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PARIS (Reuters) - Airbus parent EADS EAD.PA raised its forecast for passenger jet orders and deliveries on Thursday as it posted a 22 percent increase in underlying nine-month operating profit to 2.3 billion euros ($3.1 billion).
Europe's largest aerospace group said it now expected more than 1,200 commercial jet orders and up to 620 deliveries in 2013, but warned it faced "significant challenges" on cash generation and the development of its new A350 jetliner.
The company, which is in the midst of flight tests ahead of first deliveries of the new long-haul jet scheduled for the second half of 2014, said it expected negative free cash flow of 1.5 billion euros in 2013. It previously planned to break even.
"This reflects the company's investment into production ramp-up and development programs as well as recent government customer budgetary constraints," it said in a statement.
Airbus, whose operating profit leaped 85 percent in the first nine months and offset a drop in performance at the Eurocopter helicopter division, is developing the A350 to compete with Boeing's (BA.N) 787 Dreamliner and proposed new 777X.
EADS had previously forecast more than 1,000 Airbus orders and 600-610 deliveries in 2013. It has already exceeded the new order target with 1,265 gross orders by the end of October. <ID:L5N0IS53J>
So far this year it is ahead of rival Boeing on orders but lags behind its arch-rival on deliveries.
Both companies are entering a delicate phase of ramping up production of their latest jets amid pressure on an increasingly global supply chain.
Boeing workers earlier voted down a proposed new labor contract, overshadowing plans to launch the 777X at next week's Dubai Airshow.
Boeing last month posted 12 percent higher quarterly profit and raised its full-year forecast on soaring commercial aircraft production and margins.
Editing by James Regan