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Airbus ‘more confident’ on A350 as profits rise

Paris, May 14, 2013

Airbus expressed growing optimism about the schedule for the keenly-awaited maiden flight of its A350 on Tuesday, amid speculation that its first new jet in almost a decade could debut before next month's Paris air show.

Scooping headlines at the world's largest aerospace event would give a boost to the A350, which went through several false starts in design but for the time being seems relatively immune from problems which have plagued Boeing's 787 Dreamliner.

Airbus parent EADS described the A350 project as "challenging," but stuck to a summer target date for the maiden flight of Europe's response to the commercially successful 787.

In the best-case scenario, that could mean a flight before the June 17-23 show at Le Bourget, according to industry experts, while other likely working dates extend into July.

"You will not hear me today giving any new comment on any date; we are preparing the aircraft, we are doing ground tests, we are continuing structural tests," Harald Wilhelm, the finance director of both Airbus and parent EADS, told reporters.

"The important thing is that it is a 'mature' first flight and this will happen in the summer I think. On this we are more and more confident."

The optimistic tone added extra polish to better than expected EADS first-quarter results, driven by higher production of the most profitable existing Airbus jets, analysts said,

Gains at Airbus, which recovered the industry's top spot in deliveries from Boeing in the first quarter, eclipsed a weak performance at the EADS helicopter division. But the group also had to contend with a large outflow of cash in the quarter.

Results from Europe's largest aerospace group confirmed a solid industry outlook after Boeing beat quarterly forecasts, marking a rare bright spot in the economy as planemakers ramp up output to meet strong demand from Asia and the Middle East. EADS shares rose 1.5 percent to 41.83 euros against a weaker market.

Developed at an estimated cost of $15 billion, the 300-seat A350 emerged from the paint shop in Airbus livery on Monday, ready to start a final series of tests before the first flight.

It is the first European jetliner built mainly from lightweight carbon-fibre, a process championed by Boeing that has struck a chord with airlines desperate to cut fuel bills.

France's La Tribune newspaper reported the plane could fly in mid-June. Even so, most experts consider it unlikely Airbus's newest jet will make the short trip to Le Bourget for the air show, since it must first accumulate essential flying hours.

Boeing attends the June event determined to turn the page on a three-month grounding of the 787 due to battery problems. Before that, Airbus was in the firing line over wing cracks on its A380, for which it is still taking minor charges.

RISKS AHEAD

The final say over the date of the A350's first flight lies with the company's test pilots, who will gradually narrow down a series of planning dates after each successive ground trial.

Analysts say that even if Airbus pulls off what would be a dramatic PR coup by getting the A350 aloft before Le Bourget, the 787 crisis reminds investors that several years of risk lie ahead until all three variants are established in service.

Airbus is also keen to avoid repeating Boeing's gaffe of promising to fly the Dreamliner in time for an air show during its development, only to have to backtrack at the last minute.

"They are doing all the right things, and it is okay to be quietly confident, but they can't relax until it has entered service and been in service for a little while," said Nick Cunningham, aerospace analyst at Agency Partners in London.

The base model of A350-900 is due to enter service with Qatar Airways in mid-2014. A larger variant, the 350-seat A350-1000, is not due to enter service until 2017.

Most cash for such developments comes from record output of A320 and A330 jets, which helped push EADS first-quarter revenue up 9 percent to 12.4 billion euros ($16.1 billion). Airbus also relies on government loans, a source of friction with Boeing.

EADS' operating profit before one-off items - a measure stripping out major project charges or currency swings - rose 56 percent to 741 million euros, the group said in a statement.

"Reported" operating profit, which still excludes goodwill and some exceptional items, rose 79 percent to 596 million.

Analysts on average expected reported operating profit of 577 million euros on sales of 12.06 billion euros, according to a poll conducted for Reuters.

EADS confirmed its forecasts for the year, including a 3.5 billion euro operating profit before one-off items. It sees stable free cashflow despite a 3.2 billion euro drain in the first quarter when it built up inventory for higher production.

A weaker picture emerged at Eurocopter where deliveries of the Super Puma have been hit by safety concerns after two emergency North Sea ditchings, reportedly blamed in part on corrosion. Sales and earnings posted double-digit declines.

"A recovery is expected later in 2013 as Eurocopter has now identified the root cause for the technical issues," EADS said. – Reuters




Tags: airbus | EADS | Boeing | paris | profits | A350 |

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