A380 unit erodes EADS net earnings
By Emma Vandore |
May 15, 2010, Saturday
|
Print Edition
Print Edition
AIRBUS parent company EADS NV yesterday reported that first-quarter net profit fell 39 percent as its plane maker unit struggled with the "challenges" of producing its A380 superjumbo.
Paris-based European Aeronautic Defence & Space Co said that net profit in the January-March period fell to 103 million euros (US$129 million) from 170 million euros a year earlier.
Revenue fell 6 percent to 9 billion euros in the period, EADS said in a statement.
Airbus is struggling to ramp up production of the A380 because the cabins of the hulking plane require greater customization than other plane models.
The plane "will continue to weigh substantially on" earnings in 2010, EADS said.
The first A380 was delivered almost two years late to Singapore Airlines in 2007. Chief Financial Officer Hans Peter Ring said on a conference call that Airbus is still on track to deliver 20 A380s this year, and could even exceed the target.
EADS also said its hedging position - contracts designed to lock in currency rates and protect it from negative effects of foreign exchange fluctuations - deteriorated, weighing on earnings.
The hedging contracts were set before the recent strengthening of the dollar - linked to fears over sovereign debt in some of Europe's weaker economies.
EADS CEO Louis Gallois said the cheaper euro is good news for the company, which sells planes in dollars but has most of its costs in euros.
"EADS should benefit in the mid- and long-term if the dollar trend is confirmed," he said in a statement.
Analysts said EADS results were more or less in line with expectations, and the company is starting to deliver on its promises. The A380 problems had been already been flagged to the market.
Paris-based European Aeronautic Defence & Space Co said that net profit in the January-March period fell to 103 million euros (US$129 million) from 170 million euros a year earlier.
Revenue fell 6 percent to 9 billion euros in the period, EADS said in a statement.
Airbus is struggling to ramp up production of the A380 because the cabins of the hulking plane require greater customization than other plane models.
The plane "will continue to weigh substantially on" earnings in 2010, EADS said.
The first A380 was delivered almost two years late to Singapore Airlines in 2007. Chief Financial Officer Hans Peter Ring said on a conference call that Airbus is still on track to deliver 20 A380s this year, and could even exceed the target.
EADS also said its hedging position - contracts designed to lock in currency rates and protect it from negative effects of foreign exchange fluctuations - deteriorated, weighing on earnings.
The hedging contracts were set before the recent strengthening of the dollar - linked to fears over sovereign debt in some of Europe's weaker economies.
EADS CEO Louis Gallois said the cheaper euro is good news for the company, which sells planes in dollars but has most of its costs in euros.
"EADS should benefit in the mid- and long-term if the dollar trend is confirmed," he said in a statement.
Analysts said EADS results were more or less in line with expectations, and the company is starting to deliver on its promises. The A380 problems had been already been flagged to the market.
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