Airbus SE (AIR.PA) Q3 2026 Earnings Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Airbus 9 Months 2026 Earnings Release Conference Call. I am Laura, the operator for this conference. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Jean-Christophe Henoux, Head of Investor Relations. Please go ahead.

Jean-Christophe Henoux: Thank you, Laura, and a very warm welcome to everyone joining us today to dive into our 9 months 2026 results. I'm in Amsterdam with our CEO, Guillaume Faury; and our CFO, Thomas Toepfer, and they are here to break down the numbers and take your questions. This call is planned to last 1 hour, including Q&A, and the replay plus transcript will be available on our website. Today's presentation and the detailed financial statements are already available on Airbus website. Before we start, let me remind you that we will be making some forward-looking statements. I will encourage you to take a look at the safe harbor statement in our presentation slides. It's important stuff. So please have a quick read. And with that, let's get things started, Guillaume, the floor is yours.

Guillaume Faury: Thank you, JC, and hello, ladies and gentlemen. Hello, everyone. Thank you for joining us today for the 9-month 2026 earnings call. Thomas and I, as said by JC, are here in Amsterdam to run you through our results. To begin, I want to express my most sincere sympathies to everyone affected by the train accident in Spain, the devastating train accident in Spain earlier today. Our thoughts are with the victims, with their families and also with the first responders who are managing the accident. It took place on the line connecting Madrid and Seville, 2 cities which are very close to our heart here at Airbus. Moving forward, the global geopolitical and operating environment remains complex for Airbus and its customers who are navigating volatile jet fuel prices. Against this backdrop, we maintain our upward trajectory, driving forward our civil and military ramp-up to deliver on our strong backlog. Looking to our divisions. Defence momentum remains strong in Europe and globally. Our portfolio continues to prove its essential role in ensuring sovereignty and security. In our Commercial business, we delivered 196 aircraft in Q3, bringing our year-to-date deliveries to 547, up from 507 over the same period last year, so 40 more. While achieving this, we are addressing 2 quality topics that I will detail later. Our delivery profile is again back-end loaded. As we speak, our teams are fully mobilized for a successful year-end running. With this in mind, EBIT adjusted stood at EUR 4.5 billion and free cash flow before customer financing at minus EUR 1.3 billion. And our 2026 guidance remains unchanged. Now let's look at our commercial environment, starting with Commercial Aircraft. Passenger traffic was largely resilient against the volatile backdrop, while air cargo maintains an upward trend. We continue to closely monitor how the macroeconomic environment could impact air traffic and our customers. Our robust and diversified backlog supports our own company resilience. During 9 months '26, we booked 1,174 gross orders, of which 182 A220s, 830 for the A320 Family and 67 A330s. On the A350, we booked 95 gross orders, including 34 A350 freighters, which underpins our strong wide-body order momentum. Net orders amounted to 1,105 aircraft, including 69 cancellations, which were largely embedded in our backlog valuation at full year. Our backlog in units stood at 9,310 aircraft at the end of September 2026. Let me highlight the growth we anticipate for the services market as outlined in our latest global services forecast, which projects the market demand will double over the next 20 years. Airbus provides a full range of services across the aircraft life cycle and we have strong ambitions there. Looking at Helicopters. In the 9 months, we booked 311 net orders compared with 306 in the 9 months of 2025. The order intake includes 10 so-called UH-72B, the Lakota helicopters for the U.S. Army to modernize its fleet, and they are based on the widely successful H145. On the H225M, the government of Romania has signed a contract for the procurement of 12 Airbus multirole helicopters. This contract is the second one signed by Romania and Airbus Helicopters in the context of the European Union SAFE initiative. Finally, we celebrated the official start of the series production of the H140 in Germany, excellent H140 helicopter, with the first airframe successfully manufactured on the newly set up assembly line earlier this quarter. Overall, we continue to see good momentum in both the civil and military markets and remain fully focused on delivering on expectations. Finally, on Defence and Space, we continue to observe very strong order dynamics for the division with order intake standing at EUR 11.5 billion across all segments, so EUR 11.5 billion in the 9 months. That's very strong. In Q3, we secured strong wins in Space Systems, driven by the growing momentum towards European strategic autonomy. Notably, Airbus was selected by Eutelsat to build the further 229 OneWeb low Earth orbit satellites. Furthermore, we are pleased to see IRIS-square moving forward as a European program, and we will support by producing platforms for at least 66 LEO satellites. And now Thomas will take you through our financials. Thomas?

