Airbus legal risks spread to US, eclipsing Q3 profit

PARIS: Airbus said on Tuesday it had uncovered problems involving the use of sales agents to sell US arms technology, dragging the United States 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.
But 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 State Department under part 130 of the US International Traffic in Arms Regulations (ITAR), a section of US law covering the use of commissions to sell arms.
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 defence 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 unexpected disclosure overshadowed third-quarter earnings which showed a sightly narrower-than-expected four per cent decline on lower aircraft deliveries.
Airbus, the world’s second largest planemaker after Boeing, posted quarterly core operating earnings of 697 million euros ($811 million) as revenues rose 2 per cent.
It took a further small charge for the troubled A400M military programme and warned of further changes later in the year.
Airbus reaffirmed its 2017 guidance but acknowledged it would miss an informal goal of 720 jet deliveries that was higher 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 “around 200”.
Markets had expected a weak quarter due to delays in commercial aircraft and a build-up of inventory.
Analysts on average expected third-quarter adjusted operating profit down 5.6 per cent at 690 million euros on revenues up 1.8 per cent at 14.2 billion, according to a survey. — Reuters