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Airbus says it won 824 orders in 2006, falling behind Boeing

Thursday, January 18, 2007

PARIS -- Airbus said Wednesday it won orders for 824 airliners in 2006, falling behind Chicago-based Boeing Co., which won 1,050, for the first time since 2000.

The European aircraft maker delivered 434 planes during the year -- 36 more than its U.S.-based rival -- to remain the No. 1 commercial jet maker for the fourth straight year.

Airbus' parent company European Aeronautic Defence & Space Co. also said Wednesday that the plane maker will post a loss before interest and taxes in 2006 due to charges related to its delayed A380 program and restructuring.

"2006 was clearly a turning point for us," said Louis Gallois, chief executive of Airbus and co-CEO of EADS. "2007 will be the year for Airbus to face reality and for it to implement all the measures necessary" to deliver on promised restructuring targets.

"What we want above all is to restore confidence with our customers and our suppliers by delivering on promises," he said.

Gallois also said Airbus forecasts 440-450 plane deliveries this year.

Investors sent EADS shares down 3.5 percent to 24.83 euros ($32.14) in Paris trading, apparently focusing more on the company's financial outlook.

In a statement ahead of Airbus' annual news conference, EADS said it was still working on the 2006 financial accounts, but that Airbus was very likely to produce a negative EBIT before goodwill.

"Certain one-time charges in relation to settlements with customers, impairment of assets, or financial impacts of Power8 originally expected to occur in 2007 and after are now foreseen to be recognized as early as 2006," EADS said. "Furthermore, additional A380 charges not originally envisaged could apply as well."

Power8 is the company's ongoing, wide-ranging restructuring and cost-cutting program. Many details of the program are still to be announced.

The A380 superjumbo's two-year delay has led to order cancelations and a 4.8 billion euros ($6.2 billion) profit warning. Airbus has yet to agree on compensation with airlines including Dubai-based Emirates, the biggest A380 customer with 43 planes on order, which has said it stands to lose hundreds of millions of revenue dollars because of the setback.

After setting an industry record with 1,111 orders in 2005, the figures Airbus announced Wednesday showed that it has lost its five-year leadership by that measure. In terms of deliveries, however, Airbus remains the market leader for a fourth straight year.

The deliveries performance, which always lags behind orders, is of little consolation to Airbus as it seeks to claw back sales in the lucrative market for mid-sized airliners, currently dominated by its U.S. rival.

Airbus is being punished for its delay in developing a credible alternative to Boeing's fuel-efficient 787, due to begin commercial flights next year.

The tardiness of the Airbus response -- parent company EADS launched the A350 XWB program last month for 2013 entry into service -- is just one consequence of problems with its double-decker A380, a flagship European industrial project that industry watchers say is unlikely to turn a profit for the better part of a decade, if at all.

Beyond Wednesday's order and delivery figures, investors are keenly awaiting details of the promised "Power8" restructuring program.

"Implementing Power8 is very important in the current weak-dollar environment," said Pierre-Antony Vastra, an analyst with Ixis Securities. The Paris-based brokerage expects Airbus to announce about 430 deliveries for 2006.

The dollar's weakness against the euro has hurt profitability at Airbus -- which pays most of its costs in euros but bills customers in dollars -- and its exposure is set to worsen as currency hedges expire in coming years.


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