Thomas Toepfer: Yes. Thank you very much, Guillaume, and hello, ladies and gentlemen. Welcome to the call. I'm now on Page 6 of the presentation, and I'll be happy to take you through our financial performance. So let's start with the revenue that you can see on the left-hand side of the chart. As you can see our 9 months 2026 revenues increased to EUR 50.6 billion, which is up 7% year-on-year. And that is mainly reflecting the higher commercial aircraft deliveries as well as a higher contribution from our Defence and Space division, however, partially offset by the weaker U.S. dollar as compared to the 9 months in 2025. And as you can see on the right-hand side of the chart, our R&D expenses continue to increase in line with expectation, notably to support the Defence portfolio acceleration and R&D amounted to EUR 2.3 billion at the end of September 2026. On to EBIT adjusted on the next page, our 9 months 2026 EBIT adjusted increased 8% (sic) [ 8.9% ] to EUR 4.5 billion coming from EUR 4.1 billion in the 9 months of 2025. And it reflects the higher commercial aircraft deliveries, a strong performance in Defence and Space, again, partially offset by a less favorable hedge rate and the higher R&D expenses that I was already referring to. Now coming to the EBIT adjustments, which stood at positive EUR 55 million for the 9 months of 2026, and you can see them on the right-hand side of the page. And this EUR 55 million included positive EUR 270 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 positive EUR 146 million in Q3. Against that, a negative EUR 235 million related to the integration of the former Spirit AeroSystems work packages of which negative EUR 112 million in Q3, and then positive again, EUR 60 million linked to the Airbus Defence and Space workforce adaptation plan unchanged since Q2. And last but not least, negative EUR 40 million of other costs, including M&A, of which positive EUR 3 million in Q3. Now this takes our 9 months 2026 EBIT reported to a positive EUR 4.6 billion. And the financial result, as you can see on the lower right-hand side of the page was positive EUR 155 million and it mainly reflects the revaluation of certain equity investments and the participation held in the Venture Capital Funds managed by Airbus Ventures. And these are partially offset by the revaluation of financial instruments and the evolution of the U.S. dollar. The tax rate on the core business continues to be around 27%. The effective tax rate, however, is around 25%, including the nontaxable impact from the revaluation of certain financial investments, partially offset by the effect of the French surtax. And for 2026, we expect the French surtax to be broadly in line with 2025, which, as you might recall, was roughly EUR 0.2 billion. So the resulting net income increased 36% to EUR 3.6 billion for the first 9 months of the year, and that means earnings per share of EUR 4.54 and our 9 months 2026 EPS adjusted stood at EUR 4.26 based on an average of 790 million shares. Now let's turn the page and look at the U.S. dollar exposure coverage. In the 9 months of 2026, USD 17.1 billion of forwards matured with the associated EBIT impact and Euro conversions realized at a blended rate of $1.20 versus $1.18 in the 9 months of 2025. And in the first 9 months of 2026, we implemented USD 15.7 billion in new coverage over a 5-year horizon with a mix of instruments, including collars. The blended rate of $1.21 for additions reflects, in particular, the least favorable rate of our collars, which are primarily weighted towards the outer year of our hedging period. As a result, our total U.S. dollar coverage portfolio in U.S. dollar stands at USD 74.4 billion, with an average blended rate of $1.22 as compared to $75.8 billion at a blended rate of $1.22 at the end of 2025. Now on to a more detailed look at our free cash flow on the next page. Our free cash flow before customer financing was negative EUR 1.3 billion in the 9 months of 2026. And this outflow was mainly driven by the change in working capital. And as you recall, this notably reflects the inventory buildup linked to our back-end loaded delivery profile as well as the planned ramp-up to support our businesses. Our 9 months 2026 CapEx was EUR 2.4 billion and to support our ramp-up in the successful integration of the former Spirit AeroSystems work packages, we expect our CapEx to continue to increase in 2026, as previously mentioned. So no change. The free cash flow was negative EUR 1.1 billion, including customer financing for positive EUR 0.2 billion, and we continue to see a diverse and competitive financing landscape in the 9 months of 2026. And currently, we expect sufficient liquidity to support our 2026 deliveries. So that overall, and you can see it on the right-hand side of the page, our net cash position stood at EUR 7 billion as at the end of September, and that's also reflecting the dividend payment as well as the acquisition of Unical, slightly offset by the strengthening U.S. dollar environment. And of course, our liquidity remained strong at around EUR 30 billion. And with that, I would like to hand it back to Guillaume.

