Airbus CEO: New €1.3Bn Charge on A400M “Limits Future Exposure”

PARIS --- Airbus took another charge related to the A400M military airlifter in 2017, according to the company’s 2017 financial results announced today, saying its future exposure to the program is now limited thanks to the Declaration of Intent (DoI) signed with the partner nations earlier this month.

“On A400M, we made progress on the industrial and capabilities front and agreed a re-baselining with government customers which will significantly reduce the remaining program risks. This is reflected in a substantial one-off charge,” Tom Enders said.

The total charge of € 1,299 million related to the A400M programme included € 1,149 million in the fourth quarter, Airbus said.

This latest charge brings to over €8bn the total charges incurred by Airbus on the program, while a €5 billion bail-out was paid separately by the partner nations when the program was re-baselined in 2010.

A document signed last week between Airbus and seven NATO nations, and seen by Reuters, allows the planemaker to negotiate deals with the individual buyers so that some of the complex add-on features can be removed from the official specifications,” Reuters reported Feb. 12. This appears to be the first time the buyers have recognized that not all the designed features will be available, it added.

In its 2017 financial statement, Airbus said “On the A400M programme, good progress was made on the industrial side with 19 aircraft delivered compared to 17 in 2016. The production rate was adjusted to recalibrate inventory levels while the military capability roadmap was re-baselined.

“In 2017, Airbus entered into discussions with OCCAR and the customer Nations that resulted in the signature of a Declaration of Intent (DoI) in February agreeing on a global re-baselining of the contract, including a revised aircraft delivery schedule, an updated technical capability roadmap and a revised retrofit schedule.

“The DoI represents an important step towards reaching a contractually-binding agreement also mitigating the commercial exposure while satisfying customer needs with regard to capabilities and availability of the aircraft. With a clear roadmap in place, Airbus’ remaining exposure going forward is expected to be more limited.

“A detailed review of the programme concluded in the fourth quarter of 2017 including an estimate of the financial impact of the adaptions on schedule, capabilities and retrofit resulted in an update of the Loss-Making Contract provision of € 1,299 million for the year.”

Space & Defence unit lags

Airbus Defence and Space, the business unit which includes the A400M program, reported a 9% drop in 2017 revenues, to €10.8 billion, while its Reported EBIT declined by 13%, to €872 million.

Click here for the full financial release, on the Airbus website.


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Airbus CEO: New €1.3Bn Charge on A400M “Limits Future Exposure” Airbus CEO: New €1.3Bn Charge on A400M “Limits Future Exposure” Reviewed by Defense Alert on 04:51:00 Rating: 5

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