EADs reports increased profit in 2011, positive forecast

The Associated Press
March 08, 2012
By The Associated Press
March 8, 2012, Paris – Strong demand for commercial jets and helicopters helped bring Airbus parent company and aerospace giant EADS NV a 72 per cent jump in fourth quarter profit and a similar full-year boost, the company reported Thursday.

Shares surged as EADS' quarterly profit of C612 million ($803 million) beat market expectations, thanks to huge demand for Airbus' revamped single-aisle A320neo passenger jet and record orders that beat out U.S. rival Boeing Co. for the fourth year running.

While forecasting continued growth this year, EADS faces some shadows ahead, including the cost of repairing wing cracks in A380 superjumbo jets and challenges to Airbus' loss-making military division.

Sales for last year were up 7 per cent to C49.1 billion from C45.7 billion the year before. That was above a survey of analyst expectations that foresaw full-year revenue of C47.88 billion.

Full-year profit grew 87 per cent to C1.03 billion, from C553 billion in 2010. Even excluding a one-off gain, profit was up 76 per cent, the  company said in a statement.

The company cited larger earnings in commercial aircraft and growth in the civilian helicopter market, as well as cost savings.

Earnings per share were at C1.27, above the analysts' expectations of C0.93.

The company forecast continued growth of more than 6 per cent in 2012. With the eurozone's debt crisis dragging on, CEO Louis Gallois warned, however, that the company would be monitoring the "uncertain economic environment."

A year ago, the company had forecast flat earnings in 2011 after a rough few years involving delays and cost overruns on Airbus' A350 commercial jet program and the A400M military plane.

An upturn in the aviation market, especially in fast-growing Asian countries, has spurred new jet orders from airlines scrambling to meet demand. The Airbus fuel-saving A320neo in particular enjoyed a raft of orders in 2011.

Shares were up 9 per cent in Paris trading Thursday morning to C29.25.

EADS is a European holding company, with joint French-German management and based in the Netherlands, that also encompasses Eurocopter helicopters, Astrium satellites and Cassidian defence electronics businesses among other divisions. Gallois has sought to make the company less dependent on Airbus, which contributes two-thirds of EADS revenue.

Airbus took in 1,419 net new orders in 2011, worth $140 billion, well above Boeing's total of 805 aircraft. That topped the previous record of 1,413 net orders recorded by Boeing in 2007.

Airbus also delivered 534 aircraft last year, and is targeting around 570 jet deliveries this year.

Gallois told a news conference that the company is "devoting maximum attention to solving the wing crack issues" that surfaced late last year in the A380 superjumbo, the world's largest passenger jet.

Europe's air safety authority ordered checks last month on the entire global fleet of Airbus A380s – some 68 of the double-decker, $390 million jets _ for cracks on parts inside the wings. The checks focus on the so-called "wing rib feet" – the metal brackets that connect the wing's ribs to its skin.

Gallois said the company is looking at manufacturing solutions for future planes. "We will see the potential impact of this new process of  manufacturing on cost. We don't know if it will trigger an increase of cost."

Airbus said it has developed repair kits for the problem, which are currently being installed, and that despite the problems the aircraft remained safe to fly.

Gallois is due to retire in May and be replaced by Airbus CEO Tom Enders.

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