EADS profit slides 86% on Airbus strife

EADS profit slides 86% on Airbus strife
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First Published: Fri, Mar 09 2007. 01 04 PM IST
Updated: Fri, Mar 09 2007. 01 04 PM IST
MUNICH: Losses at planemaker Airbus slashed operating profits at Franco-German parent EADS by 86 percent to 399 million euros ($526 million) in 2006, but the fall was cushioned by profits in defence, the group said on Friday.
The results included a 572 million-euro loss at Airbus due to aircraft production and development problems and a weak dollar, as well as a 352 million-euro provision on the A400M military transporter plane project “to deal with risk and technical challenges”.
Analysts had on average forecast EADS would make an operating loss after special items of 27 million euros, according to a Reuters survey.
For the current year EADS said its operating profit would remain roughly stable, including “another substantial loss” for Airbus, but that free cash flow would be negative.
EADS said its net profit last year fell 94 percent to 99 million euros and it unexpectedly deferred an announcement on the dividend, saying its board would recommend a level at its next meeting.
The question of a dividend has proved politically sensitive as Airbus embarks on a restructuring plan including 10,000 job cuts, and the French government said this week it did not expect to receive a dividend for its 15 percent shareholding.
EADS has also raised the prospect of a capital increase, while saying it has no urgent need for a cash call.
The EADS profit drop came despite a 15 percent increase in revenue to 39.434 billion euros, which included a 30 percent boost in defence revenue to 10.039 billion euros, topping the 10 billion-euro level for the first time.
Defence and Security operating profit rose 73 percent to 348 million euros.
EADS also said it was standing by its Power8 restructuring and cost-cutting plan for Airbus despite political and union protests.
“It will take some time but Power8 will make Airbus substantially more integrated and efficient,” said co-Chief Executives Tom Enders and Louis Gallois in a statement.
Airbus has been hit by delays to production of its new A380 superjumbo airliner, revisions to development of a new mid-sized plane, the A350, and a weak dollar that favours rival Boeing.
Airbus said its other major project, the 20 billion-euro A400M military transport aircraft for seven European NATO countries, remained on schedule. But it was rebuilding its contingency reserves with a provision because of risks and complexities.
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First Published: Fri, Mar 09 2007. 01 04 PM IST
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