Airbus Delays A350 Model After Production Glitch

Published July 27, 2012

| Reuters

European planemaker Airbus delayed the introduction of its newest passenger jet, the carbon-composite A350, as parent EADS  unveiled better-than-expected second-quarter earnings lifted by resilient demand for its existing range of jetliners.

The three-month delay follows a glitch in wing production and pushes first delivery of the all-new A350 - Europe's answer to the Boeing  (BA)787 Dreamliner - into the second half of 2014.

Delivering his first results since stepping up from the Airbus unit to become head of Europe's largest aerospace company in June, EADS Chief Executive Tom Enders said improving profits by delivering on major projects would be a top priority.

"Another focus of our efforts is to further integrate and globalize EADS," he said in a statement, weeks after Airbus unveiled plans to build an assembly plant in the United States.

The A350 was already a year behind its original schedule but new Airbus Chief Executive Fabrice Bregier has stressed he would rather take time to iron out problems before the start of final assembly. A backlog of unresolved problems were blamed in part for three-year delays on the A380 superjumbo and Boeing's 787.

Problems in drilling holes in the wings on the A350 were first reported by Reuters after analysts said they had been briefed at this month's Farnborough Airshow.

The delay will result in a charge of 124 million euros ($152.5 million), EADS said.

Airbus and Boeing are ramping up production to meet a surge in demand for fuel-saving jets as airlines seek to cut costs while preparing for transport growth in emerging markets. But both have run into persistent problems with their newest projects.

EADS raised its forecast for Airbus deliveries this year to 580 aircraft from 570 and formalized a goal to sell 600 to 650 Airbus airplanes in 2012. However, a resurgent Boeing is expected to reclaim the number one spot in sales and deliveries this year as it reduces a bottleneck of undelivered Dreamliners.

EADS also raised its operating profit forecast to 2.7 billion euros from 2.5 billion on revenue which it now expects to rise 10 percent rather than 6 percent or more.

The upgrade, which contrasts with bleak economic news in its home European markets, comes after EADS operating profit almost doubled in the second quarter to 735 million euros.

Revenue grew by 12 percent to 13.53 billion, led by Airbus and strong helicopter and space divisions. EADS quarterly defense profits and revenue were flat.

Analysts were on average expecting second-quarter operating profit to rise by a third to 626 million euros on revenue of 12.979 billion, according to a Reuters survey.

The earnings follow a spate of stronger-than-expected quarterly earnings by U.S. aerospace and defense companies in the past week as they pushed through tough cost cutting and share buybacks to prepare for heavy cuts in defense spending.

Boeing raised its full-year earnings forecast on Wednesday as rising commercial airplane deliveries and defense sales offset higher pension costs.

($1 = 0.8130 euros)

(Reporting by Tim Hepher, Cyril Altmeyer; Editing by James Regan)

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