Airbus axes €1.4bn dividend as it hoards cash for coronavirus crisis

Edmund HeaphyFinance and news reporter
Yahoo Finance UK
An Airbus A380 passes the moon as it takes off from Heathrow Airport. (Steve Parsons/PA)
An Airbus A380 passes the moon as it takes off from Heathrow Airport. (Steve Parsons/PA)

Airbus (AIR.PA) on Monday said that it would suspend its €1.4bn (£1.3bn) shareholder dividend, withdraw its 2020 financial guidance, and secure a new €15bn (£13.4bn) credit facility to bolster its balance sheet in response to the coronavirus pandemic.

The European planemaker, which last week temporarily suspended production at its facilities in France and Spain, said that the new measures will mean that it has “significant liquidity” available to cope with the financial impacts of coronavirus.

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In 2019, Airbus has said it would issue a dividend of €1.80 per share, amounting to an overall cash value of around €1.4bn.

The new €15bn credit facility, which was converted from an existing €5bn credit line, now means that Airbus has around €30bn in available liquidity to withstand the crisis.

Read more: European stocks sink as US fails to agree on coronavirus stimulus package

The company also said on Monday that it would suspend a voluntary top-up in employee pension funding.

Airbus said on Monday that it continued to assess the “ongoing situation” and the impact of the pandemic on its business, customers, suppliers and the aviation industry as a whole.

Last week, Airbus said that it would close its facilities in France and Spain for four days so that the company could implement new hygiene standards.

The planemaker on Monday also said that it was forced to withdraw its full-year guidance, citing the “volatility” of the situation.

Airbus had expected to deliver around 880 commercial aircraft this year, and guidance issued last month suggested it would post operating profits of €7.5bn, up from €6.9bn in 2019.

“Our first priority is protecting people while supporting efforts globally to curb the spread of the coronavirus. We are also safeguarding our business to protect the future of Airbus and to ensure we can return to efficient operations once the situation recovers,” said Airbus chief executive Guillaume Faury on Monday.

Read more: Merkel goes into quarantine as Germany imposes extreme restrictions

“We have withdrawn our 2020 guidance due to the volatility of the situation. At the same time, we are committed to securing the liquidity of the company at all times through a prudent balance sheet policy,” he said.

“I am convinced that Airbus and the broader aerospace sector will overcome this critical period.”

Travel and aviation industry stocks have been among the worst hit in Europe, as the sector contends with the spiralling coronavirus pandemic.

The Centre for Aviation, an industry analysis and research group, warned that many airlines could be bankrupt within months, as demand for air travel sinks.

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