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Airbus vows to increase profits after losses from settlement

UNITED STATES (OBSERVATORY NEWS) — Airbus has pledged to deliver more aircraft and achieve higher operating profits this year, after an international settlement in a bribery and problems with the A340M transport plane, causing the group 1.36 billion euros ($ 1.48 billion) net loss in 2019.

Airbus said on Thursday that poor expectations for sales of the military transport plane had resulted in a cost of 1.21 billion euros, and that this item would continue its negative impact in the coming years. The entire year’s loss is also due to allocations for a settlement concluded last month with prosecutors worth $ 4 billion related to past corruption practices.

Airbus added that the revised operating profit, excluding costs and non-recurring items, rose 19 percent to 6.95 billion euros and would exceed 7.5 billion in 2020. Revenue increased 11 percent to 70.48 billion.

CEO Geum Fury said that Airbus had achieved “a truly solid financial performance.” He added that this year it will focus on improvements in operating and costs as well as “re-establishing our corporate culture”.

Airbus shares fell 1.3 percent at 1002 GMT.

Airbus downplayed the potential damage from a coronavirus outbreak that is causing disruptions to airlines and the global economy in general, and supported the growth forecast for aviation that “assumes no major disruptions, including those caused by the virus.”

Fawri admitted that some Chinese airlines had requested a “very short-term” delay in deliveries of new aircraft, in what he described as a logistical matter. Airbus aims to deliver about 880 commercial aircraft this year.

Airbus raised the proposed dividend by 9 percent to 1.8 euros per share, forecasting a free flow of cash for the entire year by about four billion euros, up from 3.509 billion in 2019.

Profits have been hit by the A400M, which is adding to billions of previous costs for Europe’s largest military project, which has become a financial thorn in the Airbus side for more than a decade.

Airbus said the project delivered 14 aircraft in 2019, on schedule, but now faces obstacles representing a “growing challenge” such as the repeated extension of the ban on German exports to Saudi Arabia.

In the fourth quarter of 2019, adjusted operating profit fell 9 percent to 2.81 billion euros, up from the 2.74 billion euros that analysts had expected, according to an Airbus survey. Quarterly revenue increased 4 percent to 24.31 billion euros.

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