EADS hopeful A380 could break even in 2015

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This story is sourced from Flight International
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With Airbus now confident that it has turned the corner with its A380 production woes, parent EADS is hopeful that the superjumbo programme could reach break-even as early as 2015.

The revelation was made by chief financial officer Hans Peter Ring during EADS's first-quarter results presentation. He said that the "maturity" of the A380 "still needs to be improved", but adds that, if progress continues, then "certainly there is some hope that, towards the end of the [five-year] planning horizon, we are approaching break-even".

Ring says the estimate does not amount to formal guidance but rather an "extrapolation of current trends". He adds that the improvement in the US dollar would also "impact positively the whole situation".

The ongoing struggle to stabilise A380 production prompted Airbus chief executive Tom Enders to comment in January that the programme would remain a "financial liability" for "years to come". Cost rises from the production issues have been compounded by the difficulty the airframer has faced in achieving its target pricing for the aircraft, having signed up many "sporty" deals for the original launch orders.

lufthansa a380, airbus
 © Airbus

Deliveries last year reached just 10 aircraft, well short of the 18 planned. However, Airbus has instigated another recovery programme and is confident it can deliver at least 20 aircraft in 2010 as it aims to stabilise production at around three A380s a month over the next two years.

Based on that output, Flight International projects deliveries should reach around 200 aircraft by 2015-16, when EADS hopes to be closing on break-even.

But to achieve break-even at this production level appears optimistic, given previous estimates. Airbus originally put the A380's development costs at $10.7 billion in 1999 dollars, but this figure is likely to have escalated significantly in the wake of the production issues suffered since 2005-06. This will have affected the programme's break-even target, which in 2002 - before production began - was put at fewer than 250 aircraft by then chief executive Noel Forgeard.

The airframer, which saw its first-quarter profit decline to just €6 million ($7.5 million) from €205 million in 2009, concedes that A380 production "continues to weigh significantly on the underlying performance".

However, the main problem was deterioration in foreign exchange, which had a negative impact of €400 million.

Airbus's 122 commercial deliveries generated revenues of just under €6 billion - an increase of 9.5%. Consolidated revenues at Airbus, including its military division, amounted to €6.26 billion with earnings of €7 million.