ALEXANDER CAMPBELL / AMSTERDAM
Fewer Airbus deliveries will bring down revenues in 2002 - but defence income expected to climb
European aerospace group EADS has ruled out cutting staff despite predictions of falling revenues and a net loss in 2002.
Most of its €30.8 billion ($27.3 billion) revenues in 2001, as in previous years, came from its 80% stake in commercial airframer Airbus: €20.5 billion. Airbus sales accounted for almost all its earnings before interest payments and tax (EBIT), €1.66 billion out of €1.69 billion.
The release of EADS' results on 18 March led credit rating agency Moody's to downgrade the aerospace giant from A2 to A3. Although still "investment grade", this lower rating reflects the poor prospects for Airbus. The A380 ultra-large airliner project will continue to demand billions in research and development costs, and orders for current types will probably remain low until 2003 at least, according to the agency.
EADS revenues are forecast to fall slightly this year, again mainly due to Airbus. Early last year, Airbus had expected to deliver 400 airframes in 2002, but since the airline crisis this forecast has dropped to 300, compared with 325 actual deliveries in 2001. This will produce a 2% drop in EADS revenue - to €30.2 billion - and a net loss over the year. Not only is Airbus selling fewer aircraft, but a company source suggests it is cutting prices dramatically, offering aircraft at more than 40% below book price.
The difficult commercial market has seen Airbus step up customer financing efforts as it normally does in downturns (Flight International, 12-18 February 2002). It reduced exposure from €3.8 billion to €3.5 billion in 2001, but that is set to rise to €5.3 billion this year as Airbus tries to keep customer loyalty and support deliveries.
Chief executive Philippe Camus says it is "still too soon to have a precise view of the evolution of our business, especially past 2003". Co-chief executive Rainer Hertrich predicts that production of the Eurofighter Typhoon will help defence revenues increase further, from their 2001 level of €6.1 billion to €9 billion by 2004. Although the group's defence businesses made an overall loss in 2001, they broke even in the second half of the year.
Hertrich says EADS will not be acquiring any other companies, specifically Fairchild Dornier.
Source: Flight International
