Image: Airbus 350-800
Airbus  /  AP file
This artist rendition of the Airbus A350-800 was released by the company in December. There may be changes in the design based on customer feedback, the airline maker said.
updated 5/16/2006 9:41:07 AM ET 2006-05-16T13:41:07

Airbus expects to decide before July on the final design of its troubled A350 airliner, parent company EADS said Tuesday as it reported a 26 percent rise in first quarter net profit.

Airbus has said it is considering modifications to the wide-body A350, its planned rival to the Boeing 787 Dreamliner, after strong criticism from airlines and jet leasing companies.

Noel Forgeard, the co-CEO of European Aeronautic Defence and Space Co., indicated to reporters at the Berlin International Airshow that changes were likely. The A350 was intended for long-range, fuel-efficient service but some customers have pushed for a larger version.

“We have listened to some customer feedback on our way to make the final definition of the A350 aircraft,” Forgeard said. “Do not expect announcements now but I think we can say that the definitive decision should be made before ... July.”

While declining to give specifics, he said whatever decision is made must take into account how to finance any changes. However, he suggested the company would be able to take on significant costs. Aircraft makers typically sink billions into the development phase of large planes.

“Whatever we do it will be compatible with the financing capacity of Airbus,” he said. “You know that Airbus has a very strong cash flow, so we have some margins in what we can offer.”

Airbus last year maintained its lead over U.S. rival Boeing Co. in terms of net orders and plane deliveries, but fell behind on order value as sales of its larger planes failed to keep pace.

Forgeard said he remained confident in the A350.

“Taking into account customer’s feedback, the A350 will prove as well to be a formidable competitor to the 787,” he said.

EADS, which owns 80 percent of Airbus, earned 516 million euros ($665 million) in the January-March period, up 26 percent from 410 million euros a year earlier. Sales rose 30 percent to nearly 9.1 billion euros ($11.7 billion) from 7 billion euros.

The company reaffirmed its full-year earnings outlook.

Deliveries of Airbus planes rose to 101 from 87 in the first quarter of last year. The company said it expects Airbus deliveries to increase by more than 10 percent over the full year.

First-quarter gross orders for Airbus planes dropped to 90 from 123, however.

EADS’ overall order intake rose by 18 percent, increasing to 10.5 billion euros ($13.5 billion) from 8.9 billion euros. The company said that was supported by units such as its military aircraft and helicopter divisions.

EADS said its Sogerma Services plane-servicing division made an operational loss in the first quarter.

As part of a restructuring plan, Forgeard said the company’s site in Bordeaux, France, would be closed down, affecting 1,000 jobs, adding that each employee would be offered new positions elsewhere within EADS.

“Anybody in Bordeaux that will be flexible, that will be ready to train, ready to move, will find a new job with EADS,” he said.

Also at the airshow, EADS said it had signed a cooperation agreement with Russian aircraft manufacturers MIG and Irkut to focus on the conversion of the A320 and A321 Airbus aircraft into freight haulers.

The aircraft conversion will be done in Russia and is planned to begin in 2010, Forgeard said.

In a highlight of the airshow, Airbus showcased its new A380 double-deck superjumbo, flying it from the airport around the Berlin area.

Chief Financial Officer Hans Peter Ring said the company now has 159 firm orders for the A380 from 16 customers to date.

Airbus, which accounts for the lion’s share of EADS earnings, saw earnings before interest and taxes rise to 681 million euros ($877 million) from 628 million euros — an 8 percent increase. Sales were up 28 percent at 6.36 billion euros ($8.2 billion).

The results reflected higher research and development expenses and the 320 million euros ($412 million) impact of a weaker U.S. dollar, since commercial aircraft are priced in dollars.

Among EADS’ other units, Eurocopter doubled its earnings before profit and taxes to 26 million euros ($33.5 million), while the defense and security systems division swung to a profit of 35 million euros ($45 million) from a loss of 35 million euros last year.

The military transport aircraft business also recovered from a loss of 6 million euros to post earnings before interest and taxes of 9 million euros ($11.6 million).

EADS’ overall first-quarter earnings before interest and taxes rose by 19 percent to 780 million euros ($1 billion) from 657 million euros. That beat the forecast of analysts surveyed by Dow Jones Newswires, who had predicted a 10 percent rise.

EADS said it still expects to achieve full-year EBIT of between 3.2 billion euros and 3.4 billion euros ($4.1 billion and $4.4 billion), compared with 2.85 billion euros in 2005.

It expects sales to come in above 37 billion euros ($47.7 billion), compared with 34.2 billion euros last year.

Shares in EADS fell 2 percent to 28.76 euros ($37.04) in Paris trading.

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