Airbus Group NV ADR (EADSY, Financial) reported a 59% increase in profits for the year 2014. In spite of underperformance at the military sector, the profit spurred due to an increase in demand for new commercial jets. Delays to a new plane bore the company additional costs of more than $600 million. The production of A320 single-aisle aircraft will increase up to 50 units starting 2017. CEO Tom Enders said in a statement that the company has delivered more commercial aircraft than before, including the A350. The net orders were twice the number of deliveries, he said.
Number mix
The net income of Airbus Group for the year 2014 rose to $2.65 billion. IE 2.34 billion euros. This was a great gain given that the net income for 2013 was 1.47 billion euros. Most of the revenue earned by the company comes from the aircraft unit. The aircraft unit reported a revenue of 60.7 billion euros. This is a 5% increment from the revenue earned in 2013. Sales increased up to 60.7 billion euros IE 5%. The earnings before interest, tax and one-time items was 3.54 billion euros in 2013. It rose to 4.07 billion euros IE $4.56 billion for 2014.
Profit drivers
Boeing Company (BA, Financial) was the first to witness an increase in the demand for passenger jets. Just like its competitor, Airbus Group has also seen a hike in the demand due to the high demand for air travel. This phenomenon is witnessed in emerging markets. The high oil prices gave a reason for the airlines to replace the fuel-guzzling planes with more robust ones. This created a hype among consumers, and they sought a chance to get hold of the efficient-model planes. The single-aisle planes garnered more passengers than the other models. They represent around three-fourths of Airbus and Boeing orders. To keep up with the high demand, Airbus said that it would accelerate the production of the single-aisle series. The popular model that consumers demanded was the A320. Around 50 models of the A320 will be produced, starting from 2017. The previous decision was to manufacture around 46 units per month. Most of Airbus' production involves 40 units of the A320. Competitor Boeing aims to produce around 52 single-aisle planes by 2018.
Most of the profit generated came from the aircraft business, it is reported. The Aerospace group reported a whooping 68% increase in profit from the aircraft division. However, the military division did not perform as expected and restructuring of the operations is on. Last year, the company had been warned of problems arising for its A400M military plane. The European government –Â the main customers –Â have reined in spending. Delivery of the A400M military plane to countries like Britain, France and Germany was decreased. This is the biggest reason for the downfall of the military sector. The company said that they had booked new charges of over 551 million euros for the military plane model. The said program has, however, crossed billions over the estimated budget. Airbus said that the profit for defense and space operations fell to 404 million Euros, a 38% decrease as compared to 2013.
2015 outlook
Airbus has predicted the net orders for 2015 to be "slightly more" than that of 2014. The company said that it will try to break even on the A380 super-jumbo program. The A380 super-jumbo program, with variants like Improved A380-800, A380-900 and A380F failed to attract new orders. Hopefully, expectations of a slight increase in operating earnings before certain items, with a break-even on cash flow before acquisitions are fulfilled.
