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EADS Raises 2010 Revenue Targets as Airbus Deliveries Begin to Increase
European Aeronautic, Defence & Space Co. raised its target for 2010 profit and revenue as deliveries of passenger jets at its Airbus unit increase.
Sales will grow to more than 44 billion euros ($57 billion) from 42.8 billion euros in 2009 and adjusted earnings before interest and tax should reach about 1.2 billion euros, EADS, based in Paris and Munich, said today. The company had in March predicted Ebit of 1 billion euros and stagnant sales.
“This is positive,” said Eric Sharper, an analyst at Credit Agricole. “The market was looking for some kind of improvement in the guidance. Most analysts believed they were being a bit conservative, given the momentum we’ve been seeing in regard to new orders.”
Airbus, which contributes two-thirds of revenue at EADS, expects deliveries this year to reach 500 units, up from last year’s 498. The aircraft leasing industry is helping spearhead a recovery in demand as air travel rebounds from the slump caused by the financial crisis.
EADS jumped as much as 5.5 percent to 18.6 euros in Paris trading today and it traded at 18.07 euros as of 1:00 p.m. local time.
“We’re all surprised by the speed of the recovery,” EADS Chief Financial Officer Hans Peter Ring told journalists.
Positive Surprise
“We’re seeing positive news from passenger and traffic growth, GDP data, and yesterday had figures from IATA that were very strong, showing traffic is at pre-crisis levels, with yields recovering,” Ring said, referring to average ticket prices. “The dollar is stronger and the financial sector has stabilized as well. All that is in the right direction.”
Such favorable signs would seem to confirm an upward trend, he said, and if that were the definitely case, EADS could move from “cautiously optimistic” to “optimistic.” There’s no upgrade for now though, and EADS will remain vigilant given weak economic growth in some economies including the U.S., he said.
International scheduled traffic statistics for June showed continued growth, the International Air Transport Association said yesterday. Passenger demand was up 11.9 percent last month compared with the same month a year earlier, while international scheduled freight traffic showed a 26.5 percent improvement.
British Airways Plc today signaled an increase in ticket prices. The carrier’s yield, a measure of average fares, jumped almost 14 percent in the second quarter.
Acquisitions
Ring also reiterated that EADS is looking for acquisitions in services, defense and security, and could spend “several hundreds of millions” of euros on any given target. A cap of about 1 billion euros exists on purchases, he said.
No acquisition is “imminent” and it’s unlikely any deal will close this year except in a “best-case scenario,” he said.
CEO Gallois said that flight tests on Airbus Military’s A400M military transport are progressing well, though he indicated that there are still some potential difficulties with the plane’s flight management system, supplied by Thales SA. He also said talks continue with the seven governments that ordered the A400M on amending the contract. Gallois didn’t give a time frame for when an agreement may be reached to firm up a preliminary accord set in March.
EADS second-quarter earnings before interest and taxes, before goodwill impairment and exceptional items fell to 323 million euros from 656 million euros, the company said in an earlier statement. Net income fell 61 percent to 82 milion euros from 208 million euros while sales dropped 3 percent to 11.36 billion euros from 11.73 billion euros.
The adjusted EBIT figure of 1.2 billion euros excludes a negative foreign-exchange impact of 200 million euros.
To contact the reporter on this story: Andrea Rothman in Toulouse, France at aerothman@bloomberg.net.
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