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EADS says first quarter profit falls 40 per cent

May 14, 2009 – Airbus parent company EADS says first quarter profit falls 40 per cent. The parent company of Airbus said Tuesday first quarter net profit fell 40 per cent after the European plane maker delivered fewer jets and booked a charge on the troubled A400M military transport program.

European Aeronautics Defense and Space Co. said net profit in the January to March quarter fell to euro170 million (US$230.76 million) from euro285 million a year ago _ lower than analysts' expectations, and cut its expectations of Airbus orders this year.

The company said earnings were hurt by fewer Airbus aircraft deliveries as well as "price deterioration."

Airbus, which receives a final payment on delivery, handed over 116 aircraft in the first quarter compared to 123 in the same period last year.

Airbus booked 22 gross orders in the quarter, but took 14 cancellations, bringing net orders to eight over the period. That is only a fraction of the 420 gross orders and 395 net orders made in the first quarter of 2008.

After two bumper years, orders have dried up this year as airlines curb spending amid the economic crisis. EADS said it expects Airbus to capture 300 gross orders this year, down from an
earlier forecast of 300 to 400.

However, analysts say the planemaker and its customers may be saving announcements of new orders for the Le Bourget air show, held near Paris in June.

EADS revenue fell 14 per cent to euro8.5 billion in the quarter from euro9.9 billion in the same period last year.

Results reported Tuesday were lower than analysts' expected. Five analysts surveyed by Thomson Reuters forecast net profit at euro200.80 million and revenue at euro9.52 billion for the quarter.

At Airbus, revenue fell 21 per cent to euro5.88 billion and earnings before interest and tax (EBIT) dropped 86 per cent to euro89 million.

CEO Louis Gallois said EADS is "proactively" monitoring its order book and deliveries whilst improving efficiency.

He said the A400M military transport program is "a big concern." EADS has indefinitely postponed the first flight of the plane and is now negotiating new technical requirements and commercial terms with the seven European NATO countries that first ordered the plane.

EADS could have to repay as much as euro5.7 billion to governments if the project were canceled but it has said that is "very unlikely."

Including a euro120 million charge booked in the first quarter, the A400M has cost EADS euro2.32 billion to date.

"All financial consequences of the delays will only be known once the negotiations are finalized," the company said.

"Substantial negative income statement impacts may still have to be booked in future periods."