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Airbus turbulence on profit warning

Thursday, December 11, 2014 - 01:34

Airbus shares have fallen another 4.5 percent, adding to a 10 percent drop in the previous session, after the plane maker predicted flat profits in 2016. As Amy Pollard reports investors had expected new and recently upgraded models to start boosting results.

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The Airbus A350 was due to have its moment in the limelight on Saturday. But Qatar Airways cancelled the delivery ceremony - offering no alternative date. The decision couldn't have come at a worse time for the world's second largest planemaker. Airbus had just announced that it's expecting flat profits in 2016 with no core income growth until 2017. Both blows sent the share price tumbling - around 4 percent on Thursday, after a 10% fall the previous session - that was the biggest one-day drop in six years. Justin Urquhart Stewart of Seven Investment Management says investors were taken by surprise. (SOUNDBITE) (English) SEVEN INVESTMENT MANAGEMENT FOUNDER, JUSTIN URQUHART STEWART, SAYING: "It had priced in for a very significant level of growth, so I think it's coming back now to much greater level of reality. If there is then a pick up in the euro zone over all, you may then find more domestic orders coming through, but in terms of overseas, I think that's going to be relatively flat." Airbus' super-jumbo is also causing headaches. The company's finance director has hinted production could be halted. With the planemaker looking to break even on the A380 in the next four years, it needs new orders. (SOUNDBITE) (English) SEVEN INVESTMENT MANAGEMENT FOUNDER, JUSTIN URQUHART STEWART, SAYING: "This is very much in a cycle to try to make sure you've got the right planes at the right time, as the economies pick up. So I suspect that Airbus will find themselves in some difficulty, as will Boeing as well, if they can't make sure they've got enough orders coming through." Emirates airline wasn't impressed with the A380 warning - it says it would buy more if the model was modified. That's still to be decided but Airbus is trying to defuse the row with its biggest customers as soon as possible

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Airbus turbulence on profit warning

Thursday, December 11, 2014 - 01:34