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Abu Dhabi, UAESaturday 17 November 2018

Airbus profit tops estimates but deliveries spur cautious outlook

Problems include a queue of aircraft still waiting to be fitted with engines and delivered

European plane maker has been hit by engine troubles this year. Reuters
European plane maker has been hit by engine troubles this year. Reuters

European plane maker Airbus revised down its headline target for jet deliveries on Wednesday and warned reaching the number would be a "greater stretch" after a series of industrial problems.

The cautious tone on deliveries, which drive revenues and profit, came despite higher than expected third-quarter core earnings at Europe's largest aerospace group.

The maker of jetliners, satellites and helicopters said it had made an adjusted operating profit of €1.57 billion (Dh6.54bn) in the quarter on revenues of €15.45bn.

Analysts on average expected third-quarter adjusted operating profit of €1.44bn on sales of €15.31bn, according to a Reuters poll.

Airbus has been struggling with fresh industrial problems as production of its fast-selling A321neo passenger jet hit a snag in Hamburg, Germany, even as bottlenecks eased at some engine makers.

"We have engines and we have the airframes but the whole industrial planning had to be reshuffled time and again ... next to some industrial challenges on our own operation," finance director Harald Wilhelm told analysts.

The new problems, which coincide with a queue of aircraft still waiting to be fitted with engines and delivered in the aftermath of the engine delays, were first reported by Reuters.

"A lot remains to be done before the end of the year to fulfil commitments," Airbus said.

Engine issues are holding back deliveries of revamped A330neo wide-bodies.

Earnings were lifted by the A350 wide-body programme, where costs are coming down as production accelerates, helping to make the plane the cash driver Airbus has needed.

Contract discussions on the troubled A400M military transport are progressing slower than planned, which suggests government customers are holding out for better terms, according to Bloomberg.

In pre-market trading, the shares were down 0.2 per cent on Tradegate.

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Airbus stuck to its headline target of around 800 commercial deliveries in 2018, but said this would now include 18 deliveries of the recently acquired Bombardier CSeries, renamed A220.

Boeing too has been suffering some industrial problems, but the world's largest plane maker last week reported stronger than expected third-quarter profit.

The commercial aerospace sector is in the eighth year of an extended upturn but there are some concerns about airline profitability that usually drives jet orders, speakers at the Airline Economics conference in Hong Kong said this week.

Even so, plane makers and their suppliers are pushing production to record levels based on eight years' worth of new plane orders, and their attention is focused on ironing out flaws in an already stretched global supply chain.

Airbus said deliveries were its first priority.