EADS rebounds to profit, but sees further gains only in 2012

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EADS bounced back to black in 2010 as it snapped up aircraft orders, but warned Wednesday that results were unlikely to improve until next year when production of the troubled Airbus A380 increases.

Europe's biggest aerospace firm reported a net profit of 553 million euros ($740 million) in 2010, against a loss of 763 million in 2009.

The company was cautious in predicting a stable result for the current year, saying it expected "clear improvement" only in 2012 with bigger sales volumes, higher prices and a boost to the Airbus A380 programme.

European aircraft manufacturer Airbus is EADS's principal unit, alongside helicopter manufacturer Eurocopter and defence and security systems builder Cassidian.

"2010 was a year of significant progress for EADS. Commercial aircraft orders exceeded expectations and our cash flow generation was excellent," EADS CEO Louis Gallois said in a statement.

Revenue was up 7 percent at 45.8 billion euros with record deliveries of 510 commercial aircraft driven by strong demand in emerging markets, he said.

Airbus plans to deliver about 25 A380 aircraft this year, about two per month, against 18 last year following a scare surrounding its A380 super-jumbo.

Last November, a Qantas Airbus A380 made an emergency landing in Singapore when one of its four Rolls-Royce engines exploded minutes after take-off, raining debris on an Indonesian island and blowing a hole in the wing.

The incident sent jitters through airlines operating A380s, and prompted extensive safety checks that revealed a flaw in the British-made Rolls-Royce engines.

Next year deliveries of the jumbos are expected to rise to three per month and costs per unit set to fall.

While the the much-delayed A380 programme is finally stabilising the group remained cautious over the long-haul A350, which is expected to be delivered in late 2013.

Other risks included tighter Western defence budgets, of which Cassidian was beginning to feel "first pressures," and higher oil and commodity prices linked to unrest in North Africa and the Middle East.

"Higher oil prices represents a pressure on aviation companies in the short term, but forces them also to renew their fleets on the long term" and to buy more fuel-efficient aircraft, Gallois said.

Sitting on a 11.9-billion-euro pile of cash, EADS has been looking to make fresh acquisitions. Chief financial officer Hans-Peter Ring said EADS was already in contact with several companies, although he did not specify which ones.

The group has frequently said it was ready to spend up to two billion euros in the US defence and security industries, in a bid to wean itself off of commercial aviation.

EADS just emerged from a bruising controversy-marred battle with US rival Boeing to capture the US Air Force's multibillion-dollar contract to replace a fleet of aging Boeing aerial refueling tankers.

After two earlier decisions were annulled, the Defense Department last month named Boeing the winner.

© 2011 AFP

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