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EADS' net dives 40% on cut in deliveries

EADS, the parent company of Airbus, said yesterday that first-quarter profit fell 40 percent as the plane maker delivered fewer jets, booked a charge on the troubled A400M military transport program and said it was "more challenging" to meet even reduced order targets.

The European Aeronautics Defense and Space Co said net profit in the January to March quarter fell to 170 million euros (US$230.76 million) from 285 million euros a year ago - lower than analysts' expectations.

Airbus said it cut prices on the 116 aircraft it handed over in the first quarter, compared to 123 delivered in the same period last year.

Net orders slump

It booked 22 orders in the quarter, but also took 14 cancellations, bringing net orders to eight for the period, compared to 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.

Although analysts say the plane maker may be saving announcements of new orders for the Le Bourget air show in June, EADS said it "is becoming more challenging" for Airbus to meet even the reduced goal of 300 gross aircraft orders this year, down from an earlier forecast of 300 to 400 planes.

CEO Louis Gallois 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 5.7 billion euros to governments if the project were canceled but it has said that is "very unlikely."

Including a 120-million-euro charge booked in the first quarter, the A400M has cost EADS 2.32 billion euros and there could be more to come.

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

EADS revenue fell 14 percent to 8.5 billion euros in the quarter from 9.9 billion euros in the same period last year. At Airbus, revenue fell 21 percent to 5.88 billion euros.


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