Big Difference From A Year Ago
"How do you like me
now?" We wouldn't be surprised if some Airbus executives this week
are asking that very question of officials with parent company
EADS, after the European aerospace consortium posted a healthy
first quarter profit, largely due to some positive economic
news from the planemaker.
Fueled by continued strong demand for its airliners, and a $620
million early payment towards its struggling A400M military
transport plane, Airbus helped EADS bounce back to a $440 million
profit for the quarter. That compares favorably to the $15 million
loss EADS incurred for the same period in 2007, due to heavy losses
at Airbus related to the delay-plagued A380.
The International Herald Tribune reports EADS CEO Louis Gallois
called the Q1 results "encouraging" in the face of serious economic
concerns, including the strong euro that devalued much of the
fiscal gains the aerospace company has made. EADS took a $557
million hit to its operating profit in the quarter, due entirely to
disparate values between the euro and the US dollar.
Gallois has earlier called the strong euro "a sword of Damocles"
hanging over EADS, and Airbus. Most of the planemaker's expenses
are incurred in euros, but its products are priced in dollars. That
offset means Airbus makes less real money on each sale.
"Though many serious challenges have been overcome, there
remains much to do in order to secure the significant and lasting
improvement in operational performance we are targeting," Gallois
said Wednesday.
EADS continues to look towards manufacturing facilities outside
the European Union, including plants in the United States, to help
offset the dollar/euro valuation crisis. Airbus has also ramped up
deliveries to bring more cash in; the planemaker delivered 123
planes in the quarter, including a record 48 aircraft delivered in
March.
Most of those planes were narrowbody A320s, however... the
least-expensive planes in the Airbus line, with the lowest
profit-margins. Still, those deliveries contributed to a $971
million operating profit at Airbus for the first quarter.
BCG Partners investment strategist Howard Wheeldon said EADS
deserves credit for posting an impressive turnaround... but
cautioned against showing too much enthusiasm.
"They are back to profit, they managed to deliver more aircraft
in the first quarter and it has painted a better picture than we've
seen over the last six to seven quarters," Wheeldon said. "But they
haven't given answers on how they will achieve all they have set
out to achieve," referring to Airbus' controversial Power8
restructuring program.
Power8 relies heavily on massive jobs cuts -- as many as 10,000
-- at Airbus by 2010, and the sale or closure of seven Airbus
plants. Union protests have halted the former, however, and weak
economic conditions have conspired to thwart the sale of Airbus
sites in France and Germany.
Airbus also can't rest on its plane-delivery laurels for
long... as earlier this week, the
planemaker also confirmed deliveries of the A380 will be delayed
yet again, due to problems as the company transitions to line
production of the superjumbo airliner.