EADS Preaches Caution – US-FOREX.US
The effect of the recession on plane manufacturers like Airbus and Boeing is difficult to track, given the five-year time lag between receiving an airplane order and completing it for delivery. But even though Airbus’ customers seemed healthy enough on Tuesday, when parent company European Aeronautic Defense and Space reported a slight increase in aircraft deliveries over the year, airlines are still facing rocky financing conditions and falling traffic-exactly the kind of pressures that could hurt plane-makers later on.”Airlines are suffering a lot, with loss of revenues coming from traffic and yield, and they have still the problem of financing,” said Louis Gallois, chief executive of EADS
, on a conference call to present the company’s quarterly results. He said the company expected deliveries for the whole of 2009 to be “at least” at 2008 levels, but would not comment on 2010, saying only that the next six months would help improve “visibility.”Shares of EADS were up 4.6%, or 59 euro cents , to 13.30 euros , during midday trading in Paris. The company’s second-quarter results beat expectations, with sales coming in at 11.7 billion euros , up 19% over the year, and profits at 208 million euros , up from 118 million euros the year before. Airbus delivered 138 planes in the quarter, compared with 122 in the second quarter of last year and 116 in the first quarter of this year.Arch-rival Boeing
, meanwhile, delivered 125 planes in the second quarter, down from 124 last year.Last month the International Air Transport Association reported a slight improvement in passenger traffic for April and May-which was respectively down 3.1% and 9.3% over the year-when compared with March, down 11.1% over the year. But the industry association’s head, Giovanni Bisignani, said airlines were “a long way from recovery,” with a slack supply-demand balance and company debts weighing them down.EADS has cultivated a tidy cash cushion of 8 billion euros in any case, which is helping to offset lower working capital from a build-up of inventories at Airbus, as well as withheld customer payments for its overdue A400M military transport. The European nations that have ordered 180 of the aircraft, worth 28.3 billion, agreed on Friday to renegotiate the terms of the deal.