Guillaume Faury: Thanks, Thomas, and let's start with commercial aircraft. In the 9 months 2026, we delivered 547 aircraft to 84 customers, an increase of 40 aircraft over the same period last year, including 68 A220s, 428 A320 Family aircraft and 51 wide-bodies. We have no change in our targeted production rates, and we continue to drive the ramp-up. Our second A320 Family FALs in both the U.S. and China are now delivering, and we recently inaugurated a new delivery center in Toulouse, marking key milestones in the development of our global footprint. When it comes to the A350 freighter, I want to highlight again the successful completion of its maiden flight which brings us one major step closer to delivering this game-changing aircraft for the air cargo market. This now marks the start of the flight test campaign prior entry into service in the second half of 2027. So that's no change. For engines, the situation is also largely unchanged. On the A320 Family, the Pratt & Whitney engines remain the main so-called pacing item for the ramp-up, but we anticipate we will get what we need to reach our 2026 objectives. On Spirit, almost a year after the acquisition of the former Spirit AeroSystems work packages, the integration remains challenging, but our teams are on it. I would like to also update you on 2 quality issues. First, on the A321, the surface protection deviation on a specific stringer was identified and is causing a short-term phasing impact in our operational flow -- sorry, on specific stringers, not just one, a series of stringers. The issue is contained. Remedy is available and all newly coated stringers conform to requirements. We are delivering the relevant aircraft. It is not a safety issue and the flying fleet continues to operate. Another quality issue, I would like to update you on impacts the A330. We have inspected all in-production aircraft following a finding in a horizontal tail plane. We took immediate action. We reinforced our controls and all aircraft coming now out of production have been inspected and can be delivered. Overall, we continue to produce in line with the plan and our commercial ramp-up continues. Now let's look at the financials for our Commercial Aircraft business. Revenues increased 8% year-on-year, mainly reflecting the higher deliveries, increased services, partially offset by the weaker U.S. dollar. EBIT adjusted increased to EUR 3.4 billion from EUR 3.3 billion in the 9 months of 2025, driven by the higher deliveries, partially offset by higher R&D and a less favorable hedge rates. Looking at Helicopters. In the 9 months, we delivered 226 helicopters, 8 more than in the 9 months 2025. Revenues were broadly stable at EUR 5.6 billion, and EBIT adjusted stood at EUR 445 million, with both figures reflecting a less favorable deliveries. Let's complete our review with Defence and Space. Revenues increased 5% year-on-year to EUR 9.3 billion, driven by higher volumes across all business units. This volume along with better overall profitability resulted in an EBIT adjusted of EUR 672 million. On R&D, the operational ramp-up continues at a gradual pace, the Q3 increase reflects, in part, a one-off catch-up effect. Now looking at our 2026 guidance, which is unchanged. The company assumes no additional disruptions to global trade or the world economy, air traffic, the supply chain, its internal operations and ability to deliver products and services. The company's 2026 guidance is before M&A and includes the impact of currently applicable tariffs. On that basis, the company targets to achieve in 2026 around 870 commercial aircraft deliveries, an EBIT adjusted of around EUR 7.5 billion and a free cash flow before customer financing of around EUR 4.5 billion. With that, and that's the last slide, we will conclude with our key priorities. Before handing over to you for the Q&A, let me summarize what is driving team Airbus as we enter the final stretch of the year. Across our businesses, our focus is to deliver on the strong demand and expectations of our customers, with safety and quality at the core of what we do in this complex and what I call a fast-changing environment, our priorities are clear. Our teams are fully mobilized to meet our objectives. And I guess with that, Thomas and I are now ready to take your questions. And for this, I will hand over to JC. JC, the floor is yours.

Jean-Christophe Henoux: Thank you, Guillaume, and thank you, Thomas. In order to allow an efficient Q&A session, let me set a couple of guidelines. First, please introduce yourself and your company before you dive in. Second, we ask you to limit yourself to 2 questions, so that everyone can get a chance to ask a question. And finally, please try to keep a steady pace and speak clearly. With that, Laura, could you please explain the Q&A procedure for participants.

Operator: [Operator Instructions] The first question is from Mr. Ross Law from Morgan Stanley.

Ross Law: So the first is on supply chain and where the current bottlenecks are. You mentioned engines are tracking broadly to plan. But on seats, Safran last week flagged a risk of delivery delays from the end of this year into '27. So interested in whether this may impact your ability to meet this year's guide or whether this risk is already embedded in your planning assumptions? And then the second is on the buyback. You mentioned -- or you announced, sorry, a EUR 5 billion buyback back in July with an ambition to start this in the second half. So it would be great to get your updated thoughts on timing of the launch here, given your confidence in full year guidance and the fact the stock has pulled back since the summer.

