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EADS Posts Narrow 3Q Profit

Airbus' parent company reported a narrow third-quarter profit, as its plane-making business continued to improve in line with the global economic recovery.

PARIS (AP) -- Airbus' parent company EADS NV reported a narrow third-quarter profit on Friday, rebounding from a loss a year earlier as its plane-making business continued to improve in line with the global economic recovery.

The European defense and aerospace company said net income was euro13 million ($18 million) in the third quarter, up from a loss of euro87 million in the same quarter of 2009. Revenues jumped 18 percent to euro11.25 billion.

EADS predicted its main strength in coming months would come from commercial aircraft sales, because its defense business with budget-pinched governments was less clear in the medium term.

In its earnings report, EADS trumpeted "a clear upturn in the aviation industry," with Airbus collecting gross orders for 379 aircraft -- more than double the 149 it had taken in during the same period of 2009.

"This demonstrates continued appetite for growth by emerging countries and a market-return by aircraft lessors," EADS said.

Chief financial officer Hans Peter Ring, in a conference call with analysts, said EADS was still expecting "a difficult year" for Airbus in 2011 and that the plane-maker's profitability still had room for improvement.

Shares of European Aeronautic Defence & Space Co. were down 1.1 percent at euro18.79 in midday Paris trading Friday.

Christophe Menard, a Paris-based analyst with Kepler Capital Markets, said the shares were slumping because among analysts, "everybody has 2011 and 2012 in mind -- and they aren't going to be great years."

The earnings statement came as Airbus, the key rival of U.S. based-Boeing Co., has faced questions about its A380 superjumbo after an engine on a Qantas A380 caught fire over Indonesia last week.

Some analysts believe that checks and fixes to the Rolls Royce-built Trent 900 engines could delay planned deliveries of three other A380s that are scheduled to be equipped with those engines to customers this year.

In its report, EADS said earnings before interest and tax (EBIT), a benchmark for underlying profits, jumped 88 percent to euro378 million from a year earlier.

That topped analysts' expectations for a far more modest rise, to around euro260 million. EADS also predicted that EBIT for the year would be "at least" euro1.1 billion.

For the first nine months of the year, EADS said net income was down 32 percent to euro198 million, though revenues in the period climbed 6 percent to euro31.55 billion.

"The commercial aviation sector continues its ascent which starts to be reflected in the nine-month results," CEO Louis Gallois said in the statement. Airbus delivered 380 planes from January to September 2010, EADS said.

The company said its underlying profit would be underpinned by three programs: the A380, the A400M military plane, and the A350XWB -- a long-range mid-size commercial jet aimed to compete with Boeing's 787.

EADS pushed back its planned delivery date for the first A350 to the second half of 2013 -- three to six months later than first thought. Ring said the delay stemmed from the unexpectedly long "transition phase from design to manufacturing," but didn't appear likely to dent EADS earnings forecasts.

As for the A380, Ring said the impact of the engine troubles wasn't immediately clear: "We cannot exclude that there is risk at this point ... This is a very recent development, being managed on a daily or even hourly basis."

Airbus has four A380s left to meet its target of deliver 20 of the superjumbos to customers this year. Three of those remaining were to have Trent engines, he said. About half of the A380s are powered by Rolls Royce engines, and the other half by an alliance including General Electric and Pratt & Whitney, Ring said.

Australia's Qantas and Singapore Airlines grounded a total of nine A380s following the engine troubles. London-based Rolls-Royce said the incident will cause full-year profit growth to be slightly lower than previously expected.

EADS is also fresh off finalizing a deal with governments of the seven launch customers for its A400M military transport plane, which stalled amid funding trouble for years.

With many European governments cutting spending as the global economic downturn thinned tax revenues, CEO Gallois said EADS will "remain attentive to challenges which could arise for our business with government customers" -- and that the plane-making business would underpin profits.

"In the midterm, at the current exchange rates, Airbus should significantly improve its underlying profitability thanks to better volume, pricing and further economic improvement of the A380 performance," said Gallois.

Camille Rustici in Paris contributed to this report.

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