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EADS to cut 1,700 space jobs
MUNICH, Germany (Reuters) -- European aerospace firm EADS posted a deep net loss of 299 million euros for 2002 on Monday, hit by hefty goodwill charges, and announced plans to cut an additional 1,700 jobs in its money-bleeding space division. In its third set of annual results since it was formed from a merger of France, Germany and Spain's largest aerospace firms, EADS also said closely-watched earnings before interest and tax (EBIT) fell 16 percent to 1.426 billion euros ($1.58 billion). The EBIT figure was in line with expectations and guidance given by EADS last month. But the net loss exceeded expectations, mainly due to 936 million euros in goodwill charges, with 350 million of that coming in the firm's troubled space division. EADS said it planned a net dividend of 0.30 euros for 2002, down from 0.50 euros in 2001. For 2003, EADS expects EBIT to come in roughly in line with the 2002 figure, based on expected deliveries at Airbus of 300 planes. EADS, which owns 80 percent of Airbus SAS and fully consolidates the plane-maker in its accounts, also said it would cut 1,700 additional jobs in its space division and take related restructuring charges in 2003. The company already has a plan in place under which it is cutting 1,600 staff. "The EADS 2003 EBIT target also includes a considerable provision for a significant re-engineering of the space business in order to achieve profitability during 2004," the company said in a statement. HEAVY RELIANCE ON AIRBUSWith a war in Iraq looming and the airline industry already struggling to cope with falling demand, weak economic growth and rising oil prices, EADS is navigating through some of the most turbulent conditions ever seen in the civil aerospace market. The company's dependence on Airbus -- it garnered nearly all of its operating profit from the Toulouse-based group in 2002 -- has left it more vulnerable to the downturn than rival Boeing (BA), which has a more sizeable defence business. EADS management has been trying hard to diminish the firm's reliance on Airbus, but its military business is heavily exposed to the German defence budget, which is under pressure. Sharp differences between the French and German governments and the United States over Iraq could also complicate the firm's efforts to penetrate the lucrative U.S. market. The U.S. spends roughly three times as much on military equipment as Europe. As expected, EADS's space division weighed heavily on profits in 2002, posting an operating loss of 268 million euros. Aeronautics, which includes the company's helicopter and fighter businesses, saw operating profit fall 15 percent to 261 million euros. Elsewhere, the defence and civil systems unit, which comprises missiles, defence electronics and telecoms, pushed into the black at the operating level to the tune of 40 million euros. EADS shares have been hit hard in recent months by fears of a war in Iraq and its consequences for the airline market. They closed at an all-time low of 7.0 euros on Friday, having lost over a third of their value in the last two months alone. Many analysts are advising investors to stay away from the stock for at least another year, when signs of a recovery in jet orders could begin to emerge. Airbus and Boeing notched up orders for 551 new jets in 2002, but Airbus expects airlines to order only around 350 new planes between both manufacturers this year. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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