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Airbus profits hit by A400M costs

Airbus profits hit by A400M costs

"De-risking the programme and strengthening programme execution are our top priorities for this aircraft in 2017", said CEO Tom Enders.

The plane's engines have been the main source of problems, with seven North Atlantic Treaty Organisation countries giving Airbus 3.5 billion euros in 2010 to resolve issues.

Hailed at the time as an innovative, fixed-price commercial-style deal, the contract foundered over the problems with the West's largest turboprop engines and an ambitious schedule for innovations such as ground-hugging technology to avoid radar.

Surprise new costs for the long-troubled Airbus A400M military jet sent the European plane maker's profits plunging last year and will weigh on the company's financial prospects through next year, even as it forecast a rise in aircraft deliveries and demand. So far, the only non-European buyer is Malaysia.

Airbus delivered 49 A350s and 68 A320neos past year, despite supply chain challenges for both aircraft.

Nonetheless, he described the penalties as "inappropriate" given the fact that the aircraft was playing a key operational role in Africa and elsewhere.

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The agency representing seven North Atlantic Treaty Organisation buyers - Belgium, France, Germany, Luxembourg, Spain, UK and Turkey - was not available for comment.

"It is likely to be important for Airbus to reassure investors that the company is close to the end for this stream of significant charges", said Raymond James analyst Harry Breach in a note to investors.

Airbus reported that it suffered a net income drop by 63% to €995 million ($1.044 billion) on the revenue increase of 3% to €67 billion ($70.419 billion).

The company met its ramp-up target for the A350, with 49 aircraft delivered during 2016, but acknowledged that the situation remains challenging as the ramp-up progresses.

Total deliveries of commercial aircraft rose to 688 in 2016 from 635 a year earlier and helicopter deliveries were up at 418 compared with 395.

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