Guillaume Faury: Yes. Thank you very much for the questions. I'll take the first one and hand over to Thomas for the share buyback question. When it comes to the risks and the bottlenecks, they are indeed factored in the delivery guidance that we have confirmed. And in the supply chain, we flagged the engines because they are indeed the pacing item, the one that creates the tension, the most on the A320 Family. For the others, I mean, we continue to face a challenging situation with the former Spirit AeroSystems work packages. You remember, and still the case that the Section 15 for the A350 is on the critical path. But again, all of this is factored in the year-end outlook. And we feel we have what we need to continue to ramp up at the pace we have highlighted before towards the production rates given for the 220, 320, 330 and 350. So nothing new on that front as we speak now. And I think with this, I hand over to you for the share buyback question, Thomas.

Thomas Toepfer: Sure. I mean, as you said, we announced the share buyback during the Airshow this summer. And we said the ambition would be to start it in the second half of this year. I will not want to preempt any potential official announcement, of course, of the share buyback. But what I can tell you is nothing has changed in our view. The ambition is the same. And so therefore, we see no reason to deviate from that. But again, I don't want to preempt and jump to anything, which would sound like an official announcement. Stay tuned. And again, our ambition is unchanged.

Operator: The next question comes from Benjamin Heelan of Bank of America.

Benjamin Heelan: First question, Guillaume, you do sound more negative on Spirit. Has something happened? Can you give us a bit of an update there? And secondly, where are you on discussions with Pratt for engine deliveries next year?

Guillaume Faury: Well, Ben, thank you. Well, actually, be it for Spirit or Pratt, there's no change in the situation. Spirit was and remains a difficult integration and quite complex. So I don't know if I sound more negative than I was before, but we knew when we entered into this acquisition that we were taking on challenging work packages. The Section 15 is on the critical path of the 350. So that remains the case. Pratt, no change either. We continue to work with the same assumptions. There's nothing I can report in that call on rather negative or positive. We think we have what we need for 2026 and the numbers have not changed for 2027. So we continue to base our ramp-up assumptions on the same number of engines from the 2 engine manufacturers, including Pratt for next year. So basically, no change in the substance.

Operator: The next question is from Chloe Lemarie from Jefferies.

Chloe Lemarie: The first one would be on the A321 and the stringers issue. It seems to still be sort of a pacing item there. Could you maybe share how many aircraft are currently held back by this issue? The second one would be on Project Bromo. Could you share update on the time line from your perspective and pacing item? And any of the proposed remedies submitted to the authorities?

Guillaume Faury: Thank you for the questions. I will leave the second one to Thomas. On the stringers, well, as I said, it's changing the timing and the speed of execution on the short term. It will not result in any non-delivered aircraft for that perspective from the technical angle of it in this year. That's the current expectation and that's the best I can share with you. So it's an operational difficulty that we are managing. This leads to additional work and will lead to additional constraints in the life of the aircraft that we are managing with customers. But for the 2026 deliveries, I don't expect any or significant impact on the deliveries.

Thomas Toepfer: Yes. So let me maybe comment on Bromo. So I would say also no fundamental change here. So let me remind you what is on our plate for 2026 and what is ahead of us into 2027. So for 2026, essentially, we have 3 major tasks to complete. One is the agreements with the -- and the discussion with the antitrust authorities, they are constructive, but have not yet been concluded. I'll come back to it in a moment. Secondly, we have the negotiations with our social partners. Here, we have broadly concluded the negotiations and so we are well on track on this front, which obviously we control largely ourselves. And number three, as we always said, 2026 will be characterized by some heavy work on carve-out, specifically for Airbus because the assets that we want to contribute into Bromo are spread across several legal entities. So there's quite a bit of carve-out work to be done. That is also progressing according to plan. So with that being said, what we do not fully control in terms of timing is obviously the antitrust process. As I said, it's constructive. We are replying to all the requests that we're getting out of Brussels. But it has not been concluded yet. So therefore, I would say our ambition is completely unchanged. We want to ideally come to a signing of a definitive agreement in 2026, and that would then be the condition for a closing of the transaction in 2027. But again, not everything is fully under our control, but we remain positive with respect to the transaction.

Operator: The next question comes from Sam Burgess from Goldman Sachs.

Samuel Burgess: So the first question is just back to the stringer issue. Can I just confirm, is the rework being done post final assembly line? And therefore, maybe a way to think about it is it's causing some delivery delay, but it's not impacting the underlying production? And just on Spirit integration costs. I think you've now booked around EUR 235 million of one-off charges through 9 months, as you mentioned earlier on the call, Thomas, but there's been quite a step-up in that quarterly increase. Could you just give us your expectation for the full year cost here and maybe the trajectory of these one-off charges into '27?

