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Astrium Soars as EADS Plunges on Airbus Woes |
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MUNICH, Germany, Mar. 12, 2007/Satnews Daily/ ― EADS Astrium significantly improved revenues and profitability while parent company EADS plunged to the worst year in its history in 2006, weighted down by manifold problems wrought by its Airbus business.
EADS (European Aeronautic Defense & Space Company) reported that Astrium, a wholly owned subsidiary and a leader in the design and manufacture of satellite systems, “significantly improved profitability and was awarded important orders for satellites and systems such as SatComBW, a major satellite communication program in Germany” last year. Astrium sales increased to $4.2 billion from $3.5 billion, and more than doubled Ebit (Earnings Before Income Tax) to $143 million.
It said Astrium’s contribution came mainly from the ramp-up of Ariane 5 production, Paradigm Secure Communications and ballistic missile development. Paradigm supplies a range of services internationally to defense, governmental users and multinational organizations.
Paradigm has signed agreements to provide resilient, secure military satellite services to various countries and organizations including NATO, Portugal, Canada and The Netherlands. It is the operator of Skynet 5, a secure military satellite launched only yesterday by Arianespace from the Kourou Space Center in French Guiana.
Astrium has 11,000 employees in France, Germany, the United Kingdom, Spain and The Netherlands. It has two main business units: Astrium Space Transportation, for launchers and orbital infrastructure, and Astrium Satellites for spacecraft and ground segment.
In 2007, EADS expects Astrium and its Defense & Security Division to maintain stable revenues, and to collectively increase their contribution to a combined Ebit of close to $1.3 billion.
For 2006, however, the entire EADS group reported record financial results and product deliveries, and revenue growth in all its divisions. EADS co-chief executives Tom Enders and Louis Gallois said group revenues rose 15 percent to $51.8 billion from $44.8 billion in 2005 driven by record deliveries and a 30 percent increase in defense revenues. Airbus deliveries rose to 434 from 378 in 2005.
For the first time, the group hit the landmark $13 billion (EUR 10 billion) in defense revenues. In 2006, EADS posted an EBIT of $522 million from $3.8 billion in 2005. The impact of the A380, A350 and A400M combined with the deteriorating weakness of the US Dollar against the Euro pushed Airbus into a loss for 2006. That loss amounted to $510 million compared with earnings of nearly $2.1 billion in 2005. EADS warned that Airbus would display "another substantial loss" in 2007.
Enders and Gallois said Airbus’ difficulties overshadowed “a remarkable order intake of 790 aircraft, record deliveries of 434 aircraft, the launch of the A350XWB program and the successful A380 type certification.” They reported that Eurocopter, the world’s largest helicopter maker, experienced an outstanding year with an unprecedented level of 615 new orders for helicopters. It recorded a strategic breakthrough with the US Army light utility helicopter UH-72A Lakota order. Eurocopter delivered 381 helicopters in 2006, the most in its history.
Despite these upbeat numbers, Airbus proved the group’s undoing in 2006. "It was the worst year for Airbus in its life," Gallois said. He pointed to the multiple and major delays to the A380 superjumbo that caused EADS to lose $1.01 billion in October-December 2006 after a $530 million profit in the year-earlier quarter.
"We had big problems, as everyone knows," Enders added. "This company needs more innovation, more focused innovation."
Enders and Gallois said the problems at Airbus would continue to be felt through the rest of this year, warning that even though deliveries will reach as many as 450 planes, the financial pain will be considerable.
They predicted the recently announced “Power8” plan, which will cut up to 10,000 jobs in the coming years, would help return Airbus to profitability. Power8 will involve job cuts across its 16 European sites, with those in France and Germany being hardest hit. Around 1,600 jobs will be eliminated in the UK. Both men said that in 2007, group priorities are to drive operational improvements, restore the group's credibility and build a leaner and more dynamic EADS.
"We will deliver between 440 and 450 airplanes, but Airbus will display another substantial loss in 2007 because of the charges for the Power8 program (and) further costs to support the A380," Gallois said. Analysts said the effects of a series of management and financial crises, including a two-year delay to the double-decker A380 superjumbo, and charges at its A350 XWB program hurt fourth-quarter profits and fueled EADS’ woes in 2006. Adding to that were higher research and development costs and the weaker U.S. dollar. The dollar, the currency for aircraft purchases, has lost 34 percent of its value against the euro since 2000, when Airbus committed to developing the troubled A380
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