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Business Home > Aviation
Airbus delays A350 after glitch

(Reuters) / 27 July 2012

PARIS - Airbus announced a fresh delay to Europe’s newest passenger jet on Friday, but the cost of the setback to the A350 barely dented a stronger-than-expected first-half performance that put rocket fuel under the shares of parent company EADS.

Shares in Europe’s largest aerospace company rose 6 percent and topped 30 euros for the first time since May after it raised profit and revenue forecasts, outpacing a broad rally fuelled by hopes of central bank support for the struggling global economy.

Delivering his first results since stepping up from the Airbus unit in June, EADS Chief Executive Tom Enders said a top priority was improving profits by delivering on major projects -a problem for both Airbus and rival Boeing.

“Another focus of our efforts is to further integrate and globalise EADS,” he said in a statement, weeks after Airbus unveiled plans to build an assembly plant in the United States.

The three-month delay to the A350 follows a glitch in wing production on the planemaker’s most ambitious project and pushes first delivery of the mid-sized jet - Europe’s answer to the Boeing 787 Dreamliner - into the second half of 2014.

The A350 was already a year behind its original schedule but Airbus wants to iron out problems before the start of final assembly. A backlog of unresolved problems was blamed in part for three-year delays on the A380 superjumbo and Boeing’s 787.

Problems in drilling holes in the wings on the carbon-composite A350 were first reported by Reuters at this month’s Farnborough Airshow.

The delay will result in a charge of 124 million euros ($153 million), EADS said.

Airbus and Boeing are ramping up production to meet surging demand for fuel-saving jets as airlines cut costs to survive the economic downturn while feeding growth in emerging markets. But both have faced persistent problems.


EADS raised its forecast for Airbus deliveries this year to 580 aircraft from 570 and formalised a goal to sell 600 to 650 Airbus jets in 2012. A resurgent Boeing is nonetheless expected to reclaim the number one spot in sales and deliveries this year as it reduces a bottleneck of undelivered Dreamliners.

In an upgrade which contrasts with bleak economic news in its European home markets, EADS raised its operating profit forecast to 2.7 billion euros from 2.5 billion on revenue which it now expects to rise 10 percent rather than 6 percent or more.

EADS operating profit almost doubled in the second quarter to 735 million euros - compared to average analyst expectations of 626 million euros in a Reuters survey.

Revenue grew by 12 percent to 13.53 billion, led by Airbus and strong helicopter and space divisions.

The earnings follow a spate of stronger-than-expected quarterly earnings by US aerospace and defence companies in the past week as they pushed through cost cutting and share buybacks to prepare for heavy cuts in defence spending.

Boeing raised its full-year earnings forecast on Wednesday.

Airbus is meanwhile moving to inject new confidence in its A380 superjumbo after recent wing cracks but expects a dip in orders and deliveries as it seeks to reassure customers of the world’s largest passenger jet, in service since 2007.

EADS kept a forecast for 30 A380 deliveries in 2012 but faces some reluctance to take the double-decker aircraft next year before a definitive solution becomes available in early 2014. Qatar Airways has said it would rather wait until then.

“Obviously we have a challenge dealing with the wing cracks and with customers and that will result in a temporary - temporary - delivery doubt. But we know how to fix the problem and it’s well under way.” Enders told reporters.

EADS is progressively taking charges for the A380 cracks but a drop in deliveries would erode its cash position because it would have the undelivered planes on its inventory for longer than expected. The A380 sells for $390 million at list prices but most airlines get big discounts.

Enders rekindled doubts over whether Airbus would reach a separate target of selling 30 A380s in 2012.




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