WEBVTT - Airbus CFO Dr Thomas Toepfer Talks Supply Chain

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>And pleased to say that joining us now is the

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<v Speaker 2>Airbus CFO Thomas Hopeford. Tomas, thank you so much for

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<v Speaker 2>joining us now. As Nina said, we'll get to some

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<v Speaker 2>of those risks coming up, but we have to start

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<v Speaker 2>with the earnings here and now some concern there on

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<v Speaker 2>your deliveries. How far away are we from supply chain

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<v Speaker 2>snags being resolved in getting anywhere near back to the

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<v Speaker 2>peak of twenty nineteen.

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<v Speaker 3>Well, I would say we're getting close to it. So

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<v Speaker 3>first of all, I think the good news is we

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<v Speaker 3>had a delivery target of seven hundred and seventy planes

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<v Speaker 3>for twenty twenty four.

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<v Speaker 4>We got very very close to it with.

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<v Speaker 3>Seven hundred and sixty six, So that shows we were

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<v Speaker 3>able to deliver on what we had promised for twenty

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<v Speaker 3>twenty four. And you said it, we have a delivery

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<v Speaker 3>target of around eight hundred twenty planes for twenty five,

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<v Speaker 3>so that is an uplift of over twenty planes. But

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<v Speaker 3>more importantly, it's fully in line with the trajectory that

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<v Speaker 3>we've given ourselves. Also for the year to come, we

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<v Speaker 3>want to go to a monthly production rate of seventy

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<v Speaker 3>five aircraft for our best selling A three twenty model,

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<v Speaker 3>and we're in on the trajectory to achieve that.

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<v Speaker 4>Now to your.

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<v Speaker 3>Question, supply chain definitely is still the limiting factor, and

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<v Speaker 3>that is true for a number of items. Maybe engines

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<v Speaker 3>is the most prominent one, but it really goes far

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<v Speaker 3>beyond that. It's also cabin, interior, aerostructures, et cetera, et cetera.

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<v Speaker 3>And therefore, yes, we're very, very focused to be super

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<v Speaker 3>close to our Tier one but also Tier two and

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<v Speaker 3>Tier three suppliers to support them and detect if there's

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<v Speaker 3>any issues that we can resolve with them together. And therefore, yes,

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<v Speaker 3>that is clearly what we're absolutely focused on to make

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<v Speaker 3>sure that the vamp up is really happening.

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<v Speaker 1>Thomas, you delivered about one hundred and fifty aircraft to

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<v Speaker 1>the US last year. We're wondering, if you're looking at

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<v Speaker 1>what we're hearing from the White House every day from

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<v Speaker 1>Donald Trump, what are your thoughts on airbus level of

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<v Speaker 1>preparation for potential terriffs and also what are the scenarios

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<v Speaker 1>that you're working with as you're trying to prepare for

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<v Speaker 1>such an environment.

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<v Speaker 3>Yes, I think I think clearly, it's quite difficult to

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<v Speaker 3>prepare for a concrete scenario. But I think part of

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<v Speaker 3>the answer is to remind you that we have a

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<v Speaker 3>production site in Mobile, Alabama. We've got over five thousand

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<v Speaker 3>people in our US team, and we're extremely proud of

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<v Speaker 3>that team. So we're delivering out of the United States

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<v Speaker 3>into the US from our Mobile site, and we're not

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<v Speaker 3>only producing the A three twenty, but also the A

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<v Speaker 3>two twenty at that site. So therefore, I would say

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<v Speaker 3>the global footprint that we have with a very very

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<v Speaker 3>strong presence in the United States that we've built over

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<v Speaker 3>the recent years, is already part of the answer. But

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<v Speaker 3>it's true, Nina, if you think about teriffs for the industry,

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<v Speaker 3>it will have a negative impact in our view, because

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<v Speaker 3>the entire aerospace industry is a global industry. It has

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<v Speaker 3>a very global, highly integrated supply chain that is in

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<v Speaker 3>the phase of ramping up, and therefore tariffs would certainly

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<v Speaker 3>be on the one hand and negative for the industry,

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<v Speaker 3>but we also think that in the end it will

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<v Speaker 3>affect negatively our customers. So ultimately the tariffs, it is

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<v Speaker 3>the airlines that will have to pay for it, and

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<v Speaker 3>therefore it would be a double negative in our.

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<v Speaker 4>View in terms of level of preparedness.

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<v Speaker 3>I think we've done a lot in the past through

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<v Speaker 3>our footprint and we're waiting for the exact scenario that

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<v Speaker 3>will then finally play out.

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<v Speaker 1>Could you expand the existing facility that you have in

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<v Speaker 1>the US in order to potentially produce more aircraft here

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<v Speaker 1>in the US. And has Airbus been in touch with

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<v Speaker 1>the Trump administration at all?

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<v Speaker 3>I think we're looking forward, of course to work with

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<v Speaker 3>the administration. That question on whether we're expanding really depends

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<v Speaker 3>on the exact regime that will then be be specified

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<v Speaker 3>and decided. As I said, it's a highly complex and

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<v Speaker 3>integrated supply chain, also with parts coming in from Canada

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<v Speaker 3>for example in our mobile site, So the effects really

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<v Speaker 3>go both ways, and the question of whether it makes

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<v Speaker 3>sense to expand it or in other ways rebalance our

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<v Speaker 3>production really depends on what finally is decided in terms

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<v Speaker 3>of the terriff regime.

