Fitch Ratings revised the outlook on Airbus SE's long-term issuer default rating to positive from stable, citing expectations of an increase in the company's funds from operations and free cash flow in the next one to two years.
Fitch expects the company's FFO margin to grow to about 11% in 2020 from 7% in 2018 and its FCF to rise above 3% in 2020 and subsequently inch toward 4% with capital expenditure moderation and improving core profitability.
Fitch affirmed Airbus' long- and short-term ratings at A-/F1, citing the company's strong position in the commercial aircraft market, liquidity profile, a large order backlog, and stable capital structure and financial flexibility.
The rating agency expects Airbus' FFO-adjusted leverage to fall below 2x from about 2x-3x in the past few years, with an increase in FFO.
Fitch added that uncertainties surrounding Brexit may impact Airbus' deliveries due to potential restrictions in the cross-border flow of goods, as well as possible certification requirements.