EADS Profit Jumps

Future of A400M in doubt after delays

European aerospace giant EADS on July 28 reported a 76% jump in net profit for the second quarter to US$297 million despite costs linked to delays of its A400M military transporter.

EADS, the parent company of Airbus, said its second quarter operating profit was up 69% to US$935 million but for the six months to June period was down 23% at US$1.3 billion.

It said the six months result reflected a charge of US$272.3 million taken to cover delays on the A400M project.

"Substantial (further) charges could be taken against results in coming (quarters) depending on how the (A400M) program advances and the outcome of negotiations" on its future with the project partners, EADS said in a statement.

Last week, the seven project partners -- Britain, France, Germany, Spain, Turkey, Belgium and Luxembourg -- agreed to renegotiate their contracts to buy the aircraft by year-end.

The future of the plane, which was to replace aging military transports in several European air forces, has been in doubt after its service date was pushed back from 2009 to 2013 amid technical problems.

French and German officials said on July 24 they would extend a deadline for agreeing a new contract for the US$28 billion project until the end of the year.

EADS said its second half operating profit before exceptional items should be positive, if lower than in the first six months of the year, reflecting higher research and development costs plus unfavorable exchange rates.

Costs on the Airbus A380 superjumbo, with 14 deliveries expected this year, "are still higher than expected," EADS said.

Revenue for the six months to June inched up 2% to US$28.7 billion with 254 aircraft delivered, it added.

Orders were down sharply, falling 66%.

EADS said its order book had been hurt by the global financial crisis and slump but noted a recent slight improvement in trends, reiterating its "challenging" forecast for 300 aircraft orders this year.

Copyright Agence France-Presse, 2009

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