juga melaksanakan simulasi untuk mengenal pasti potensi berlaku tsunami akibat letusan itu dan ancamannya kepada Malaysia.