EADS shares up on 2Q profits, delivery outlook

[July 28, 2009]  PARIS (AP) -- Shares of EADS NV rose Tuesday as the parent company of plane-maker Airbus said net profit increased 76 percent -- and that it expects to deliver as many planes this year as last year even as the recession hurts their airline customers.

EADS CEO Louis Gallois said order cancellations were "surprisingly limited" and that Airbus has been able to manage its order book to cope with deferrals.

"We are not in the situation of previous crisis when we saw more panic," he said in a conference call. "There is no panic on the market."

European Aeronautics Defense and Space Co. reported net profit of euro208 million ($297 million) in the April to June period, up from euro118 million reported a year earlier, helped by Airbus' deliveries. Revenue in the second quarter rose 19 percent to euro11.7 billion.

The company's shares were up 5.1 percent at euro13.35 ($19.05) in Paris midday trading.

Airbus handed over 254 aircraft to customers in the first six months, compared with 245 in the first half of 2008. The tally helps it keep the title of world's largest planemaker, as archrival Boeing Co. delivered fewer aircraft -- 246 -- in the period.

In a statement, EADS said it expects Airbus to win 300 new gross orders this year while keeping aircraft deliveries stable at the 2008 level, including 14 A380 super jumbos.

In the first six months, Airbus booked 90 gross orders and 22 cancellations.

Conditions are difficult for Airbus customers during the recession as people hold off on air travel. The International Air Transport Association says airlines could lose $9 billion globally in 2009, and Airbus is extending financial help to some buyers.

"It's too soon to say that we have reached the bottom," Gallois said.

But EADS said despite the tough environment "customer financing needs remain limited in the first half," enabling Airbus to hang onto its cash.

The company said its net cash position "remains solid" at euro8.1 billion. At the end of the previous quarter, EADS had cash reserves of euro8.7 billion, compared with euro9.2 billion at the end of last year.

The cash is "a strong asset in the current situation of limited economic visibility," EADS said.

Airbus reported a 20 percent increase in first quarter revenue to euro8.06 billion. EBIT -- or earnings before interest, taxes, depreciation, amortization and exceptionals -- more than quintupled to euro430 million in the period.

EADS took a relatively minor new charge of euro71 million on the delayed A400M military transport program, but warned that it may take "substantial negative" hits to future profits.

Defense ministers from the seven European countries that launched the troubled A400M project agreed last week to renegotiate the contract. EADS has already booked over euro2 billion in penalties and other charges.

"The full financial consequences of the delays will only be known once the negotiations are finalized," EADS said in a statement.

EADS missed a March 31 contractual deadline for the first flight, and it could have to repay as much as euro5.7 billion ($8 billion) to governments if the project were canceled.

EADS said its second half earnings before interest, tax, goodwill and exceptional items will be positive but will fall compared to the first half level of euro888 million, due to higher research costs and foreign exchange rate impact.

Earier this month, Boeing reported a 17 percent rise in second-quarter profit to $998 million.

[Associated Press; By GREG KELLER and EMMA VANDORE]

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