November 10, 2011 / 8:04 AM / 6 years ago

EADS delays A350 but avoids heat of crisis

PARIS (Reuters) - Airbus parent EADS EAD.PA pushed back its new A350 jetliner by six months with a charge of 200 million euros ($272 million) as it gave itself more room to deliver Europe’s answer to the carbon-composite Boeing BA.N 787 Dreamliner.

<p>A model of an Airbus A350 passenger plane is displayed at a news conference in Hong Kong, March 7, 2011. REUTERS/Bobby Yip</p>

The delay trimmed third-quarter profits that nonetheless beat expectations as Airbus stabilized costs on its troublesome A380 superjumbo project, lifting EADS shares as Europe’s largest aerospace group also raised its outlook for the year.

Despite the storm clouds over developed economies, Airbus and Boeing who dominate the $70 billion aircraft market are boosting output to meet demand from Asia and the Middle East.

“I am confident the commercial aircraft market will sustain our growth in years to come despite the weakening of the macro-economic environment and particularly of the European economies,” Finance Director Hans Peter Ring told reporters.

“Fifty percent of our backlog is in growing regions of the world and not in Europe or the U.S....so provided there isn’t a big double-dip recession we think it is manageable for us.”

He declined to comment on the instability ripping through the euro zone or to say whether EADS, seen as another European flagship, had drawn up contingency plans for further turmoil.

“I am not in politics and this is something nobody can anticipate reasonably at this point, so we are following the environment, that is all I can say.”

EADS operating profit fell 15 percent to 322 million euros in the third quarter as revenues fell 4 percent to 10.751 billion euros. Net income rose sharply to 312 million euros.

The Franco-German-led group said it expected 2011 operating profit to increase to 1.45 billion euros rather than staying flat at 1.3 billion euros due to the commercial market.

Shares rose six percent to 21.17 euros.

Analysts were predicting operating profit of 51 million euros on sales of 10.37 billion and a net loss of 34.6 million.

Aircraft sales remain buoyant despite fears that the economy will dampen passenger travel and a downturn hitting cargo.

After injecting new life into its best-selling A320 with a revamped version in the summer, the world’s largest commercial planemaker now expects record orders of 1,500 aircraft in 2011 instead of a previous target of 1,000.

The prediction, beating a 2005 record of 1,111 orders, sets the tone for what industry sources expect to be a haul of at least 100 new Airbus sales at the Dubai Air Show next week.

These include a sale of five new A380s to Qatar Airways, doubling its previous order.

Airbus had 1,372 gross orders by the end of October.

BREATHING ROOM FOR BOEING

Airbus however faces a major challenge in building the lightweight A350 mid-sized jet and said it had learned from past mistakes on the delayed A380 whose risk profile is now “significantly reduced,” according to Ring.

EADS said the A350 would enter service in the first half of 2014 instead of late 2013, a delay of up to six months.

It pushed the first assembly back by three months to the first quarter of 2012.

Boeing’s 787 Dreamliner entered regular service in Japan this month after three years of delays caused by problems in building the world’s first jetliner made mostly of carbon fiber, introducing revolutionary materials on an unprecedented scale.

“Each delay of the A350 program and the individual models allows Boeing to recover some breathing room on the 787 program and to develop the 787-9,” wrote U.S.-based aviation analyst Scott Hamilton, referring to the next Dreamliner variant.

Airbus and Boeing see a market for several thousand of the twin-engined planes which aim to save costs by some 30 percent.

Airbus, which overtook Boeing in 2003 as the world’s largest commercial jet maker, turned the page on its earliest attempts to challenge Boeing on the world’s longest routes by terminating the A340 program.

The four-engined plane first flew almost exactly 20 years ago and was until recently the world’s longest jet, with a focus on routes like the 18-hour trip from Singapore to New York.

But its motto of “four engines are better than two” backfired when airlines put their faith in a new generation of planes with two engines led by the Boeing 777.

The decision to scrap the plane rubs salt in the wound a day after Boeing trumpeted the start of work on its 1,000th 777 wide-body aircraft. But a two-engined sister version of the A340 known as the A330 continues to bring solid sales to Airbus.

The A340 set distance records and also made its mark as a luxury accessory for VIPs such as the Sultan of Brunei but total orders of 379 aircraft were dwarfed by 1,295 sales of the 777.

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