Airbus parent warns of cash call

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The Independent Online

The crisis at Airbus over the development of the A380 superjumbo deepened yesterday after its parent company admitted it may have to go to shareholders to raise money as it delivered its third profits warning in less than a year.

EADS, the aerospace group that owns Airbus, said it is "probable" that the aircraft maker will report a loss for 2006 and revealed that it could have to take additional financial charges.

The parent company said that it may use its shareholders' annual general meeting in May for a cash call, justifying fears voiced by BAE Systems as a reason for selling its 20 per cent stake in Airbus last year.

Hans Peter Ring, the finance director of both EADS and Airbus, said: "If the question is whether it is possible that we will ask the AGM for authorisation to go to the market, the answer is 'yes', it is possible."

Speaking at a press conference in Frankfurt to accompany a trading update, EADS co-chairman Manfred Bischoff said there were various ways of raising funds, implying that a rights issue was not necessarily the way that it would get more cash.

EADS had previously said it would take the €4.8bn (£3.2bn) charges related to the problems over developing the A380 between 2007 and 2010. Yesterday the company said some of those charges would fall in 2006, leading to a likely loss for last year when the figures are reported in March.

"Certain one-time charges in relation to settlements with customers, impairment of assets, or financial impacts of Power8 [cost-cutting programme] originally expected to occur in 2007 and after are now foreseen to be recognised as early as 2006," EADS said in a statement.

More worrying for the market, the company also warned that "additional A380 charges not originally envisaged could apply as well". It is thought this is partly related to the Power8 scheme, details of which are expected to be announced in the next few weeks.

Power8, designed to make the company "leaner, more integrated, more efficient and more productive", is a reaction to the impact of the weak dollar. It could have implications for Airbus sites and employment levels. It is expected that the cost-cutting scheme will be put in place before more funds are raised.

Louis Gallois, the president and chief executive of Airbus, said: "Our financial estimate is a consequence of our 2006 turbulences, in particular reflecting the effect of the A380 delay. We are also taking into account the launch of the A350 XWB and the financial impact of Power8, which we originally expected for 2007. Clearly we are cleaning the grounds and preparing for a new Airbus."

In 2006, new plane orders at Airbus fell behind Boeing for the first time in five years, with 824 gross new orders. That compares with 1,050 at Boeing. Airbus stressed that this still represented its second best year ever in terms of orders and its backlog of orders, at 2,533, is its highest ever and ahead of Boeing.