EADS delays Airbus A350 delivery by six months
Airbus parent company EADS announced on Thursday a six-month delay in first deliveries of its A350 long-haul jetliner but raised its earnings outlook for the year after third-quarter profits surged.
It also said it was abandoning production of its A340 four-engine long-haul plane, which had failed to compete with Boeing's twin-engine 777.
Reflecting strains on the financial markets, the company said it had begun to sell some aircraft in euros, a first in the dollar-denominated trade, as some of the European banks that had financed sales began to feel a dollar funding squeeze due the eurozone debt crisis.
The Franco-German group said the A350 would now enter service in the first half of 2014 rather than by the end of 2013 as previously announced.
The push-back will cost it 200 million euros ($272 million), EADS said. It gave no reason for the delay.
The group announced net profit soared to 312 million euros in the third quarter, up from 13 million euros in the same period last year. Operating profit was down 15 percent year-on-year to 322 million euros.
Net profit more than doubled to 421 million euros in the first nine months of the year, it said.
EADS said it had raised its 2011 operating profit forecast to 1.45 billion euros, up from 1.3 billion euros, with revenues expected to rise four percent on the 45.8 billion euros reported in 2010.
"Our nine-month results are better than expected thanks to the group's efforts to improve performance," CEO Louis Gallois said in the statement.
"I am confident the commercial aircraft market combined with our strong (order) backlog will sustain our growth in the years to come," he said.
Gallois said the A350 programme continues to have "our highest management attention."
The A350 long-haul twin-jet is aimed at competing with Boeing's 787 Dreamliner.
Both the A350 and the 787 are made with modern composite materials such as carbon fibre that reduce weight and drag, leading to greater fuel economy.
The 787 made its first commercial flight last month from Tokyo to Hong Kong.
EADS said Airbus should deliver 520 to 530 commercial aircraft in 2011 and that its gross orders should be around 1,500. The company's order book has reached a record level of 503 billion euros.
Start of assembly of the A350 is due in the first quarter of 2012.
Airbus financial director Hans Peter Ring said the company had decided to abandon production of the A340, admitting: "We have accepted reality. We have not sold any A340s for nearly two years."
The nine-month profit rise was notably due to good results at affiliate Eurocopter, which saw operating profit rise 30 percent to 157 million euros, and at space group Astrium, where profits rose 4.0 percent to 165 million euros.
Defence arm Cassidian was a drag on profits however, showing a 17 percent drop in operational profits in the nine months to 170 million euros.
EADS blamed the performance on "an evolving business environment," a clear reference to governments cutting defence budgets in recent years.
"On the basis of existing contracts, EADS is ready to enter into discussions with the governments on the future of defence procurement programmes," Gallois noted.
The company said it has also sold aircraft in euros in an industry in which transactions are usually in dollars.
"It has happened. We have several contracts with airlines in euros," said Ring. "The number is starting to become significant," he added.
Exchange rates have long been a concern for Airbus which has most of its production costs in euros and earnings in dollars but the eurozone debt crisis has pushed some of the European banks which financed aircraft purchases out of the business.
Traders reacted warmly to the group's results and more positive 2011 outlook, with EADS shares up 3.68 percent to 20.70 euros.
© 2011 AFP