Military transporter is a drag on Airbus performance, and ‘the jury is still out’

Commentary: Airbus acknowledged Wednesday that its cash problems will continue into next year as European governments delay payment for its troubled A400M military transport, weighing down the company’s more successful commercial jet program.

The Airbus A400M military transporter weighs 10 times as much as a large elephant. Otherwise, it’s not that dissimilar — to a white elephant, that is.

On Wednesday, the European aerospace and defense manufacturer had to report an additional 1.2 billion euro ($1.26 billion) charge on the long-delayed, over-budget troop carrier, bringing the project’s total charges to about 7 billion euros. Airbus says risks remain, so the bleeding may not stop here.

Overall, Airbus reported that its profits fell 63 percent in 2016 to 995 million euros ($1.04 billion), from 2.7 billion euros the year before. The company reported 2.2 billion in charges on the A400M in 2016, including a new 1.2 billion-euro hit in the fourth quarter as it reassessed the overall cost of the program.

Airbus CEO Tom Enders acknowledged that “the jury is still out on the long-term success” of the A400M, but insisted “it’s absolutely necessary” to maintain it as long as European militaries depend on it. With governments delaying payments because of A400M delays, Airbus warned that cash problems “will continue to weigh significantly in 2017 and 2018 in particular.”

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Airbus’ commercial-plane forecast was more upbeat, after a year that saw a rise in deliveries but a drop in orders. It foresees a rise in deliveries in 2017 to more than 700 planes, up from 688 last year.

Chief Operating Officer Fabrice Bregier told reporters he didn’t want Airbus to have to use commercial-aircraft revenue to subsidize its operations. But absent a big financial helping hand from governments, which seems unlikely, there’s a danger of this happening for the…

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