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Airbus Group announced a hike in aircraft production to keep up with record demand for its smallest jets as it unveiled slightly higher-than-expected core profits today. 

Europe's largest aerospace group, previously known as EADS, said it would increase production of its best-selling A320 jet family to 46 aircraft a month by the second quarter of 2016 from the current 42, echoing plans by rival Boeing to reach towards 47 a month.

The company's Airbus commercial planemaking unit has been hinting at a possible production increase for some months as jetliner demand rides out the recession, but has been anxious to ensure that an already taut global supply chain can keep up.

Airbus Group's widely watched operating profit before one-off items rose 21 percent to 3.6 billion euros last year, it said in a statement. Revenue rose 5 percent to 59.3 billion. Net profit also rose 22 percent to 1.5 billion euros after charges of 434 million related to higher costs on its newest wide-body jet, the A350, and 292 million driven mainly by restructuring of defence and space activities. Analysts were on average expecting group operating profit before one-off items of 3.52 billion euros on sales of 58.724 billion, according to a Reuters survey. Net profit was seen up 29.5 percent at 1.59 billion. Airbus Group had forecast core operating earnings of 3.5 billion euros and negative free cash flow of 1.5 billion.

From Jan. 1, Airbus Group changed its name from EADS and reorganized itself into three divisions by merging its defence and space unit alongside the Airbus jet and helicopters units. It had already disclosed that its Airbus planemaking subsidiary had beaten its gross order target of 1,200 planes with orders of 1,619 aircraft in 2013, outselling rival Boeing but failing to catch up in terms of jets delivered. Airbus, which is heavily dependent on recently unsettled emerging markets, said it was assuming "no major disruptions" to the world economy but outlined cautious forecasts.

For 2014, it predicted deliveries in line with those of 2013 and reaffirmed it would deliver its first A350 to Qatar Airways by the end of this year. Gross commercial aircraft orders should remain above the level of deliveries and group revenue should be stable, it said. It also predicted "moderate" growth in its operating margin and breakeven in cash flow before acquisitions in 2014. The results from Europe's largest aerospace group come two weeks after UK engine maker Rolls-Royce sent shivers through the sector after warning that defence spending cuts would halt its profit growth in 2014. In January, Airbus's direct rival Boeing posted strong fourth-quarter profits but sent its shares tumbling 5 percent with more cautious-than-expected profit and cash flow forecasts for 2014.

Both firms have bulging order books as airlines seek fuel savings by placing orders for the latest generation of jets or revamped versions of earlier models, but defence cuts and a chill in emerging markets have dampened some of their euphoria. Airbus Group shares closed at 53.11 euros on Tuesday. The stock has risen around 49 percent in the past 12 months, easily outrunning a 19 percent gain in French blue-chip shares over the same period. But it has underperformed the French CAC 40 index by giving up 3 percent in the past month. ( C ) Reuters

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