European Manufacturer Claims 824 Orders To Boeing's 1,044

Airbus made it official today ceding the 2006 order race to Boeing. The EADS subsidiary claimed 824 orders for the year while Boeing snagged 1,044. Having led the order race since 2001, Airbus still holds on to the "number one manufacturer" title by delivering 434 jets this year -- 36 more than Boeing.

Despite those 434 deliveries -- that's $33.5 billion in sales -- EADS warned its investors it will likely post a loss on the year. EADS said it is still working its 2006 reports, but "...certain one-time charges in relation to settlements with customers," among other costs, will probably put the company in the red.

The European conglomerate is expecting 440 - 450 deliveries this year.

In a press conference today, Airbus CEO Louis Gallois said, "2006 was clearly a turning point for us. 2007 will be the year for Airbus to face reality and for it to implement all the measures necessary to deliver on promised restructuring targets."

Airbus points to its tardy response to Boeing's 787 Dreamliner in the mid-sized jet market for this year's loss in the order race. Airbus' entry in that market segment is to be the A350XWB, but parent EADS just gave the go-ahead for its development only last month -- with expected customer deliveries to begin in 2013 -- while Boeing has been racking up orders for the 787 all year with first deliveries slated for 2008.

Industry analysts say the delays with the A380 program are directly to blame for the delay in Airbus getting started on the A350XWB. Worse, A380 delivery delays have pushed the break-even point for the program such that the company may not see profits on it for years -- if at all.

Meanwhile, company executives are scrambling to find a way to counter the weak US dollar. Airbus pays its costs in Euros, but bills its customers in dollars. One way the company seeks to do so is via restructuring. Another, hinted at during today's news conference, is capital development.

Airbus parent EADS said it may need more money than expected to get the A350XWB off the ground, and the A380 back on track. Current estimates place A350XWB program development costs at around $13 billion -- but Airbus CFO Hans Peter Ring told reporters the company may require measures to "...strengthen our capital base."

According to AFX News Limited, EADS management is discussing the matter with its core shareholders, and details will be developed before the group's annual meeting in early May.

It's still unclear whether the company will go to the markets for more money, but with core shareholders like the UK's BAE Systems jumping ship, and Germany's Daimler-Chrysler looking to reduce its stake, it seems unlikely Airbus can look for help there.

There was also a suggestion the company may further ramp up A320 production. The single-aisle, twin-engine jet is still the company's best-seller, and executives concede Airbus can sell more of them than it's currently building. Tom Williams, Airbus vice president in charge of programs, said production rates will be increased to 36 planes per month by the end of 2008, up from 32 currently. But, he says, the company is debating an increase to as many as 38 - 40 per month to help defray A350XWB and A380 costs.

FMI: www.airbus.com