Flight path maintained

Airbus delivered another robust performance in 2016, with Q4 results exceeding market expectations. The addition of a further provision of €1.2bn (FY16 total €2.2bn) for the troubled A400M military transport aircraft remains a burden on cash in 2017 and 2018. However, even allowing for this, it would appear that both underlying earnings and group FCF are set to start improving from this year, and likely accelerate as the civil aircraft ramp-ups deliver expected learning curve benefits with improved pricing.