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
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
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 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.