European Aeronautic, Defence & Space Co., parent of planemaker Airbus SAS, had its long-term credit rating upgraded one notch at Fitch Ratings, which said the business has improved its financial performance and stands to benefit from progress on the new A350 wide-body model.
Fitch elevated Toulouse, France-based EADS to an A- rating with a stable outlook, versus BBB+ previously, it said today in a statement.
“The upgrade reflects Fitch’s view that the recovery and improvement in EADS’s financial performance in 2012 and 2013 is sustainable and has brought the group’s overall credit profile to a level commensurate with the ‘A’ category,” the agency said. Airbus boosted earnings before interest and tax to 5.8 percent of sales in the first half of 2013 from 3.2 percent a year earlier, and other units have stable margins, Fitch said.
EADS is likely to improve its funds for operations cover -- a measure of operating performance -- to 9 percent this year from 7 percent in 2011, aided by enhanced program execution on the A350 plane following the first flight in June, together with better cost discipline and rising profitability on the A380 superjumbo, the ratings company said.
EADS is due to report third-quarter results on Nov. 14. The company’s large currency hedging portfolio, required because planes are paid for in dollars, continues to contribute to earnings volatility and is a drag on its rating, Fitch said.
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