EADS returned to profitability in the first quarter in spite of the weak dollar.

The EADS share surged 5.85% yesterday, at €16.64, thus scoring the best CAC40 performance. The group announced a € 285M net profit for the first quarter, beating analysts’ expectations. Its turnover rose 10% to € 9.9Bn, lifted by record deliveries at Airbus (123 aircraft). For the full year, Louis Gallois confirmed the target of a € 1.8Bn operating profit on a turnover “superior to € 40Bn”. He added that Airbus’s target of 470 aircraft deliveries in 2008 was not called into question and that orders are expected to slow in coming quarters. These strong quarterly results are mainly due to the Power 8 savings programme at Airbus, but also to robust growth at Eurocopter, Astrium and the defence and security branches, outlines Die Welt. Still, the press largely emphasises the challenges still looming over EADS and its subsidiary. The most worrying one remains the weak dollar. Mr Gallois confirmed that new cost-saving measures will be announced by the summer. Their main stake will be to “increase the share of production and purchases billed in dollars” and save on R&D spending, in order to generate € 300M in additional savings. Other options are under study to add yet a further € 350M in savings. Jobs should only be marginally affected. Mr Gallois also pointed at “risks looming on certain programmes”, like the A400M or the A380. The financial impact of the latest delays to the A380 has not been estimated yet, though Mr Gallois claimed they were “not catastrophic”. As for the A350, he said the programme was “on schedule”, with its development stage to be completed by the end of this year. In a comment piece, Les Echos says EADS is not yet out of turbulences, even though it posted profits in the first quarter and Louis Gallois plays down the impact of the latest A380 delay. The A380 is a “technological prowess” indeed, and the industrial hitches must certainly be qualified. But the company truly suffers from the “AMF effect”, as explained by a source close to EADS. Its managers are under the threat of lawsuits. Besides, EADS’s commercial successes in both the civil and military sectors should not hide the recent failure of its industrial strategy, symbolised by the cancellation of the plant-sale programme, concludes the newspaper. For its part, Frankfurter Allgemeine Zeitung recalls that, when Airbus’s management recently tried to justify the fourth delivery delay to the A380, chief commercial officer John Leahy compared the construction and delivery of the superjumbo with the venture of sending a man to the Moon. He thus meant that the high complexity of the project requires a lot of time. Besides, following the overhaul of its dual-headed management structure one year ago, EADS promised a new start. But so far, notes the German daily, its aircraft making subsidiary has not taken off. Despite surprisingly good quarterly results, Airbus still has a lot to do. At least it can rely on full order books. AFP (14/05), Bloomberg (14/05), La Tribune, Les Echos, Le Figaro Economie, La Croix, Frankfurter Allgemeine Zeitung, Handelsblatt, Financial Times Deutschland, Suddeutsche Zeitung, Die Welt, Hamburger Abendblatt, Financial Times, The Wall Street Journal Europe, International Herald Tribune