Airbus Problems Result In Big Losses

It's official: this year will go down as the worst-ever in the 37-year history of European Aeronautic Defence & Space (EADS), parent company of troubled planemaker Airbus -- and according to the company's co-CEOs, the worst may still be yet to come.

"It was the worst year for Airbus in its life," co-chief executive officer Louis Gallois said during the company's annual news conference in southern Germany this week.

"We had big problems, as everyone knows," co-CEO Tom Enders added, according to The Associated Press. "This company needs more innovation, more focused innovation."

Both men placed blame for EADS' current financial woes squarely on Airbus, which has endured massive losses stemming from a 22-month delay in deliveries of its A380 superjumbo. The planemaker also misfired on its original design of the A350 midsized airliner, competitor to the Boeing 787; after a costly redesign, that plane won't reach the market until at least four years after the 787 starts customer flights.

Airbus' woes contributed to a staggering $1 billion loss from October-December of 2006; in the last quarter, EADS posted an operating loss of $2.26 billion. Those are the kinds of numbers not even anticipated record deliveries of airliners can surmount.

"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.

As Aero-News reported, Power8 has drawn strong opposition from labor groups in Germany and France, protesting planned job cuts of 10,000 workers and the sale or partnering of six plants. Gallois said those losses, painful as they are, are absolutely necessary for the planemaker to regain its former glory.

"We have to build a new Airbus. A network of strong partners sharing expenses and risk with it," Gallois said. "It's our priority in 2007 to implement Power8."

FMI: www.airbus.com, www.eads.com