ATW Daily News

Burdened by Airbus, EADS reports third-quarter loss

Thursday November 9, 2006

Now the sole shareholder in Airbus, EADS felt the full impact of the aircraft manufacturer's troubles as it reported a €195 million ($248.8 million) third-quarter loss, a reversal from a €279 million profit in the year-ago quarter.

At Airbus, operating result plunged to a €350 million loss from a €410 million profit even as revenues rose 14% to €5.42 billion.

"EADS financials remain sound based on good performance of the Airbus delivery programs and the helicopter, defense and space businesses," co-CEOs Tom Enders and Louis Gallois said in a statement. "Nevertheless, the struggle to reverse the A380 problems imposes a severe burden on our financial performance. This, together with the [US] dollar devaluation, requires drastic measures to remain competitive. Therefore the Power8 program in Airbus and structural streamlining of the Group has top priority."

Corporate revenues climbed 14% to €8.49 billion and the operating loss of €239 million compared to a €559 million profit in the third quarter of 2005. Airbus was the only EADS division to report an operating loss.

Airbus's nine-month operating profit of €1.14 billion was down 38% from €1.85 billion earned in the year-ago period. EADS revealed that the A380 delay already has had a €1 billion effect. Airbus revenues rose 16% to €18.57 billion and its order intake dropped 49% to €14.7 billion. It delivered 320 aircraft during the period compared to 271 last year, and received 226 gross orders.

EADS said it is "preparing to make a decision with respect to the future of the A350 XWB...in the weeks to come" and that A380 type certification remains on schedule before year end. The company's nine-month profit of €848 million was down 33% from €1.27 billion in the year-ago period.

by Brian Straus

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