Airbus parent EADS yesterday posted a six per cent rise in first-half operating profit - in line with forecasts- but warned design and manufacturing problems could spill over to hit 2006 earnings.
The company said it expected full-year profit to come in at the bottom end of its previous forecast as it grapples with problems with the A380 superjumbo, a costly redesign of another model and losses on a sale of its Sogerma maintenance business.
Earnings before interest and tax (EBIT) before goodwill and exceptional items rose to 1.6 billion euros (£1.09 billion) from 1.5 billion euros (£1.02 billion) a year ago, in line with average forecasts of 1.645 billion euros(£1.12 billion).
Sales rose 18 per cent to 19 billion euros (£13.01 billion), underpinned by strong Airbus deliveries, while net profit increased five per cent to 1.043 billion euros (£714.3 million).
EADS confirmed it saw a record 430 Airbus aircraft deliveries this year and full-year sales of well over 37 billion euros (£25.3 billion). But it forecast EBIT of about 3.2 billion euros (£2.19 billion, slightly below previous forecasts.
The group is trying to repair its reputation after it was rocked by problems at Airbus that wiped a quarter off EADS's share price and led to the resignations of its French co-chief executive and the head of Airbus.
This is reflected in EADS's valuations, with an enterprise value to operating profit (EV/EBIT) ratio of 4.7, well below the 8.5 average of European peers.
Rival Boeing is bullish on the airplane market but posted a large quarterly loss as expected on Wednesday.
EADS co-chief executive Tom Enders said the crisis over A380 superjumbo delays had been triggered by mistakes in the way the huge project had been defined as well as faults in manufacturing. The plane-maker has previously blamed the 2 billion euro (£1.36 billion) delays on bottlenecks in the installation of complex wiring systems needed to customise the double-decker jet for airlines.
Mr Enders said a comprehensive review over the summer under new Airbus chief executive Christian Streiff would analyse what went wrong and provide a detailed revised schedule of deliveries.
He also pledged there would be no repeat of industrial problems when Airbus starts building a revamped version of its long-haul A350 twinjet, unveiled at this month's Farnborough air show following airline complaints about an earlier design.
EADS has already said it expects the A380 delivery delays announced in June to cost 500 million euros (£342.4 million) a year between 2007 and 2010, including penalties for late delivery.
Mr Enders told analysts that putting the delayed project to build and deliver the world's largest passenger aircraft back on track was the biggest EADS priority following senior management changes earlier this month.
But the company yesterday said that further unquantified A380 expenses could be recognised in its 2006 accounts as Airbus reviews its industrial plans and any impact on other programmes.
It also raised the prospect for the first time of one-off charges linked to previously signed contracts for the A350.
Airbus has said most of the ten firm customers for a total of 100 A350 models are expected to roll their orders into the new model. But some airlines at last week's Farnborough air show hinted they would only sign up for new jets at the same price.
The new A350 series contains three models instead of two but the comparable models are on average 12 per cent more expensive at list prices, according to Airbus data.
The total gap in value between the old orders and the same number of new planes is estimated at $1.87 billion (£1.28 billion). Furthermore, whereas most previous orders were for the smaller A350-800 passenger model, originally seating 253 people and now 270, it is the larger A350-900 model - now capable of seating 314 people and a competitor to the Boeing 777 - that will be delivered first. Delivery schedules have slipped one to three years.
Mr Enders said the A350 should cost "significantly less" than the 12 billion euros (£8.21 billion) spent on the four-engine 555-seat A380.
Airbus has indicated a provisional A350 development price tag of 8 billion euros (£5.47 billion), twice the original budget.
