Airbus parent EADS back in profit

PARIS, France (AP) -- Airbus parent EADS said Wednesday it returned to profit in the first quarter as the planemaker increased deliveries and the company cut costs, helping offset the weaker dollar.

European Aeronautic Defence & Space Co reported a net profit in the January to March quarter of €285 million ($440 million), compared with a loss of €10 million a year earlier. In the previous five quarters, EADS has been in the red four times. Shares in the company were up 7 percent to €16.82 ($26.03) in early trading Wednesday in Paris.

CEO Louis Gallois said in a statement the results are "encouraging."

"Though many serious challenges have been overcome there remains much to do," he added.

EADS didn't change its expectations for earnings this year, but warned of a possible "negative impact" from the weakening dollar later in the year.

The dollar's slide against the euro makes it harder for Airbus to compete against Boeing Co. Unlike its U.S. rival, many of Airbus' costs are in euros, though it sells its planes in dollars.

Gallois is seeking to reduce EADS' exposure to the dollar by shifting production to the dollar zone and increasing defense work.

EADS said it is progressing with a restructuring program, dubbed Power-8, which aims to shed 10,000 jobs by 2010 and transfer some factories to suppliers to share the financial risk of the mid-size A350 aircraft.

Some of those talks recently broke down, but EADS said it expects to conclude sales of two factories in Germany and Britain in coming weeks.

The cost-cutting plan was devised after multiple delays to the A380 superjumbo and a redesign of the A350 -- the planned competitor to Boeing's 787 -- wiped billions of euros off EADS' profits.

In the first quarter sales increased 10 percent to €9.9 billion ($15.3 billion) from €8.9 billion a year earlier.

Earnings before interest, taxes, goodwill impairment and exceptional items -- a measure of profit favored by analysts -- increased almost ninefold to €769 million ($1.23 billion) from €88 million. That exceeded analysts' expectations of €359 million ($555 million), according to a poll by Dow Jones.

EADS predicts 2008 revenues will exceed €40 billion ($61.9 billion), with an EBIT of €1.8 billion ($2.8 billion).

The forecast is based on Airbus delivering about 470 airplanes in the year and taking over 700 orders. It does not take into account the additional delays to the A380 superjumbo announced Tuesday, which may result in financial penalties from airlines.

Airbus, which accounts for two-thirds of EADS' sales, reported earnings before interest and taxes of €698 million ($1.08 billion) in the quarter after a loss of €69 million a year earlier.

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