Airbus profit slides as engine glitch, cabin delays crimp output

[TOULOUSE] Airbus Group NV said first quarter earnings fell 23 per cent as an engine glitch stalled deliveries of its revamped A320neo single-aisle jet and a shortage of cabin equipment crimped handovers of the A350 wide-body. New production issues are also afflicting the A400M transport plane.

Earnings before interest and tax fell to 501 million euros (S$763.88 million), excluding one-time items, from 651 million euros a year earlier, the Toulouse, France-based company said in a statement. Analysts had forecast a profit of 473 million euros, the average of estimates collected by Bloomberg.

Airbus's upgrade of the best-selling A320 has become a headache as engine supplier Pratt & Whitney grapples with an over-heating issue that led launch customer Qatar Airways Ltd to refuse delivery of the jets.

The A350 is behind schedule as suppliers of galleys and interior furnishings struggle to keep up.

Chief Executive Officer Tom Enders said the setbacks shouldn't affect Airbus's goal of delivering 650 aircraft this year, up from 635 in 2015, or its forecast for earnings at least matching last year's level.

"We expect a stable financial performance but deliveries, cash and earnings will be heavily loaded towards the end of the year," Mr Enders said. The company faces "a serious challenge" in production of its A400M military transport due to new and unexpected issues concerning the engine-propeller gearbox, he said.

Airbus delivered four A350s in the first three months out of a total of 50 it aims to hand over this year, together with 103 A320s, down from 109 in the first quarter of 2015.

With Pratt promising an engine fix by mid-year, the company plans to accelerate Neo output in the second half and could also bring forward production of some older-version A320s to fill any gap. Sales rose 1 per cent in the quarter to 12.2 billion euros.

Net income fell to 50 per cent to 399 million euros from 2014's figure of 792 million euros, which was swelled by a 697-million euro gain from the sale of a 17.5 per cent stake in Dassault Aviation SA.

BLOOMBERG