EADS defense knot to overshadow 2009 losses
Airbus parent EADS
Europe's largest aerospace company has told investors it will take a 1.8 billion euro hit for remaining losses on the over-cost troop plane after accepting a 3.5 billion euro public bailout, pushing it into the red at net and operating levels.
The announcement at the end of seven-nation A400M rescue talks on Friday was meant to draw a line under troublesome delays and leave the Franco-German-led group free to pursue new civil jet projects while hunting new defense contracts overseas.
But its prospects of mounting a joint bid with U.S. partner Northrop Grumman
In a statement late on Monday, EADS said it would not bid as a team together with Northrop but avoided saying whether it would go ahead and mount a solo bid against rival Boeing
In a German newspaper interview appearing on Tuesday, Airbus Chief Executive Tom Enders said the decision not to bid had come from Northrop but blasted the competition rules as unfair.
It's not about the best tanker any more and it's not about a fair competition, Enders told Financial Times Deutschland.
EADS will nonetheless be considering its options carefully, European defense sources said, with one defense source indicating it had little choice but to gamble on a bid.
EADS dominated recent tanker sales outside the United States but the $35 billion U.S. contest could set a new benchmark. It is also seen from Europe as a rare chance to make a bold move into the world's largest but tightly guarded defense market.
EADS has however said it was badly bruised by a fixed-price contract for the A400M, bearing some similarities to the U.S. tanker contest. Its shares reacted often to perceived variations in price in a previous contest won by Northrop and EADS in 2008.
The tanker race and the A400M rescue deal were expected to dominate briefings on EADS results on Tuesday, but analysts said they would seek clarity on the health of underlying activities.
They said EADS faced other potential charges against high production costs on its largest civil project, the Airbus A380 superjumbo. The company said in November that A380 costs were higher than expected and its financial impact was under review.
Analysts polled by Reuters before the A400M bailout deal was finalised expected a 2009 operating profit before one-offs of 694 million euros, down from 2.83 billion euros in 2008. They predicted a net loss of 43 million euros.
In January, EADS said it expected a drop of some 4 percent in group sales in 2009 to 41.7 billion euros.
The company gave no operating profit forecast for 2009 due to uncertainty over the A400M contract but it has predicted that core earnings before one-offs would come in at 2 billion euros.
Aerospace earnings have generally been boosted by hopes of gradual recovery as aviation clambers its way out of recession.
U.S. rival Boeing
EADS earnings were due at 0600 GMT on Tuesday, with an analyst meeting at 0800 GMT and a news conference at 1000 GMT.
(Additional reporting by Erik Kirschbaum, Andrea Shalal-Esa)
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