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EADS surges as it dismisses talk of raising funds to support the A350 – Suppliers Share Wrap

8-Dec-2009

EADS CEO, Louis Gallois, has allayed fears that the downturn in aircraft ordering and the costs associated with the A400M and A350 XWB programmes are creating a problem for the company and would force it to turn to shareholders for additional funding.

The CEO has admitted that the EUR12 billion A350 XWB programme, as well as the downturn in aircraft orders and rising deferrals, are eating into its cash stockpile, but the company is still sitting on a surplus of more than EUR8 billion.

With a surplus that size, “you do not ask your shareholders for funds,” said Mr Gallois, in an interview with The Financial Times. The company will fund the majority of development for the A350 by itself, but EADS is also receiving more then EUR3 billion in ‘launch aid’ in the form of loans from Germany, France, the UK and Spain - a sore point with the US and its major competitor, Boeing.

With the A400M now on track to fly before the end of the year, and commercial negotiations on the programme now under way, EADS and Airbus are in a much happier position than they were a few months ago. While Airbus is still experiencing challenges with A380 production, the group is now getting ready to start production on its first A350 aircraft in early 2010.

Shares in EADS surged 4.5% on Monday, the strongest single day increase since Sep-2009.

Meanwhile, shares in Boeing gained 2.1%. Major parts and aerospace supplier, Rockwell Collins, was also up 2.1%.

Selected Aviation suppliers’ daily share price movements (% change): 07-Dec-09


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