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<v Speaker 2>Tomas, just quickly there. I want to fall up on

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<v Speaker 2>what Nina said. Have you spoken to the Trump administration

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<v Speaker 2>you or the rest of the team in trying to

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<v Speaker 2>work out any sort of exemptions or deals.

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<v Speaker 3>No, I think we're not working specifically on exemptions for Airbus.

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<v Speaker 3>We're absolutely respecting whatever will be taken in terms of decision.

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<v Speaker 3>We're in contact, but quite frankly, I think it's really

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<v Speaker 3>the US administration who has to come to a decision,

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<v Speaker 3>but clearly making our point that in our view it's

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<v Speaker 3>not about Airbus only, but the entire industry would not

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<v Speaker 3>be positively affected through terraffs TAMAS.

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<v Speaker 2>The other thing this industry has to contend with, and you,

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<v Speaker 2>especially sitting in the heart of Europe, is what it

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<v Speaker 2>means for this new world of European defense, one in

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<v Speaker 2>which Donald Trump calls Voladimir Zelensky a dictator and Europe

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<v Speaker 2>feels more on its own when it comes to defense.

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<v Speaker 2>I know you've had had some snams when it comes

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<v Speaker 2>to some of your military aircrafts, but do you see

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<v Speaker 2>more demand? Will your defense business be growing in Europe

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<v Speaker 2>as a result of this geopolitical moment?

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<v Speaker 4>I think the clear answer is yes.

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<v Speaker 3>If you look at the order intake in our defense business,

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<v Speaker 3>we have had a record order intake in twenty twenty

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<v Speaker 3>four with sixteen point eight billion, and it's actually the

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<v Speaker 3>second year in a row that we have a record

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<v Speaker 3>in terms of order intake, So it shows that we're

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<v Speaker 3>well positioned with our products with a eurofighter in our

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<v Speaker 3>military air business, but also with our satellites and other

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<v Speaker 3>military devices that we produce. So therefore we stand ready

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<v Speaker 3>to step up in what I think is a clear

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<v Speaker 3>need for Europe to be more self sustained in a

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<v Speaker 3>sovereign ability and therefore Airbus clearly is prepared.

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<v Speaker 4>To help here.

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<v Speaker 3>And we're also seeing good science in terms of the

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<v Speaker 3>order intake that we had in twenty twenty four.

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<v Speaker 1>Thomas, you're a German working at a large European company

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<v Speaker 1>that has a US competitor.

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<v Speaker 4>What's your outlook for.

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<v Speaker 1>The European economy and also for Germany where we'll have

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<v Speaker 1>elections this Sunday.

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<v Speaker 3>Well, I think it would clearly be helpful for Europe

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<v Speaker 3>as a whole if we will have more stability. I

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<v Speaker 3>think that's true for Germany, where I think it is

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<v Speaker 3>about time that we have clarity about who will be

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<v Speaker 3>the new government, but also more stability in other countries

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<v Speaker 3>in Europe would certainly be helpful. I think we as

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<v Speaker 3>an industry are ready to support many of the proposals.

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<v Speaker 4>That have been made.

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<v Speaker 3>I refer, for example, to the Dragon report, which has

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<v Speaker 3>a special chapter not only in defense but also on space,

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<v Speaker 3>calling for more consolidation not only on the supply side

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<v Speaker 3>in Europe but also on the demand side. So I

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<v Speaker 3>would say the proposals also from that perspective around the table,

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<v Speaker 3>we clearly support it and it would be good if

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<v Speaker 3>now there is also the political will and power to

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<v Speaker 3>put some of these things now into practice.

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<v Speaker 2>Jama's just quickly here and look, we've been hinting at it,

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<v Speaker 2>but it feels like a moment of step change for Europe,

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<v Speaker 2>especially with transatlantic relationships, both from an economic point of

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<v Speaker 2>view with tariffs and geopolitical you having been at the

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<v Speaker 2>helm of industry in Europe for some time now, is

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<v Speaker 2>Erope prepared for this moment?

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<v Speaker 3>Well, I think it's hard to say whether it is prepared.

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<v Speaker 3>I think Europe has the ingredients that it needs, both

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<v Speaker 3>from an industrial site, but also of course from the

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<v Speaker 3>let's say, the GDP power that we have in order

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<v Speaker 3>to step up. What I think it takes is a

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<v Speaker 3>political will and the ability to now implement those steps.

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<v Speaker 4>To your question, is it prepared, I think it is

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<v Speaker 4>fair to.

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<v Speaker 3>Say that what happened in the recent past is a

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<v Speaker 3>clear wake up call, and I'm hopeful that Europe will

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<v Speaker 3>act on that call. The level of preparedness I think

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<v Speaker 3>could probably be better, but I do see promising signs

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<v Speaker 3>that Europe is taking up the challenge.

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<v Speaker 2>Tomas, thank you so much, time, so much for spending

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<v Speaker 2>your time with us this morning. We really appreciate it.

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<v Speaker 2>That is the Airbus CFO to us Hofer and Bloomberg's

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<v Speaker 2>Nina Trentman