Translated material
Dollar and Airbus spoiled EADS indicators
The financial results are indeed more than modest. Profit before taxes and bank interest amounted to 367 million euros (for the same period last year - 1.654 billion euros). EADS's net profit fell by 93% compared to last year's figure, from more than 1 billion euros to 71 million euros.
The main reasons for the financial failure were identified as structural reorganization and a planned increase in research and development costs at the Airbus aircraft manufacturing subsidiary, as well as the fall in the dollar. Airbus production sites are located primarily in the eurozone, and sales of aircraft and, accordingly, settlements under contracts for them in the world are carried out in dollars. Delays in the implementation of the program to create the A400M military transport aircraft and increased costs in Eurocopter, the helicopter division, also played an important role. However, the most significant negative factor was the increase in costs for the A380 airliner and the new long-range A350 XWB aircraft. Airbus has repeatedly postponed the release of the A380 in recent months, and the A350 project also had to be finalized. The company recently adopted a restructuring program called Power8, which includes cutting 10,000 jobs and selling a number of production sites. In total, Airbus expects to save 300 million euros through these measures.
However, the EADS press release states that the results achieved were not unexpected, but, on the contrary, only confirmed the concern’s forecasts made at the beginning of the year. Moreover, over the course of six months, the trend leveled off: in the second quarter, the drop in profits, although noticeable, was still less significant compared to the first quarter, and not as precipitous as expected just a few months ago.
The aerospace concern expressed cautious optimism regarding its financial prospects for the near future. Despite the current dramatic financial performance, the group believes that in 2007 turnover will fall by only a “single-digit percentage”, and pre-tax profit will remain at last year’s level of 399 million euros.
The reason for optimism lies in the results of the last air show in Le Bourget. At the exhibition held in June, Airbus managed to receive a solid package of new orders. In the first half of the year, their total number reached 680 aircraft. (In financial terms, by the middle of the year, the amount of the order package increased from 210.1 to 251.7 billion euros.) Of these, 392 are various modifications of the A320 family aircraft, 279 are long-range aircraft, of which 152 are orders for the new A350 . The Airbus A380, a double-deck airliner that seats 555 passengers and can fly non-stop for up to 15,000 kilometers, received nine new orders in the first six months of this year, bringing the total to 165 from 14 buyers. The first aircraft of this type should arrive at Singapore Airlines, then the production of these aircraft will be significantly expanded.
The markets reacted to yesterday's EADS news by dropping the company's quotes by 3.12%.
The global boom in the aircraft sector could continue for several years, and Boeing Co. may receive more than a thousand orders for airliners by the end of this year, said the head of the American aviation giant, James McNerney. Boeing shares rose more than 3% in U.S. trading on Wednesday after the company reported second-quarter earnings and significantly raised its full-year forecast. "The acceleration is lasting longer than expected. We haven't had a cycle as long as this in a long time. It looks like it will remain strong over the next few years," he said. Increase in orders from the world's largest aviation leasing company International Lease Finance Corp. for 787 jets at this year's Paris Air Show - evidence that the boom is unlikely to abate.