Leonardo helicopter deliveries affected by Coronavirus lockdown

UPDATE: A Leonardo spokesperson told Helicopter Investor the following regarding the impact of Coronavirus on delivery acceptance: “Leonardo is unable at this stage to perform acceptance of aircraft at the Vergiate plant because customers cannot travel (to visit us and back) due to the present situation of limitations as dictated by the Covid-19 situation.”

Leonardo is unable to fulfill some helicopter deliveries due to flight restrictions from the Italian coronavirus lockdown, the CEO Alessandro Profumo explained during an earnings call on Friday (March 13).

Following stringent measures to combat the spread of the coronavirus across Italy and beyond, Profumo said that the company’s helicopter deliveries are being impacted as customers are unable to travel to its facilities to accept the aircraft.

It is too early to say anything [definite] on the potential impact of the virus,” said Profumo during the call. “But, at the moment, the acceptance of helicopters cannot be realised.

“We really don’t know if this will be resolved before the first half, during the first half, or after the first half of the year. It’s technically impossible to quantify what the impact will be.”

About 8,000 Leonardo employees are working from home. However, the company has not halted production at any of its Italian sites. It is instead taking stringent measures – including a two-day cleaning and sanitisation of its facilities – to ensure that as many production activities can continue as possible.

Additionally, a “small number” of employees have been told to self-isolate.

8,000 Leonardo employees

Whether the company will need to suspend production in the near-future is unknown.

Leonardo manufacturers most of its aircraft in Lombardy. This area is being particularly affected by the virus, also known as Covid-19, with more than 1,218 deaths, according to Italian news publication The Local. But so far, there has been no disruption to the manufacturer’s supply chain, according to Profumo on Friday.

Leonardo has decided to exclude the impact of the virus in its financial forecasts, due to the difficulties in qualifying its effect.

Leonardo’s chief financial officer Alessandra Genco said in the earnings call: “Despite the challenges in making forecasts in the current situation due to the Covid-19 emergency, Leonardo believes it is appropriate to provide guidance in a continuity scenario without including Covid-19 impacts.”

By the numbers

Excluding the impact of the Coronavirus, Leonardo expects to record €14bn in new orders for 2020 in line with 2019’s figures. Revenues for 2020 are expected to increase to €14-14.6bn compared with €13.8bn last year.

Earnings before Interest, Tax and Amortisation (EBITA) are also expected to be up in 2020 reaching between €1,325-1,375m. Free-operating cash-flow (FOCF) is expected to almost double from €241m to €400-450m. Finally, the group’s net debt is expected to remain unchanged at €2.8bn. Looking forward to 2022, Genco expects Leonardo’s gross debt will stay below €3.1bn. Leonardo plans to use its recent €300m loan from the European Investment Bank and €100m from Italian investment bank Cassa Depositi e Prestitito to help fund its operations.

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