Airbus warns of greater A380 loss
01-18-2007, 02:29 PM
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Airbus warns of greater A380 loss
Airbus warns of greater A380 loss
Company concedes order title to Boeing
Associated Press
January 18, 2007
PARIS -- The two-year delay to the Airbus A380 is proving costlier than expected, parent company European Aeronautic Defense and Space Co. warned Wednesday, and it confirmed Airbus had lost its five-year lead in orders to Boeing Co.
Airbus won orders for 824 airliners last year, the company said, well short of both Boeing's 1,050 tally and its own industry record of 1,111 in 2005. But it said it delivered 434 planes to Chicago-based Boeing's 398.
Despite the production crisis blighting the double-decker A380, 2006 was "the best year ever in terms of deliveries and the second-best year in terms of sales," said EADS co-Chief Executive Louis Gallois, who also heads Airbus.
Shortly before the orders announcement, EADS said an unspecified fourth-quarter accounting charge tipped Airbus into an operating loss for 2006 and will "roughly balance" earnings before interest and tax from other divisions.
Hans Peter Ring, chief financial officer for EADS and Airbus, said the "bulk of the charges" were caused by previously disclosed loss projections that were brought forward, including costs linked to the A380 setbacks and restructuring plans.
EADS said in October that the A380 problems would wipe $6.2 billion from 2006-10 profit.
However, EADS also blamed the Airbus loss on new A380-related costs that were "not originally" envisioned. For the first nine months of 2006, Airbus posted an operating profit of $1.46 billion.
Previous disclosures "do not explain" the full extent of the warning, said Harald Liberge, an analyst with CM-CIC Securities. "Our impression is that there are losses that are greater than expected even by Airbus."
Dubai-based Emirates Airline, the biggest A380 customer, with 43 planes on order, has said it will lose hundreds of millions of dollars in revenue because of the delays. Airbus will have to take a "massive write-off" to foot the bill, Emirates President Tim Clark said this week.
Airbus also said Wednesday that it had completed the wiring on the first A380 scheduled to enter commercial service with launch customer Singapore Airlines in October, meeting a key milestone in its recovery plan for the superjumbo program.
Meeting the first delivery deadline remains "by far our biggest challenge," Airbus Chief Operating Officer Fabrice Bregier said.
Bregier said Airbus will learn from mistakes on the A380 as it steps up development of the A350 XWB, the midsize airliner launched last month to plug a gaping hole in the Airbus product line, which has leaked business to Boeing's 787.
While Boeing has booked 448 orders for the fuel-efficient Dreamliner, Airbus faces the task of renegotiating most of its 102 A350 sales with customers who ordered an earlier version of the plane, since scrapped.
Top Airbus salesman John Leahy said he was undaunted by the 787's head start in a market estimated at 5,600 planes over the next two decades.
"I'm willing to give up, regretfully, the first 400 to them, and I'll catch up on the next 5,200," said Leahy.
http://www.chicagotribune.com/busine...i-business-hed
Company concedes order title to Boeing
Associated Press
January 18, 2007
PARIS -- The two-year delay to the Airbus A380 is proving costlier than expected, parent company European Aeronautic Defense and Space Co. warned Wednesday, and it confirmed Airbus had lost its five-year lead in orders to Boeing Co.
Airbus won orders for 824 airliners last year, the company said, well short of both Boeing's 1,050 tally and its own industry record of 1,111 in 2005. But it said it delivered 434 planes to Chicago-based Boeing's 398.
Despite the production crisis blighting the double-decker A380, 2006 was "the best year ever in terms of deliveries and the second-best year in terms of sales," said EADS co-Chief Executive Louis Gallois, who also heads Airbus.
Shortly before the orders announcement, EADS said an unspecified fourth-quarter accounting charge tipped Airbus into an operating loss for 2006 and will "roughly balance" earnings before interest and tax from other divisions.
Hans Peter Ring, chief financial officer for EADS and Airbus, said the "bulk of the charges" were caused by previously disclosed loss projections that were brought forward, including costs linked to the A380 setbacks and restructuring plans.
EADS said in October that the A380 problems would wipe $6.2 billion from 2006-10 profit.
However, EADS also blamed the Airbus loss on new A380-related costs that were "not originally" envisioned. For the first nine months of 2006, Airbus posted an operating profit of $1.46 billion.
Previous disclosures "do not explain" the full extent of the warning, said Harald Liberge, an analyst with CM-CIC Securities. "Our impression is that there are losses that are greater than expected even by Airbus."
Dubai-based Emirates Airline, the biggest A380 customer, with 43 planes on order, has said it will lose hundreds of millions of dollars in revenue because of the delays. Airbus will have to take a "massive write-off" to foot the bill, Emirates President Tim Clark said this week.
Airbus also said Wednesday that it had completed the wiring on the first A380 scheduled to enter commercial service with launch customer Singapore Airlines in October, meeting a key milestone in its recovery plan for the superjumbo program.
Meeting the first delivery deadline remains "by far our biggest challenge," Airbus Chief Operating Officer Fabrice Bregier said.
Bregier said Airbus will learn from mistakes on the A380 as it steps up development of the A350 XWB, the midsize airliner launched last month to plug a gaping hole in the Airbus product line, which has leaked business to Boeing's 787.
While Boeing has booked 448 orders for the fuel-efficient Dreamliner, Airbus faces the task of renegotiating most of its 102 A350 sales with customers who ordered an earlier version of the plane, since scrapped.
Top Airbus salesman John Leahy said he was undaunted by the 787's head start in a market estimated at 5,600 planes over the next two decades.
"I'm willing to give up, regretfully, the first 400 to them, and I'll catch up on the next 5,200," said Leahy.
http://www.chicagotribune.com/busine...i-business-hed
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