Guillaume Faury: Yes. So for the stringers, when the issue has been identified, we had aircraft or we had components parts MCAs in production. We had aircraft in the FAL, in the final assembly line process, and we had also aircraft being already delivered. I don't have the number of aircraft or items for each of the different categories. But basically, it's not a safety issue for aircraft in service. So this has to be managed through the way the maintenance will be carried out moving forward, and it's work ongoing and discussion with customers on how to deal with this. I don't think it's really critical, but it needs to be managed for aircraft, which are in the production process at different stages of production. We are correcting the topic. And aircraft continue to be delivered. It takes time. So it has had a short-term impact as we had to understand the situation, to do the investigation to understand the criticality and then find the appropriate measures. So as I said earlier, we took the appropriate measures. We correct the situation and aircraft will be delivered. And when it comes to the full year 2026 deliveries, we don't expect impact on the deliveries or at least not that I know and in any case, not significant impact.

Thomas Toepfer: Let me maybe take the one on Spirit. So key message is, of course, the integration remains a challenge, but nothing fundamentally new. And that means also our financial view of the transaction is unchanged. So let me just reiterate how we look at things. We're expecting a low triple-digit EBIT effect in 2026. And so I would say what you see after 9 months is in line with that trajectory. We also said the cash effect would be significantly higher and would be a high triple-digit effect in 2026. Why is that? Because on top of the integration costs, of course, we are building up working capital in order to smoothen the production flow, and we have to make some investments in order to prepare Spirit for the ramp-up, specifically for the A350. Also for this number, I would say we're on track and therefore, no news with respect to our financial projections with respect to Spirit.

Operator: The next question comes from Ian Douglas-Pennant from UBS.

Ian Douglas-Pennant: Yes. It's Ian Douglas-Pennant at UBS. Maybe you could help us think about 2026. So what are the headwinds that you expect to see in Q4 which means that EBIT is going to be roughly flat year-over-year this year, which is what your guidance implies when deliveries will be up year-over-year, as implied by your delivery guidance? And secondly, I understood the engines are a pacing item today, and it seems likely, given your commentary before that, that will continue at least through most of 2027. Please correct me if that's wrong. But thereafter, it seems like to me, at least you'll have -- at least engines won't be a pacing item, if not, you'll have a surplus of engines. Do you need to increase your inventory levels and again in 2027, to be ready for that moment, so that you can increase production rapidly thereafter? Or is that not the right way to think about it?

Guillaume Faury: Maybe I'll take the second question first and hand over to Thomas. Engines will continue to be the pacing item indeed for 2027. I mean, the sum of Pratt & Whitney and CFM engines. There's no change compared to the assumptions we have taken previously and consistently with the business outlook we gave at the Farnborough Airshow, so there's no change in the assumptions. But indeed, the delivery profile for '26 and '27 has been built with the engine delivery profile given by Pratt beginning of this year. So there's no change on the fact that would we get more engines or would we have a commitment for more engines, we would prepare for more aircraft delivery, but we have adapted the number of aircraft we produced to the number of engines we expect to get. In other words, we are not building and we will not be building in 2027 additional inventories and so-called gliders, assuming we would then get more -- many more engines in 2028. We have adapted the profile to the number of engines. We have finally understood we would get from especially Pratt & Whitney, but also CFM. I hope that clarifies the plan. We produce according to the number of engines we expect to get.

Thomas Toepfer: So maybe let me take the one on the remain to do for the last 3 months of the year. So to put it into perspective, last year, our EBIT adjusted in Q4 was EUR 3 billion. What are the changes that we're expecting in Q4 of 2026 relative to 2025? So obviously, the most important one is the uplift of our deliveries. So if you take the midpoint of the guidance, so 870 deliveries, that means 37 more aircraft in Q4. However, I would caution you a little bit, those 37 aircraft contain a slightly higher proportion of A220s relative to the uplift that we had in the first 9 months. So not all of the 37 carry the full margin. So make a deduction of, I would say, a small double-digit number in absolute and then you multiply with the usual EUR 15 million, and that brings you to roughly the right amount that you should put into your model in terms of the volume and efficiency uplift that we have in Q4. And then you asked specifically what are the headwinds that we have. I think we already touched on the topic of Spirit. So Spirit will be one thing that is a headwind in the order of magnitude that I indicated for Q4. And secondly, R&D is also slightly back-end loaded. You've seen that in Q3, R&D accelerated. We are absolutely on the trajectory that we have foreseen for R&D, but that means also a slight step-up in Q4. And finally, you've seen that we also recruited some people, so it's a minor effect. But if you take those 3 together, that brings you to the uplift for commercial. And last but not least, for the other 2 divisions, so Helicopters and Defence and Space, if you take them together, I would not put in a big uplift, so you can take them as broadly stable or a slight uplift. So with all that together, we feel that we are on the right trajectory, not only for the deliveries, but also for the corresponding financials.

