Airbus SE earnings surged in the second quarter, helped by a ramp up in deliveries of a narrow-body model that rivals Boeing Co.’s grounded 737 Max.

Adjusted profit before interest and tax increased 72% to 1.98 billion euros ($2.2 billion) as Airbus handed over close to 300 of the A320 planes, marking an acceleration of build rates after a series of production snags. Four-fifths of the jets were the revamped Neo version, according to a statement Wednesday.

Airbus reiterated guidance for up to 890 aircraft deliveries this year and about 4 billion euros of free cash flow, while cautioning that both goals are challenging. Analysts have been concerned by complaints from airlines including IAG SA and JetBlue Airways Corp. that some A320 shipments, especially a new longer-range variant, remain behind schedule.

Net orders for the first half totaled 88 planes. Even with the finalization of further deals announced at the Paris Air Show, the year is looking lackluster for new business, raising worries about a possible downturn in the aerospace cycle. While backlogs at both Airbus and Boeing stand at record highs, the manufacturers like to book at least as many new sales as planes shipped.

Airbus took a charge of 208 million euros against the suspension of defense export licenses to Saudi Arabia by the German government. Chief Executive Officer Guillaume Faury has said the company could source parts from elsewhere or shift production as a workaround for the problem.

The planemaker also warned that any U.S. decision to impose tariffs on its products in a dispute over government subsidies would weigh “significantly” on deliveries of aircraft and helicopters to American customers. The European Union may decide to retaliate, but only at a later stage, Airbus said, adding that it continues to support a negotiated solution.

Airbus shares have surged 52% this year, giving the Toulouse, France-based planemaker a market value of 99 billion euros. Boeing has gained only 7.7% as it grapples with the crisis surrounding the Max following two fatal crashes involving the jet in less than five months.

Credit : https://www.bloomberg.com/news/articles/2019-07-31/airbus-profit-jumps-as-it-lifts-output-of-rival-to-boeing-s-max?srnd=premium-asia