A400M Delivery Snafu May Represent $2 Billion Loss
European planemaker
Airbus continues to represent a mixed blessing for parent company
EADS. Despite recent sales success and evidence two trouble-plagued
airliner programs are back on track, past Airbus miscues continue
to haunt the aerospace consortium... sinking its financial outlook
in the process.
EADS announced Monday it abandoned its previous profit forecast
for the year, leading to a 5.1 percent drop in the company's stock
price. EADS blamed last month's announcement of problems with its
A400M military transport aircraft program... which the company
conceded may lead to as much as 1.4 billion euros $2 billion US) in
charges against the program.
And even that lofty figure may not be all, reports
Bloomberg.
As ANN reported, EADS
announced October 17 deliveries of the four-engine turboprop
transport -- intended as a competitor to, and replacement for, the
aging Lockheed Martin C-130 -- would be delayed as much as six
months. EADS also confirmed reports EPI, an engine consortium
including Rolls Royce and companies from France, Germany and Italy,
was behind in work on the TPM400 turboprop engine which will power
the A400M.
Analysts responded by issuing loss forecasts as high as one
billion euros... much of which was projected to be from payouts to
customers forced to wait for the aircraft, first proposed in the
late 1980s.
"The charge for the A400M is higher than we expected," said
Goldman Sachs analyst Sash Tusa, who had estimated a figure of 900
million euros. "The key issue is going to be how EADS manages the
risk associated with flight tests."
Contributing to shaky investor confidence in EADS is the
consortium's recent history for internal strife, and aircraft
development woes at Airbus. Current Airbus CEO Tom Enders is the
fifth person in 18 months to hold that title... as his predecessors
have either been forced out, or bailed out on their own.
Enders -- along with numerous executives with EADS, and its
partners -- faces possible charges of insider trading, stemming
from suspicious stock sell-offs ahead of the announcement of a
second delay to the Airbus A380 program last year.
"This is a considerable loss and the news is worrisome for
EADS," added Salah Seddik, a fund manager at Richelieu Finance in
Paris. "Management has a credibility problem."
Speaking of the A380... the superjumbo airliner represents
something of a light at the end of the tunnel for Airbus. The
planemaker delivered the first A380 to enter revenue service, to
Singapore Airlines, last month. While that was 22-months after
originally promised, it's heartening for the planemaker to see the
A380 finally enter service.
Things had also
appeared brighter for Airbus' beleaguered A350 XWB. The aircraft --
redesigned numerous times throughout its development -- has started
to win new orders in advance of its expected 2013 entry into
service... but trouble may once again be on the horizon for the
composite-bodied aircraft.
"The biggest problem is that the delays and technical problems
on the A400M mean that vital engineering and research and
development resources will be diverted from new civil programs
until at least 2010," said Citigroup Global Markets analyst David
Perry.
EADS will issue a revised profit forecast November 8, when it
issues its third quarter numbers. Stay tuned... and, bring a
liferaft...
ANN's Daily Aero-Linx (04.15.24)
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