Airbus announces 63% drop in profit for 2016 – A400M to blame

Despite immediate fluctuations, shares in the French plane manufacturer Airbus remained barely down on Tuesday after the announcement of a 63% drop in profits at €916 million for 2016, compared to €2.2 billion in 2015. The principal reason for the dramatic drop in profitability rests at the door of the A400M military jet, which took a €1.2 billion hit in the fourth quarter of 2016.
Airbus has already warned that with governments delaying payment because there are delays in production of the aircraft, cash problems “will continue to weigh significantly in 2017 and 2018 in particular.”
According to Airbus CEO, Tom Enders, “the jury is still out on the long-term success” of the A400M, but he still insisted that “it’s absolutely necessary” to maintain it as long as European militaries depend on it.
Airbus management is currently holding discussions with a number of governments in an attempt to reduce further financial blows related to the A400M. Enders has placed blame for the plane’s problems on misguided decisions made at the beginning of the program back in the early 2000s, problems that have been exacerbated by engine suppliers’ problems and delivery delays, which have resulted in large financial penalties.
While it has already begun scaling back on production of the A380s superjumbo owing to unexpected low demand, Airbus is still predicting strong demand for the single-aisle A320 family of jets.
Enders also downplayed concerns over possible U.S. protectionism under President Donald Trump. Taking note that Airbus already has an assembly plant in Alabama, other plants opening soon, and suppliers across the U.S., he commented that: “I feel pretty good about … our contribution to the U.S. economy.” (€1.00 = US$1.06 at time of publication.)