Pressure Mounts on Airbus To Meet EADS Profit Goals

 - March 4, 2013, 2:05 PM
Ground testing of the A350XWB continues but Airbus remains under financial pressure to stick to an already-delayed development timetable for the new widebody, according to parent company EADS. (Photo: Airbus)

Record Airbus deliveries in 2012 proved a big factor in boosting the group revenues of parent EADS by 15 percent last year, and a strengthened U.S. dollar improved the return on sales. But at last week’s EADS annual results press conference, the group characterized 2013 as a critical year in terms of ensuring that the costs associated with both the A380 and A350XWB programs do not drag down profitability any more than they already have done. In its 2012 balance sheet EADS has had to incur charges of €251 million ($331.3 million) associated with engineering work needed to fix a problem with cracked wing rib feet on the A380 and €124 million ($162.4 million) covering delays in the A350XWB program.

CFO Harald Wilhelm told reporters in Berlin on February 27 that Airbus has no further leeway in the time required to meet its revised service entry target for the A350XWB of the second half of 2014 and that the task “remains challenging.” But the company is confident it will achieve a first flight by the summer of 2013, and on February 26 it rolled out the first example of the new widebody with a complete set of wings. Plans call for the airplane now to begin ground tests and to serve as one of five aircraft used in the certification process. Airbus has yet to decide whether it will require a second production line for the A350. According to EADS, demand for the new 350-seat A350-1000 version of the aircraft has been strong.

EADS chief executive Tom Enders indicated that Airbus has eliminated further engineering risk by opting to use all-metal fasteners to solve cracking problems in the A380’s wing-rib feet, which fasten skin panels to the internal wing ribs. EADS expects to achieve break even on the A380 during 2015 as long as it can achieve its goal of delivering 30 aircraft that year. Airbus delivered 30 A380s in 2012 and expects to deliver 35 this year, but new orders for the type didn’t materialize at the rate expected last year. Commenting on Airbus’s recent decision to opt to use conventional batteries on the A350 in place of the lithium-ion type favored by Boeing for the troubled 787, Enders said airline customers have endorsed the move; he also noted that the associated weight penalty now stands at more than 130 pounds per aircraft.