Wed, Nov 01, 2017 - Page 10 News List

Airbus uncovers problems related to US military sales

SHORTFALL:The finding added fuel to a corruption scandal at the planemaker, which said it would miss its informal annual target of 200 for A320neo deliveries

Reuters, PARIS

Airbus SE yesterday said it had uncovered problems involving the use of sales agents to sell US arms technology, dragging the US for the first time into a growing corruption scandal at Europe’s largest aerospace firm.

Airbus also warned of a material impact from potential fines resulting from existing bribery investigations in the UK and France surrounding the use of middlemen in airplane sales, which have also triggered a sweeping internal investigation.

However, it said it was too early to gauge the size or timing of these or the outcome of the latest US-related findings.

Airbus said it had discovered inaccuracies in past declarations to the US Department of State under part 130 of the International Traffic in Arms Regulations, a section of US law covering the use of commissions to sell arms.

Airbus finance director Harald Wilhelm stressed the European company had not disclosed any secrets about sensitive US technology and that the issue was restricted to the use of sales agents and commissions.

“This is about defense equipment and services related to it,” he told reporters.

Airbus has been badly shaken by the existing corruption probes, which have already clipped aircraft sales.

Wilhelm declined to say whether the latest disclosure could lead to an investigation by the US Department of Justice, which has so far stayed out of the European bribery probes.

The disclosure overshadowed the firm’s third-quarter earnings, which showed a sightly narrower-than-expected 4 percent decline on lower aircraft deliveries.

Airbus, the world’s second-largest airplane manufacturer after Boeing Co, posted quarterly core operating earnings of 697 million euros (US$811.2 million) as revenue rose 2 percent.

It took a further small charge for the troubled A400M military program and warned of further changes later in the year.

Airbus reaffirmed its guidance for this year, but acknowledged that it would miss an informal goal of 720 jet deliveries that was more than the official target of 700.

Airbus has given different written and verbal delivery targets for several quarters in a row.

The shortfall is chiefly the result of engine delays for the A320neo. Airbus now expects to deliver fewer than 200 of the aircraft this year, compared with a target of about 200.

Markets had expected a weak quarter due to delays in commercial aircraft and a buildup of inventory.

Analysts on average forecast third-quarter adjusted operating profit down 5.6 percent at 690 million euros on revenue up 1.8 percent at 14.2 billion, a Reuters survey found.

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