EADS slumps to loss as A400 fails to takeoff

The Telegraph ^ | 3/9/2010

[bruinbirdman]

EADS, the owner of planemaker Airbus, has scrapped its dividend as overruns on the troubled A400 military plane drove it to a loss last year.

EADS, which is the world's second-biggest aerospace company after Boeing, today reported a net loss of 763m euros (£693m) for last year compared with a profit of 1.57bn euros in 2008. Revenues fell to 42.8bn euros from 43.3bn euros.

The company told investors last week that delays on the A400M military transport aircraft it's building for European governments would force it to take a charge of 1.8bn euros. The charges also left EADS, based in both Paris and Munich, nursing an operating loss of 322m euros compared with an operating profit of 2.83bn euros.

Overruns on the A380 superjumbo, which Airbus doesn't expect to be profitable for several years, also contributed to last year's losses. "The A380 continued to weigh heavily on the underlying performance," EADS said today.

Computer illustration of proposed A400M military plane

The A400M is designed to replace ageing military planes and is already a third more costly than originally budgeted for. Tom Enders, the chief executive of Airbus, had complained in January that the company's spending of 150m euros a month on the planes was not sustainable.

Today's loss comes less than 24 hours after EADS and its American partner, Northrop-Grumman, dropped out of a nine-year, two-horse $40bn (£27bn) race to provide the US Air Force with a fleet of air tankers after accusing the American government of skewing the competition in rival Boeing's favour

[Proud_USA_Republican]

Agreed. The A400M was another european socialized jobs program. When there is no motivation to break even or turn a profit, odds are the project ends up just like it has.

[RayChuang88]

I still think if the European military orders 180 C-17’s instead of the failing A400M program, it wouldn’t be just the current model with the Pratt & Whitney F117-PW-100 (PW2040) engines and the Boeing “flying boom” refueling receptacle. That level of production—especially given European local parts requirements—will involve installing Rolls-Royce RB211-535E4 engines rated at 40,100 lb. thrust and using a drogue-and-probe refueling system.

[Paleo Conservative]

If they buy a Europeanized variant of the C-17, I wouldn’t be surprised if the RAF swapped their existing C-17’s for the new version.