Operator: The next question comes from Milene Kerner from Barclays.

Milene Kerner: Guillaume, Thomas and Jean-Christophe, so Milene Kerner from Barclays. I have a first question on the A320 Family. Outside of the engine, I found that you sound more confident in ramp-up today. What has specifically improved over the last few months to drive the change of your tone, Guillaume? And then the second question is for Thomas on the inventory. Looking across the A220, A350, A320 Family, where do you carry the most excess inventory? And what would it take to remove it without increasing the delivery risk?

Guillaume Faury: So what drives my -- I don't know if it's a more optimistic tone or a more positive tone on the supply chain is that basically the general state of the supply chain in supporting the ramp-up of the A320 mainly is indeed improved compared to previous years. That's not inconsistent with what we have said already. Still, we are limited by engines, that's the pacing item. We've been discussing this already earlier in this call. And as there's no change on the perspective of a number of engines, we continue to be on the same trajectory that supports the confidence we have for the ramp-up and confirming the outlook for this year also on the 320. So yes, it took years to get to that point to have the recovery of the supply chain. We are not yet there everywhere, and we have other difficulties and seats were mentioned earlier, interiors in general, are a bit of a challenge. You know that we are suffering in the ramp-up on the A350 because of the Section 15 of the A350. And therefore, the acquisition of Spirit and what I commented already earlier on the call. A220 is going through a very steep ramp-up, quite satisfied with the outcome, and we are on trajectory. So an overall better situation in the supply chain, but still a large number of topics where we are working to iron out challenges. And what remains on watch is the quality. We need a better quality environment to be more regular, to be more predictable. I commented on 2 quality issues earlier around the call, one that is an internal and self-generated topic with an FOD on the A330. The other one being on the stringers, highlighting the challenges of transfer of work and managing a supply chain with the perspective of increasing the resilience in this complex environment. So we are active and we are moving things, but it comes with some challenges. Overall, we feel comfortable with the ramp-up. As you see, we are confirming the outlook for this year. We were comfortable enough at the Farnborough Airshow to give a 2029 midterm target. So it is supported by the view we have, the confidence we have in the ability of the supply chain to serve us and support us in this ramp-up. The previous question?

Thomas Toepfer: With respect to inventory, Milene. So let me try to characterize it in the right way. So as you've seen from our balance sheet, we have built up roughly EUR 10 billion of inventory if you compare the 9 months point with EUR 51 billion relative to the starting point of the year, EUR 41 billion. I would not call it excess inventory. I would say, relative to the situation that we're in, which is a steep ramp-up, this is the inventory that we would like to have and which we think makes sense to have, because we don't want to create additional bottlenecks internally because we are scrutinizing too much the inventory. So I think the good -- the positive message is we have what we need to have in our production lines to manage the steep ramp-up that we have ahead of us in Q4. But of course, this inventory level is not the right level if you look at it from a steady-state perspective. So I would clearly say that once we are at a stable rate, 75 for the A320, there should be potential to reduce inventory and squeeze out some cash. But that is not yet the case. We have to be stable at that rate for a certain while. And now I'm not going to be too detailed with respect to your question. But of course, the biggest potential in terms of eventual inventory reduction is for the programs where we have the steepest ramp-up, and that is clearly the A320 and to some smaller degree in absolute terms, the A350. But again, currently, our view is this is the inventory level that we should have and the potential then comes later once we are at a stable state.

Operator: The next question comes from David Perry from JPMorgan.

David Perry: Guillaume, Thomas and JC. Two questions, please. The first one is we've had a nice move in the dollar and that comes and goes. But if I just tapped in today's dollar rate into my model, it would throw out for me an EBIT number above your EUR 12 billion to EUR 13 billion range in 2029. That might be because my model doesn't work, I don't know. But is there any reason why you're hard capped at the EUR 13 billion? Are there any negatives that might offset a better FX rate? That's the first question. And then the second one, and I'm sorry to be a bit pedantic and come back on the stringers. Just a clarification. So you said, Guillaume, it won't impact deliveries this year. You always say your delivery guidance is plus/minus 20. So I just wondered, does the stringer issue take you to the lower end of 850 to 890. And also, you very specifically said it wouldn't impact deliveries this year. So I just wondered, does it have any potential impact on 2027?

