Outlook: Not a penny more for flying circus

AIRBUS INDUSTRIE does not publish its own accounts - one of the joys of being part of that strange French hybrid known as a Groupement D'Interets Economique, or GIE. Even when financial information about the business does seep out into the public domain, it is only after liberal use of that old accounting double act, smoke and mirrors.

Whether Airbus really makes money or loses it is, like beauty, in the eye of the beholder. Or, to be more accurate, in the eyes of its industrial partners. Thus Airbus made a bottom-line loss of pounds 120m last year according to British Aerospace, but an underlying profit of up to pounds 450m if you believe Aerospatiale of France. For what it is worth, the figure they use down at Airbus headquarters in Toulouse is a pounds 40m operating profit.

Noel Forgeard, who took over as chief executive of this peculiar beast a year ago, has sensibly decided that much of the profit Airbus has been booking for the past three years is as fictional as the finest work of Victor Hugo, and has begun to bring private sector conventions to bear.

Thus were the Airbus accounts for 1998 ever to see the light of day, they would show a pounds 200m provision to cover exposure to unprofitable aircraft sales over the previous three years when the vicious price war with Boeing was at its height. There will be more of the same provisions this year and next, so that eventually Airbus will have taken some pounds 400m in charges.

The adoption of more conventional accounting techniques is part of the necessary process of transforming Airbus into a single corporate entity with a recognisable balance sheet and a set of shareholders, as opposed to industrial partners.

Full transparency is the name of the game. For the first time since its creation three decades ago the taxpayers of the four member countries, who have already pumped some pounds 2bn into Airbus, will be able to see what their money is buying.

Conversion to this new status could take another 18 months, however, and is supposed to be a prerequisite for any more taxpayers' money being handed over. It is ominous, therefore, that the four partners have already applied formally for another pounds 2bn of launch aid for the latest paper plane - the A3XX super jumbo - with the intention of launching the programme some time in mid-2000.

The economics of the 600-seater jet and the markets for such a huge beast are far from proven, however lyrical Airbus may wax about the aircraft. Full conversion to plc status must be a non-negotiable precondition before a single penny more of taxpayers' money is pumped into this project.

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