Airbus incurs €1.3bn charge for delay in delivering military transport planes

Airbus incurs €1.3bn charge for delay in delivering military transport planes

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Aerospace and defence firm delivers profit despite losses on military aircraft project

Airbus






A pilot looks out the window of a RAF Airbus A400M at Fairford, England.
Photograph: Matt Cardy/Getty Images

Airbus has taken a new €1.3bn (£1.1bn) charge on its troubled A400M military aircraft programme – taking its total losses on the project to €8bn.

The charge was the outcome of talks with seven European Nato-member governments awaiting overdue deliveries. The project has faced numerous setbacks, including a fatal crash during a test flight which killed four crew in 2015.

Nevertheless, the European aerospace and defence firm exceeded analysts’ forecasts with an 8% increase in profits to €4.25bn on revenues of €66.8bn. In the same period last year the company turned in €3.9bn.

The company’s chief executive, Tom Enders, said it had been a year of “turmoil and challenges” for the plane maker, which employs about 15,000 people in the UK and 129,000 worldwide, producing commercial aircraft, as well as defence, helicopters and space. But he also announced a higher dividend payout to shareholders. The share price climbed more than 10%. Enders told analysts: “This certainly ain’t pretty but we are making good progress overall.”

Airbus said that the talks with Nato governments would significantly reduce the risks remaining in the A400M programme, although there would be “a negative net impact” on jobs at its Seville production plant.

Enders said 2017 had been an encouraging year despite “a lot of challenges, some turmoil, the doom and gloom the media have poured over us”. He added: “We delivered very strongly, even overachieved. We look forward with a lot of confidence to 2018.”

Airbus got a big boost last month when it signed its first significant order in years for its flagship double-decker superjumbo, the A380. The $16bn-deal with Emirates for 36 of the giant airliners came as Airbus had hinted it might stop making the jet because of lack of orders.

Enders said all targets had been reached after production of the A320neo was ramped up to record levels in the the last months of 2017. The neo – which stands for new engine option – is a more fuel efficient version of the single-aisle A320, and has become the firm’s fastest selling commercial aircraft ever. More than 4,000 orders have been placed.

Airbus A400M military transport plane.



Airbus A400M military transport plane. Photograph: Victor R Caivano/AP

Engine issues had stalled deliveries of some of the new planes and Enders said engine makers still needed to do more, with fresh problems at Pratt & Whitney causing some A320neos to be grounded and deliveries suspended this week. An enhanced 2018 target of 800 deliveries was threatened, he said. “We have plenty of challenges going forward, but it is manageable.”

Costs have been lowered on the long-haul A350 passenger airliner, but Enders suggested that fear of overstretching the supply chain could preventAirbus from increasing production of its rival to Boeing’s Dreamliner. He said: “It is blatantly clear that the demand is there.”

The company’s profits were dented by issues around another military plane, after an €82m settlement last week to end an investigation by German prosecutors into corruption in the sale of the Eurofighter to Austria in 2003.

Airbus took a total €117m charge, including €35m to cover ongoing legal costs in the case – one of a string of corruption inquiries surrounding Airbus after it decided to self-report several cases to mitigate potential sanctions.

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