Airbus reports billion-dollar loss, EADS plunges into red

11th March 2008, Comments 0 comments

European plane maker Airbus made an operating loss of more than a billion dollars last year despite record orders for its aircraft.

   PARIS, March 11, 2008  European plane maker Airbus made an operating loss of more than a billion dollars last year despite record orders for its aircraft, forcing parent company EADS into the red, company results showed
   Airbus, struggling with cost overruns on its star A380 superjumbo project
and delays with its A400M military plane, made an operating loss of 881
million euros (1.4 billion dollars), worse than the loss of 572 million euros
in 2006.
   "2007 was a tough year with many high profile challenges to be overcome,"
said EADS chief executive Louis Gallois, reflecting on the worst ever results
for Airbus.
   EADS reported a net loss of 446 million euros for 2007, following a
collapse in its profits in 2006, but the giant aerospace and defence group
forecast a return to profitability this year.
   Operating profits as represented by earnings before interest and taxes
(EBIT) were forecast to be 1.8 billion euros against just 52 million in 2007.
   Sales are expected to rise to "above 40 billion euros" against 39.1 billion
euros in 2007.
   Shares in the company plunged by nearly 5.0 percent on the Paris stock
exchange, with some analysts saying the forecast for this year was weak.
   Furthermore, the net loss by EADS was worse than most analysts had
predicted and news that US rival Boeing was to protest a decision to award
Airbus a massive Pentagon defence contract added to negative sentiment.
   "All-in-all a disappointing outlook which should further weigh on the
company's already disappointing results," said one Frankfurt-based investment
banking analyst who asked not to be named.
   In early trading in Paris, EADS shares showed a loss of 4.92 percent at
16.43 euros.
   Airbus has suffered huge delays and incurred multi-billion-dollar cost
overruns with its A380 and A400M programmes and has also been forced to
relaunch its midsized A350 plane.
   The A400M was launched in May 2003, but it is already six months to one
year behind schedule due to technical problems.
   EADS, which stands for the European Aeronautic Defence and Space Company,
said in November that it was going to have spend between 1.2-1.4 billion euros
to deal with the delays.
   "We stick to the plan of first flight this summer," Gallois told a press
conference, responding to reports that a planned maiden flight in July would
be delayed.
   Airbus is also struggling with the rise of the euro to record levels
against the dollar, which makes its planes relatively more expensive compared
to those of Boeing and reduces its margins.
   Nevertheless, it won 1,341 firm orders in 2007, slightly fewer than arch US
rival Boeing, but higher than the European company's previous record set in
2005 of 1,055.
   Airbus delivered 453 planes to customers, including the first of its A380s
to launch client Singapore Airlines -- albeit 18 months late.
   The combined orders of Boeing and Airbus, which dominate the world market
for passenger jets, were the highest in the history of the industry in 2007.
   Late last month the US Pentagon defence department awarded an aerial
refuelling tanker contract worth 35 billion dollars to EADS and the US group
Northrop Grumman, instead of to US group Boeing.
   It was a stunning upset for Boeing, until now the sole supplier of air
refueling planes to the US military, and the group has said it may protest the


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