Airbus earnings slide due to military plane costs

Company - Mohit Shah - Feb 22,2017

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airbus earnings slide due to military plane costs

A significant dip in profits was reported by the global aircraft manufacturer, Airbus, for the year 2016; this downfall is assumed to be a result of a major charge on the A400M military plane.

According to reports, Airbus Group SE’s net income dropped by 63% to 995m euros (£838m); however, revenue surged upwards by 3% to 66.5bn euros (£56bn).

These sliding figures are somewhere related to the military plane costs. In particular, the A400M plane has tackled numerous obstacles over the years.

A major mishap occurred earlier this month when an A400M which was carrying German Defence Minister Ursula von der Leyen broke down on the ground.

Several other reasons for the dip in net income includes ramping up the output of the A350 twin-aisle model along with the impact of engine malfunctions which restricted the delivery of the latest A320 narrow-body.  

Airbus had earlier forecasted that 2016 Ebit might be slighted different, with the exclusion of one-time items, customer financing and disposals. However, the aircraft maker booked charges of 2.2 billion euros for delivery delays troubling the A400M military-transport plane, up from a value of 1.03 billion euros in the first half.

There was a late rise in the delivery of civil planes which boosted the overall profits at Airbus. This came as a surprise as analysts had forecasted a 7% fall.

The global aircraft manufacturer reached a prominent milestone of attaining positive free cash flow after the successful delivery of 266 planes in the final quarter.

Chief Executive Officer Tom Enders said, “We have delivered on the commitments that we gave a year ago.” He further added though the company has achieved its objectives, but there is one exception, the A400M, which brought along another “significant charge”.  

The firm also confirmed that its helicopter division turned out to be decent regardless of a “difficult market environment".