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Aviation History
2004
2004-09 - 2238.PDF
BUSINESS RESULTS MURDO MORRISON / LONDON Bullish EADS raises profit target Airbus effect boosts European group's performance, but defence businesses struggle to hit profitability EADS has again bumped up its profit target for 2004 after strong Airbus sales boosted third quarter figures. But the European group says a weakening dollar could force it to further slash Airbus's cost base. The latest results emphasise how dependent EADS continues to be on its commercial-aircraft poster child - which it owns with 20% shareholder BAE Systems. While Airbus made up around two-thirds of EADS's €21.5 billion ($28 billion) revenues for the first nine months of the year, the airliner manufac turer delivered 92% of earnings before interest and tax (EBIT). That proportion is rising: for the whole of 2003 the figure was 88%. Part of the reason is that, while the performance of EADS's troubled Space division is improving - it is close to break even after making a €400 million loss last year - its key defence businesses are struggling to be profitable. The Defence and Security Systems division, which in cludes EADS's shares in the Euro- fighter programme and MBDA mis sile house, recorded a €75 million loss, while the Military Transport Aircraft division - responsible for the A400M and Casa transport air craft - scraped a €5 million profit. Revenues overall were up 16% compared with the first nine months last year. But the rise in Airbus deliveries to 224, from 199 in the same period in 2003, has encouraged EADS to increase its full- year EBIT target from €2.1 billion to €2.2 billion. However, the weak dol lar continues to concern Airbus, which pays most of its costs in euros EADS QUARTERLY EBIT* BREAKDOWN CUMULATIVE (€ MILLIONS) 2004^2003 Airbus 224 166 MTA"* (8) (11) Aeronautics 10 16 Space (11) (21) Defence & Security Systems (51) (54) HQ" 34 34 Total EADS 198 130 2004 982 (10) 56 (11) (82) 50 985 •pre goodwill and exceptionals; "headquar Q2 2003 621 (8) 59 (131) (28) 79 592 2004 1,382 5 116 (5) (75) 77 1,500 ers/consoiidation; * Q3 2003 701 (7) 112 (184) (18) 180 784 Q4 2004 2003 1,353 30 217 (400) 171 172 1,543 "Military Transport Aircraft but sells aircraft in the US currency, so, ironically, higher deliveries in crease its exposure to the weak dol lar. One euro is worth just over $1.25, but if the dollar stays above that level for the "longer term", Airbus could be forced to raise the €1.5 billion savings target it has set under its "Route 2006" programme, says chief financial officer Hans Peter Ring. Although €1.1 billion savings have been identified, says Ring, "Route 2006 might not be enough". Ring adds that a launch decision on the A350 7E7 rival will "most probably" be this year, but "we cannot exclude the possibility that it slips into next year". FLOTATION NICHOLAS LONIDES /SINGAPORE AirAsia raises $227m in share sale as it prepares to renew its fleet Malaysian low-fare carrier AirAsia has completed its initial public offering (IPO), raising 863.3 mil lion ringgit ($227 million) that will enable it to renew its fleet and expand its route network. The 560.4 million shares offered to institutional investors were sold at 1.25 ringgit each while the 140.1 million shares offered to the public sold for 1.16 each - below the indicative price of 1.40 ringgit. In its prospectus AirAsia said the final retail price would be set below the institu tional share price. AirAsia's targeted price range for its IPO was 1.20-1.50 ringgit per share, meaning the result came in at the low end of expectations. It says the institutional tranche was 3.5 times subscribed while the pub lic offer was 1.5 times subscribed. The 700,5 million shares sold - nearly 85% of which were new shares - make up around a third of the carrier's enlarged share capital. AirAsia says it is "very pleased with the level of interest" in its IPO, through which it raised gross proceeds of 717.4 million ringgit. It plans to use the funds in part to revamp its fleet with new narrow- body aircraft from Airbus or Boeing and further expand its international route network. OUTLOOK CFMI raises 2004 order forecast CFM International is growing con fident of securing a further batch of orders over the next two months, raising its projected order forecast for 2004 to around 600 engines, or around 100 more than expected year-end tally it announced in July. "Orders that we were anticipat ing for early 2005 may come a bit earlier and we may be closer to 600 by the end of the year - or at least in that ballpark," says CFMI president Pierre Fabre. A total of 412 firm engine orders have been booked this year so far. Up to September, CFMI claims to power 1,654, or 51%, of the 3,256 Airbus A320 family aircraft ordered, and says the CFM56 pow ers 1,344, or 59%, of the 2,272 air craft delivered. Of the backlog of 984 on firm order, it claims 310, or 32%, against International Aero Engines' 324 orders, or 33%. Of the balance, 30 aircraft are still allotted to the Pratt & Whitney PW6000 while 320 are classed as "open". Deliveries are also expected to begin rising in 2005. SIMULATION Boeing sets up new unit Boeing has formed a new organ isation to co-ordinate analysis, modelling and simulation (AMS) capabilities across its Integrated Defense Systems (IDS) busi ness. The unit will focus on large-scale system-of-system modelling and simulation of net work-centric operations to help understand customer require ments and inform Boeing business decisions, says AMS vice-president Guy Higgins. AMS will co-ordinate funding across IDS, which has more than $500 million invested and 2,500- 3,000 people engaged in modelling and simulation, says Higgins. The goal is to develop and operate a system-of-sys- tems simulation environment that is "truly open", he says, so new Boeing programmes like the US Navy Multi-mission Maritime Aircraft "can develop their model to common standards and bring that model to the simulation without having to develop their own naval system-of-systems environment". www.flightinternational.com FLIGHT INTERNATIONAL 9-15 NOVEMBER 2004 25
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