Leave aside that Airbus delivered more planes last year than Boeing and likely as not received a handful more net orders as well. Far better than that take a look at what really matters for Airbus parent company EADS – the bottom line. True, having managed to crawl back into profit in Q3 2008 EADS profits slipped to a mere EUR87m in the third quarter of 2009. Hardly great news for shareholders then with the company once again blaming problems associated with the A380 and A400M projects. Quite rightly this time round as it confirms the final number of aircraft delivered in 2009 and the level of orders received EADS management reminds that it is also being seriously disadvantaged on currencies. Indeed, the company reckons that this will be to the to the tune of EUR1bn in the coming year alone as the dollar slips further down and the Euro remains at a seemingly ridiculously high level in relation to the overall Euro economy. The message? Despite working hard to reduce manufacturing costs across the whole European production network Airbus must buy far more of the components it needs from outside Europe. Airbus and EADS management confirmed today that given the current situation this is now an absolute necessity.

Such statements clearly go against the nature, the grain and the whole history of a company like Airbus that since the original partnership foundations were laid back in 1965 was intended to be about building and buying as much material and components as possible in Europe will be hard to swallow for some. But in the so-called globalised world we live in today Airbus must now bow to the inevitable.

Meanwhile EADS has said that January 31st will be the deadline for intra government A400M partners to conclude a deal on numbers and price for the manufacturing phase of the programme to begin. Nevertheless, whilst Airbus management have again threatened to pull out of the A400M project completely if the revised agreement with the governments is not sown up quickly we doubt that this is anything more than sabre rattling aimed at speeding the process up. Chivvying up governments to make the final commitment necessary ahead of a new round of talks that are due to begin in London Wednesday is no bad thing of course and if the pressure works it will have been worth it. Would Airbus Military be better to abandon the project? Given the prospect of needing to take maybe another EUR3.5bn and more on the chin on top of already made EUR2.5bn provisions or thereabouts we believe the best position for both Airbus Military, EADS shareholders and the government partners involved that we should not forget have been badly let down as well is that the A400M furrow continues to be ploughed. In short pulling out now would cost far too much money. True, as I said in my separate A400M piece last week, Airbus won’t be taking a cent of profit on the aircraft even should it still be being manufactured twenty years from now for domestic Europe or export. Maybe the same is true for the A380 program as well, at least until the number of aircraft made passes the six or maybe seven hundred mark> Nevertheless, one notes from remarks made earlier today that Airbus maybe doesn’t agree about the prospect of eventually making profits on the A380.

Meanwhile given the reasonably positive if somewhat blunt attitude of management to forward commercial market outlook the trading statement may be best summed up as an honest approach to the future. Indeed, unlike too many previous statements from this particular company that had so often been filled to the brim with arrogance we now see in new Airbus that they are prepared to come clean on the bad news too. OK, so having been the thorn in the side, the devil if you like in the side of A400M for so long now – virtually ever since the idea of a European designed and built military airlifter was suggested back in the early nineties you may (see above enclosure) – you may well be surprised to see that my view in the separately enclosed paper was that governments should quickly agree a final revised price and that the program should be allowed to move ahead to production as soon as the final development phase is complete. Scrapping A400M now will be seen as a defeat too far for Airbus and its EADS owner.

Back at the ranch slow progress on building up A380 production remains a big concern as does, bar less than a handful, lack of any new orders for the plane of late. Nevertheless, arguably the additional production problems on A380 couldn’t have come at a better time within the current down cycle – something that I can probably say and write as an independent but that you would never hear said by the company. We move on and assuming that A380 costs don’t further rocket and that the currency situation can at least be contained by having a consistent and honest policy of buying more from the none Euro area the next problem is to ensure that all the problems that have been learned from the A380 and A400M programs are in turn learned by those engaged in the design and development of the all important A350 XWB project. For now given the signals evident from the CEO Tom Enders today we can at least believe without doubt that the A350 project is moving ahead well. Indeed, that new found consistency and honesty has in recent years been belatedly found at Airbus since the current management took over a few years ago is one of the most important and welcome changes that has been seen in this company in a generation. Now it [parent company EADS] needs to move forward with the new found transparency that translates to also doing whatever it can to reward shareholders.

In this short paper I will make no comment on vexing matters such as the long running disputes between Boeing and the US government against Airbus and the EU relating to alleged subsidies that together with reverse applications by Airbus and the EU on Boeing and the US government alleging similar remain, at various stages, in the hands of the WTO. Together with the other vexing issue for Airbus – that of its ability to compete with its partner Northrop Grumman on a level playing field basis – to compete fairly and squarely on an equal basis with Boeing in the vast and again revised US tanker program these are two very separate issues that demand separate papers that will follow.