More glitches in delivery of military aircraft hit Airbus profits
Europe’s biggest aircraft maker has now taken €7bn in charges against the A400M
Airbus ceo Tom Enders, has previously described the A400M as “mission impossible”. Photograph: Reuters
Airbus Group SE booked new charges against the delayed A400M military-transport aircraft and warned that cost over-runs will extend into 2018 at least, overshadowing company forecasts for increased earnings this year.
Europe’s biggest aircraft maker announced a €2.2 billion hit to cover the cost of the latest glitches to afflict the troubled troop carrier and asked government buyers to help ease the burden. It has now taken €7 billion in charges against the A400M over the past decade, following a 2003 deal to build 180 of the turboprop planes for €20 billion.
Chief executive officer Tom Enders, who has previously described the A400M as “mission impossible,” said Wednesday that the model remains a major concern given steep penalties for late deliveries and fresh issues with meeting promised performance specifications. That means Airbus has no choice but to go back to the aircraft’s purchasers and plead for “mitigation,” he said.
The latest blow in the A400M saga clouded an otherwise upbeat assessment from Airbus of its prospects for this year, with Enders predicting that adjusted earnings before interest and tax will show a mid-single-digit percentage gain. That’s after the figure fell 3.6 per cent to €3.96 billion in 2016, slightly above the €3.80 billion predicted by analysts.