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Airbus profits rise but A400M and foreign exchange issues present problems

Airbus profits rise but A400M and foreign exchange issues present problems
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Airbus has reported a stronger-than-expected 12 percent rise in underlying operating profit for the nine month period from January to September and reaffirmed its profit forecasts for the whole year, despite the weaker euro hitting net earnings.

Its planemaking and helicopter divisions performed well, but the European aerospace company warned of a possible accounting impact from additional production delays to its A400M military transport.

The A380 superjumbo continues to cause losses, but Airbus reaffirmed plans to deliver the first of its new A350 jetliners to Qatar Airways in the fourth quarter.

A400 problems

Airbus said it had run into delays in enhancing the military capabilities of the A400M and that a clause allowing buyers to cancel had come into effect from November 1. But it said it was “highly unlikely” that this right would be exercised.

The A400M was developed at a cost of 20 billion euros for seven European NATO countries and received a 3.5 billion euro bailout in 2010 following delays and cost overruns, which Airbus blamed in part on a poorly designed fixed-price contract.

In a statement, Airbus said the heavy cargo and troop plane had been hit by “military functionalities challenges”, and delays in producing and delivering the aircraft to customers.

Actions to address this “are under assessment and will be finalised for the 2014 full-year accounts,” it said.