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EADS profit hit by A380 problems

Uwe HeßlerMay 16, 2012

Fixing tiny cracks in its flagship Airbus A380 has weighed heavily on first quarter profits of European Aeronautic Defense and Space Company (EADS). Nevertheless, the firm's earnings are up and its prospects are bright.

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A380 airplane
Airbus-Werk in HamburgImage: dapd

Lifted by a 16 percent surge in sales to 11.4 billion euros ($14.4 billion), EADS net profit in the first quarter of 2012 came in at 133 million euros, the European aerospace and defense group announced Wednesday.

The net result marks a sharp turnaround from the company's 12 million euro loss posted in the first quarter of 2011, which EADS at the time attributed to an "unfavorable exchange rate" between the US dollar and the euro.

However, net profit could have been about 158 million euros higher, EADS said, if the group hadn't suffered costs needed to fix hairline cracks in the wings of the A380 superjumbo, which is built by its Airbus subsidiary.

Last year, the cracks were first discovered on Singapore Airlines' aircraft, forcing Europe's air safety authority, EASA, to order wing inspections of the entire global A380 fleet.

Costly fix

Airbus said Wednesday that it had found a solution to the wing cracks, which had appeared in the so-called wing rib feet - metal brackets that connect the wing's ribs to its skin.

"Airbus has now defined a permanent solution for the wing bracket issue and collaborates closely with A380 operators to respond to their operational needs," an Airbus statement released Wednesday said.

Admitting that the fix was "more complex than initially anticipated," the statement added that 158 million euros had to be set aside for a solution in the first quarter.

Nevertheless, Airbus delivered four of its wide-body 500-seat superjumbo aircraft in the first quarter, bringing the total number of A380s in service to 71.

EADS, which is a holding company that alongside Airbus includes helicopter manufacturer Eurocopter, Astrium satellites and Cassidian defense electronics businesses, has confirmed its outlook for 2012, envisaging full-year sales to rise six percent from last year's 49.1 billion euros and earnings before interest and tax of 2.5 billion euros.

The result is to be achieved on the back of projected deliveries of 570 aircraft in 2012, up from 534 last year.

uhe/sms (AP, AFP, dpa)