EADS Q2 net profit decline 61 percent

By EMMA VANDORE AP Business Writer

PARIS (AP) - EADS NV, the parent company of plane-maker Airbus, on Friday raised its outlook for 2010 - despite a 61 percent drop in second quarter earnings - as its commercial aviation business takes off.

Louis Gallois, the CEO of Paris-based European Aeronautic Defence & Space Co., in a statement that a recent flurry of orders "reflect an improvement in the commercial aviation market."

Airbus has increased its target for gross orders to above 400 this year, from its previous goal of 300 and plans to increase production of its main money-earner, the single-aisle A320, to keep up.

Revenue in 2010 should increase to more than euro44 billion, from euro42.82 billion last year.

Previously, EADS had said it expected revenue to remain roughly stable this year.

The company blamed a deterioration in its hedging position - contracts designed to lock in currency rates and protect the company from negative effects of foreign exchange fluctuations - for a 61 percent drop in net profit in the three months to June, a result that was in line with analyst expectations.

EADS said net profit in the quarter fell to euro82 million ($107 million) from euro208 million. Revenue fell 3 percent in the period to euro11.36 billion.

While the future is looking up for commercial aviation, Gallois sounded less optimistic about defense contracts. "The institutional outlook is more challenging as public budgets in our domestic markets are under tight review," he said.

Priorities for the year include improving efficiency of its superjumbo A380 program, which is weighing on profits, and finalizing the re-negotiated contract for the troubled A400M military transport program with customer nations, he said.