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Airbus Profits Rise But A400M Problems Resurface

Airbus Group reported a 12 percent rise in nine-month underlying operating profit, led by its commercial aircraft and helicopter divisions.

Nine month operating earnings before one-off items rose to EUR€2.6 billion (USD$3.23 billion) as revenue grew 4 percent.

In the third quarter, Airbus posted operating profit of EUR€744 million, up 14 percent, on flat sales.

However, it warned of a possible accounting impact from production delays in its A400M military airlifter, which it said would be assessed with its full-year results.

It continued to target stable revenue and aircraft deliveries, and "moderate" operating margin growth in 2014.

Airbus said it had run into delays in enhancing the military capabilities of the A400M and that a clause allowing buyers to cancel had come into effect from November 1. But it said it was "highly unlikely" that this right would be exercised.

The A400M was developed at a cost of EUR€20 billion for seven European NATO countries and received a EUR€3.5 billion bailout in 2010 following delays and cost overruns, which Airbus blamed in part on a poorly designed fixed-price contract.

In a statement, Airbus said the heavy cargo and troop plane had been hit by "military functionalities challenges", and delays in producing and delivering the aircraft to customers.

Actions to address this "are under assessment and will be finalised for the 2014 full-year accounts," it said.

Airbus reaffirmed plans to deliver the first A350 to Qatar Airways in the fourth quarter after it received Type Certification from European and US regulators.

Chief executive Tom Enders said in a statement the ramp-up of A350 and A400M production, as well as a planned upgrade to the A330, "continue to require strong management focus".

(Reuters)