Airbus Aims to Break Even in 2010

PARIS-European commercial aircraft manufacturer Airbus is aiming to break even this year after incurring an operating loss of €1.37 billion ($1.82 billion) in 2009, the company's chief operating officer Fabrice Bregier said Monday.

Mr. Bregier said he's hopeful that pay talks between management and Airbus' French labor representatives on May 4 will reach a acceptable compromise. Workers at the company's assembly facility in Toulouse, in south-west France, disrupted production last week, Mr. Bregier said. The strikers prevented sub assemblies brought in by air from other Airbus plants in Europe from being transported to the production line.

"Of course production was affected; that's what strikes set out to do," Mr. Bregier said on the sidelines of a conference of the French Civil Aviation Research Council, which he chairs. "We are a lean company" that doesn't have a big inventory of parts, he added.

Mr. Bregier acknowledged that it's "difficult" to explain to labor representatives the need for financial prudence when Airbus's production is at a record level of some 500 aircraft a year.

"We lost a lot of money in 2009, and in 2010 we are aiming roughly for break-even, so we can't continue to have a policy that's unrelated to this context," he said. "The financial situation of the company isn't exactly blooming."

Airbus and rival Boeing Co. are still producing aircraft at full capacity as they work through a backlog of orders garnered before the current downturn in the industry. However, both manufacturers saw orders fall sharply last year.

Mr. Bregier said the announcement by Malaysian Airlines last week that delivery of the airline's first Airbus A380 superjumbo has been pushed back into 2012 had been negotiated some months ago after Airbus was forced to adjust its delivery schedule due to hiccups in the A380's industrial process.

The company still expects to deliver 20 A380s this year, double the number of 2009, he said. "There are no additional delays," he explained, although a major challenge is to make the program profitable.

Labor representatives in France are worried that jobs will be transferred to Airbus' facility in Hamburg, Germany when the company shifts production of the fast-selling A320 there. But Mr. Bregier said it's "logical" that the A320 and all its variants should be made in one place. He pointed out that all the variants of the future wide-bodied Airbus A350, which is scheduled to enter into service with airlines in 2013, will be assembled in Toulouse.

Airbus took a major financial hit last year due to a €1.8 billion provision against expected losses from its troubled A400M military airlifter program. Excluding this impact, Mr. Bregier said Airbus would have shown a €400 million profit, a figure that he described as "not exceptional" given the company's 2009 revenue of more than €28 billion. Airbus is a wholly-owned unit of European Aeronautic Defence & Space Co NV.

Source: online.wsj.com/ May 2010