Guillaume Faury: Yes, I'll start with the latter and give a bit of time to Thomas to also...

Thomas Toepfer: I'm ready. Go ahead.

Guillaume Faury: No, it will not have an impact on 2026 or no significant impact. I mean very minor, if any, and I'm not suggesting it will take from midpoint to low point. I mean, generally speaking, we're happy to have this plus/minus 20 as there are uncertainties in our ability to deliver and what will really come out of the FALs by the 31st of December. But as you have understood, I think we feel reasonably comfortable to be somewhere in the 870, plus or minus 20, with what we see and what we have today. So no -- don't take this as a trick. There's no trick behind and there's no trick for 2027 either. We don't intend to have this impacting 2027. So don't take the stringer quality issue as something having a similar impact of what we had with the panel last year. It's of a completely different nature and completely different type of impact on the product and on the deliveries, meaning much smaller, easier to manage, less impactful for customers and not changing the view we have on 2026 deliveries and 2027 deliveries either.

Thomas Toepfer: And so with respect to the 2029 midterm guidance, so what -- as we don't have a crystal ball where the dollar will be in 2029 and how it will evolve in the meantime, what we have said, David, is we take an assumption of a dollar rate of $1.22 for 2029. And then that gives you the flexibility to put it as an input factor in your model. And we also, in the summer, gave you the flexibility that with each cent, the variance is roughly $250 million in the model. So why did we do it this way simply because we don't have the visibility and where does the $1.22 come from? It might sound conservative from today's perspective. But when we put those numbers together before the summer, the assumption was if we had hedged the entire exposure of 2029 with forward, that would have roughly been the rate that would have led to $1.22. So you can say it's a theoretical exercise and the reality will look different, and I would agree to that. But we simply had to take an assumption. And then I think that gives you the input factors that you can put into your model, and I have full confidence that your model works perfectly. And I think with that, you have the ingredients that you need.

Operator: The next question comes from Doug Harned from Bernstein.

Douglas Harned: Two questions. First, I'd like to go back to Spirit. And if we think back to pre-COVID, Spirit was producing Section 15 at a 10 a month rate. They were actually doing it. They said it was cash positive. Now that everything has gone through all these transitions. Can you talk about what is wrong today in terms of labor, supply chain, anything that has led to the much more difficult at Spirit and how you're addressing it? And then the second question is, can you comment on the status of the new planned variants, the A220-500, A350-2000? And specifically, any update you can give us on engine choice there.

Guillaume Faury: So starting with the latter. I think a lot has been said on this. I don't know where to start to make a reasonably short answer. We have 2 programs where we are looking at potential stretch versions. One is the A220, the 500 being the potential stretch version and the A350-2000 or whatever you call it being a potential stretch version of the A350. We are working towards a potential decision, which doesn't mean that there will be a positive decision. We are looking at the opportunity and what the product would look like, and checking with partners and suppliers that we would have the ability to do the program that there is a business case that makes sense, engaging with customers on what the product would look like, what it would mean for them. So we are in the phase of analysis prelaunch and not suggesting that the launch decision has been taken. It's not the case. Still, we are looking at the opportunity. When it comes to engines, well, I don't want to be specific, engine makers, engine partners are important partners we're speaking with to make the decision. And obviously, the choice of engine drives a lot of assumptions and has a lot of implications on what the business case looks like, what the aircraft looks like, what the performance of the aircraft looks like. So it's an important piece of what we are looking at. So that's basically it. I think we are also looking at potential additional ramp-up on the A350. That's something that Lars Wagner has been quite specific on as we see a very strong demand for the A350 family, and we think there's potentially an opportunity to look at further increasing the rates beyond the rate 12 that we are working towards at the moment. That's maybe the opportunity to go to Spirit. Well, why was it what it was before COVID? I mean going through COVID, a lot of companies have made a very significant decisions to scale down their operations to reduce their cost base and that has come with a lot of midterm and long-term consequences, and we have a large number of suppliers who had to rebuild very significant part of their operations as they moved out of COVID having survived the crisis. Spirit is a company that was not only serving Airbus, they were serving mostly our dear competitor Boeing when this competitor was going through difficult times, especially on the one program that was making Spirit mostly making money. So they have suffered big time in this time. And we have, both of us, our competitors and ourselves, been facing the situation of a company that was in a very difficult place as we were starting to ramp up. And you know what has happened in the meantime with the decision from Boeing and therefore, afterwards of Airbus to do the acquisition of -- for us certain work packages and for Boeing a large part of the company. We've done this at a time where what we found and what we have to repair and what we have to do is very significant, but it's mostly coming from the history of the company, from what has happened between 2018, 2019 and where we are today. And indeed, it's a difficult work to do the ramp-up. Having in mind that we've gone through the up and downs of the program, we were indeed close to rate 10 before COVID, not more. And we went down to rate 4, actually below rate 4 for some months or some quarters, then stabilizing at rate 4, and we are now targeting rate 12. As you can imagine, it's a significant effort to put the production system back on track with the right level of speed of quality for the 350. And I guess your question was mostly on the 350. So I try to do my best answering your detailed question on those 2 points.

