Delays dogging the A380 superjumbo, problems developing the A350 XWB and a strong dollar triggered the loss for 2006 of €572 million ($752.3 million, £389.4 million). As a result, annual net profits at aerospace giant EADS plunged from €1.676 billion to just €99 million. EADS said Airbus would suffer „another substantial loss in 2007”, but insisted the A380 would be delivered on time. Singapore Airlines will be the first company to receive the double-decker airplane, which is scheduled to go into service at the end of this year. Another reason for the losses is the recently-announced restructuring program at Airbus, called Power8, which will see about 10,000 jobs go and several factories sold to partners.
France will be worst hit with 4,300 job losses. Germany will see 3,700 jobs go, while the UK and Spain will see 1,600 and 400 jobs cut respectively. Joint CEO Tom Enders and Louis Gallois said it would take some time before Power8 would make Airbus „substantially more integrated and efficient”. „It is clear… it was the worst year for Airbus in its life,” Gallois said. Enders said EADS had „big problems, as everyone knows”, adding that „this company needs more innovation, more focused innovation”.
EADS said that Airbus’ difficulties were overshadowing a „remarkable” intake of orders for 790 airplanes – its second-best year for orders – and „record deliveries” of 434 aircraft. But the cost of developing the new A350 extra-wide body plane – designed to compete with Boeing‘s new 787 Dreamliner – and the cabling problems that caused a two-year delay in delivering the new A380 superjumbo combined to push the European jet planemaker deep into the red.
The A350 is estimated to reach airlines about five years after the Boeing 787, which is scheduled to make its first test flight later this year. The situation would not get any better in 2007, Airbus warned, because although deliveries of aircraft were expected to grow, Airbus revenues would „most likely” be affected by the weak dollar and competitive pressures. EADS also hailed strong orders in its defense business, with the first deliveries of Eurocopter UH-72A Lakota helicopters to the US army.
Overall, sales were up 15% at EADS – and up 30% in its defense business – to reach €39.4 billion. However, operating profits at EADS were down 86% to €399 million, after a €2.85 billion in 2005. The company delayed a decision on whether to pay a dividend until its next board meeting. The French government had already said it did not expect to receive any dividend for its 15% stake in EADS. (BBC NEWS)
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