Airbus Profit Plummets Amid Production Costs and Space Division Charges

Airbus, the European planemaker, reported sharply lower second-quarter profits on Tuesday as the cost of investing in higher jetliner production, coupled with largely pre-announced charges in its Space Systems business, outweighed higher revenue. The company said adjusted operating profit fell by more than half to 814 million euros ($879.7 million) in the quarter as revenue edged up to 15.995 billion euros. It also took a charge of 989 million euros on forward losses in its space business, slightly higher than the estimate of about 900 million euros given with a profit warning last month.

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Analysts were on average expecting second-quarter adjusted operating income of 699 million euros on revenue of 15.822 billion euros, according to a survey compiled by the company. The charges bring to just under 1.6 billion euros the amount written off Airbus's balance sheet in just over five months to reflect a new audit of potential losses on key communications and navigation satellites in its troubled Space Systems business. Industry sources say much of the newly identified risk is accumulated in the OneSat satellite project and EGNOS, a system designed to improve the accuracy of existing navigation signals.

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Airbus is working on a review of space activities as it discusses potential alliances with France's Thales and Italy's Leonardo, and will detail a turnaround plan for Space Systems in September, Reuters reported on Monday. The company has also launched an expanded cost containment plan for the wider Defense and Space division, accelerating and deepening existing cost measures, industry sources said. Announcing its own mid-year results on Tuesday, Leonardo confirmed talks with its existing partner Thales, and with Airbus over possible alliances in the space sector.

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The company's financial performance was impacted by a number of factors, including the cost of ramping up jetliner production, charges related to its space business, and lower commercial aircraft deliveries. Despite these challenges, Airbus delivered 323 commercial aircraft in the first half of the year. The company's results highlight the ongoing challenges facing the aerospace industry, particularly in the space sector, as companies navigate a complex and competitive landscape.

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