Operator: The last question comes from Ken Herbert from RBC Capital Markets.

Kenneth Herbert: If I could, just 2 final questions. The first really strong bookings, the trend continuing through the third and obviously 9 months straight in the Defence business. Can you talk about expectations for continued strength in Defence bookings into the fourth quarter and into 2027? And how we think or how we should model the conversion of the bookings to the revenue growth? And could we be seeing maybe better revenue growth in the Defence business than what you've previously been communicating? And then second, on the 321XLR, there's been a fair amount written on the extra weight on that program to accommodate the fuel tank. Can you talk about momentum on that program? And if we should start to see maybe an upturn in orders on the 321XLR?

Thomas Toepfer: So let me maybe start with the first one. So yes, I would agree with you. We're happy and pleased with the order intake that we see for the first 9 months of the year. So that's a 70% uplift. But I think maybe more importantly, I think the message is the order momentum we see is very sustained. And we, as Airbus in our Defence and Space division, we are taking advantage of this momentum. So the customers trust us, they want us to play a big role when it comes to European sovereignty. So I think all that is reflected in this order intake. It's a little difficult to make a prediction for Q4 because order intake in Defence can be lumpy, and we're talking sometimes big orders, and it's difficult to, let's say, project or promise what exactly will happen in Q4. But I would not exclude indeed that we're moving into another -- or that '26 will be another real record year for Defence and Space. Remember, we had a record year in terms of order intake in '25, and that was beating the record of 2024. So that shows we're really on a good trajectory. And I think the overall message is we're confident that the momentum will continue irrespective of what the exact number in Q4 will be. I think that also shows that ADS has potential to increase the margin. That is what we're expecting. But I will certainly not give any new guidance with respect to their EBIT trajectory. So I would say we are confident that they are on a good track to achieve the around EUR 1.3 billion that we have modeled into the overall guidance for 2029. I would say the environment that we're currently seeing is clearly supporting that.

Guillaume Faury: When it comes to the XLR, I have not looked at the recent percentage of A320 Family aircraft, which are XLRs. What I can tell you is that the percentage, I mean, the share going to the A321 is very high, is getting higher. And the vast majority of the backlog is now on the A321s. And I think we have around 500 XLRs in the backlog. I'm looking at the team to see if they can get the exact figure, but that's the order of magnitude. So we continue to see interesting momentum for the product. And indeed, there's positive feedback from customers on the product, on the use of the XLR. It works really well. Long-distance flights on the A321XLR really feels good from a passenger experience perspective. So that's something that pleases very much the airlines, airline customers and the economics of the XLR on such type of routes is coming back to us as something very efficient. So I think we will see a continued success and momentum on the XLR, but being one share of the A321 family we take it as part of the A321 family. We also have the LR, we have the regular A321s. So that's a family of products, not mentioning the A320 as well that makes sense as a whole. But this latest member of the family is performing well, and we expect will continue to perform well.

Jean-Christophe Henoux: Thank you, Guillaume and Thomas, and thank you, everyone. We really appreciate you taking the time to join us today. Before we close, let me end with a personal note regarding Olivier Prebay, who is in the room with us because today, this is his last disclosure. You all know him and obviously appreciate him, and he has been an award-winning interface to the markets for several years at Airbus. So thank you, Olivier, for your outstanding contribution and amazing support to Investor Relations in the last years. And as you prepare for your next challenge, still at Airbus, know that you leave with our deepest gratitude and warmest wishes.

Guillaume Faury: Thank you, Olivier.

Jean-Christophe Henoux: As usual, if you have any further questions, please don't hesitate to reach out, just drop an e-mail to Victoria, to Olivier for a few weeks or myself, and we'll get back to you as quickly as we can. That brings our session to a close for today. Have a great evening, everybody.

Guillaume Faury: Thank you, everyone. Bye-bye.

Thomas Toepfer: Thank you very much. Bye-bye.

Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening. Goodbye.