Airbus delays plunge EADS into third-quarter loss

9th November 2006, Comments 0 comments

PARIS, Nov 8, 2006 (AFP) - Chronic delays at plane maker Airbus have led to a third-quarter loss at its parent group EADS, which must now take "drastic measures" to keep up with US rival Boeing, EADS acknowledged on Wednesday.

PARIS, Nov 8, 2006 (AFP) - Chronic delays at plane maker Airbus have led to a third-quarter loss at its parent group EADS, which must now take "drastic measures" to keep up with US rival Boeing, EADS acknowledged on Wednesday.

Amid the ongoing crisis, Russia was set to strengthen industrial ties with the European Aeronautic Defence and Space Company, which suffered a net loss of EUR 195 million, a year after making a quarterly profit of EUR 279 million, a senior executive added.

EADS published the data a day after losing its first customer for the Airbus A380 superjumbo jet, and the group admitted in statement that it would have to undertake "drastic measures to remain competitive".

Third quarter operating losses before interest, taxes and exceptional items came to EUR 239 million, compared with earnings of 559 million in the same period a year earlier.

EADS financial director Hans Peter Ring told a webcast that the future of the A380 cargo version would depend on a reconfirmation of remaining orders after the US freight giant FedEx announced it would no longer buy 10 of the planes.

FedEx cited "significant delays" in the planned delivery of the A380 for its decision, and turned to Boeing with an order for 15 of its 777 cargo jets.

Lead A380 customer Singapore Airlines confirmed it was sticking with the plane's passenger version however, saying Wednesday that "there are no changes to our existing aircraft orders with Airbus."

Deliveries of the A380, the world's largest commercial airliner and the cornerstone in Airbus efforts to catch up with Boeing, have been delayed three times and are now two years behind schedule because of production problems.

On the Paris stock exchange, EADS shares nonetheless shot up by 3.24 percent to EUR 21.33 euros in a market that was flat overall.

The stock had fallen by 3.05 percent on Tuesday.

Analysts said investors had not been too surprised by the third-quarter results, but that sales were in fact better than expected.

In the nine months to end September, EADS sales rose 17 percent on an annual basis to EUR 27.469 billion.

Looking ahead, Ring said the aerospace group planned to "do much more with the Russians" in terms of industrial cooperation. "This is meant to support ... our ambitions to sell Airbus aircraft in Russia," he added.

The state-owned Russian bank Vneshtorgbank bought 5.02 percent of EADS in September but French and German officials have resisted the idea of increased Russian influence in the group's management.

Both France and Germany have major interests in EADS, but tensions within the group that were fueled by 18 months of Airbus problems led to a boardroom shakeout in June and the presentation of a rescue plan in late September along with more top management changes.

French Prime Minister Dominique de Villepin told French lawmakers Wednesday that the would visit the headquarters of Airbus next week "to find solutions" to the problems.

Villepin said the government would "abandon neither Airbus nor the workers".

The new management must push through a painful restructuring of the group and resolve deep organizational problems, though it insists that EADS as a whole remained healthy.

"The struggle to reverse the A380 problems imposes a severe burden on our financial performance," EADS co-chief executives Thomas Enders and Louis Gallois acknowledged in a statement Wednesday.

"This together with the dollar devaluation requires drastic measures to remain competitive.

But they stressed that EADS's finances remained "sound, based on good performance of the Airbus delivery programs and the helicopter, defense and space businesses."

Over the first nine months of 2006, EADS posted operating earnings of EUR 1.399 billion against 2.099 billion in 2005, a decline it attributed to A380 production delays and a weaker dollar, the currency in which aircraft are sold.

In the coming weeks, directors are to decide whether to develop the A350 WXB, Airbus's potential long-haul challenger to the Boeing 787 Dreamliner.

An EADS source told AFP Tuesday the board felt Airbus needed the A350 "to meet the needs of clients in a niche that represents 40 percent of the global market".

An official announcement is expected later this month.

Copyright AFP

Subject: French news

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