Airbus legal risks spread to U.S., eclipsing third-quarter profit
PARIS (Reuters) – Airbus <AIR.PA> said on Tuesday it had uncovered problems involving the use of sales agents to sell U.S. 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 U.S.-related findings.
Airbus said it had discovered inaccuracies in past declarations to the U.S. State Department under part 130 of the U.S. International Traffic in Arms Regulations (ITAR), a section of U.S. law covering the use of commissions to sell arms.
Finance Director Harald Wilhelm stressed the European company had not disclosed any secrets about sensitive U.S. 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 U.S. 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 percent decline on lower aircraft deliveries.
Airbus, the world’s second largest planemaker after Boeing <BA.N>, posted quarterly core operating earnings of 697 million euros ($811 million) as revenues rose 2 percent. It took a further small charge for the troubled A400M military program 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 percent at 690 million euros on revenues up 1.8 percent at 14.2 billion, according to a Reuters survey.
(Reporting by Tim Hepher and Cyril Altmeyer; Editing by Sudip Kar-Gupta)