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EADS returns to profit on jet sales

disclaimer: image is for illustration purposes only
by Staff Writers
Munich, Germany (UPI) Mar 9, 2011
European defense giant European Aeronautic Defense and Space Co. returned to profit in 2010 on strong jet sales at its subsidiary Airbus, reinstating a dividend and forecasting even greater sales in the year ahead.

After an abysmal 2009, EADS posted a higher-than-expected net profit of $769 million in 2010, the company said Wednesday.

New orders in 2010 rose to $115 billion, an 81 percent increase over the previous year. Those results will enable EADS to reinstate the dividend, valued at around 33 cents per share, the company said.

"2010 was a year of significant progress for EADS," Chief Executive Officer Louis Gallois said in a statement. "Commercial aircraft orders exceeded expectations and our cash flow generation was excellent."

The outlook for 2011 is similarly positive, Gallois said at a news conference in Munich.

Demand for Airbus jets and defense technology in emerging markets in Asia and Latin America has picked up to pre-crisis levels, he said. EADS said Airbus delivered 510 commercial aircraft in 2010 and estimates to deliver up to 530 this year.

Key military projects, such as the over-budget Airbus A400M military transport plane built for several European armed forces, have been de-risked, while production of the Airbus A380 super jumbo is improving, Gallois said.

Smaller units such as satellite maker Astrium and helicopter firm Eurocopter have been driving 2010 profits and are expected to continue to do so this year.

EADS said, however, it would have to monitor fuel prices, which are growing on the unrest in North Africa and the Middle East.

"The best protection for the company and the best basis for growth in the future are clearly our cash and our order book," Gallois said.

Net cash flow in 2010 increased by 22 percent to $16.6 billion, a major war chest the European giant might open to gain a stronger foothold in the United States, the world's biggest defense market.

EADS has said it wants to purchase medium-sized companies in the United States. This comes as EADS' own shareholder structure might change. There have been reports French media company Lagardere and German automobile maker Daimler -- EADS' biggest shareholders -- aim to offload their stakes.

EADS recently was dealt a major blow in the U.S. market when the Pentagon decided to award a $30 billion contract to supply the U.S. Air Force with an in-flight refueling tanker to rival Boeing. Both companies had competed for the deal for nearly a decade.

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