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Military

Airbus Parent EADS Earnings Dimmed by Cash Flow Issues

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By Paul Ausick Updated Published
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A350_XWB

Courtesy EADS/Airbus
The European Aeronautic Defence and Space Co. (EADS) reported first-quarter earnings before markets opened this morning. Airbus, the company’s largest division, competes with U.S. aircraft maker Boeing Co. (NYSE: BA) for both commercial and military plane sales.

In the first quarter, Boeing posted revenues of $18.9 billion, compared with sales totaling $16.23 billion at EADS. Boeing’s net earnings totaled $1.1 billion, compared with about $315.8 million at EADS. Boeing’s earnings per share (EPS) totaled $1.44 in the first quarter, compared with EPS of $0.38 at EADS.

And both companies have their problems. Boeing’s problems are well-known: long delays in the delivery of the company’s 787 Dreamliner and an electrical system problem that kept the all 787s grounded for three months. At EADS, similar delays stalled delivery of the Airbus A350 XWB, which is just about to enter flight testing after the first plane got a nifty paint job.

The big issue for EADS — and Airbus — is that it is bleeding cash. The company’s free cash flow in the first quarter was negative — about $4.15 billion negative. The company is burning through cash as it prepares to manufacture the A350, a military transport, and its A380 jumbo jet. The company expects to get its free cash flow back at break-even for the year.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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