Airbus H1 profit rises, takes new A400M charge

By Tim Hepher and Cyril Altmeyer

PARIS (Reuters) - Airbus Group surprised investors with a strong second-quarter rise in earnings, pushing its shares up as much as five percent as lucrative jetliner deliveries outshone more bad news for the A400M military transporter.

Quarterly operating profit before one-off items jumped 15 percent to 1.23 billion euros, with gains of at least 20 percent in jetliner and helicopter profits masking a 159 million euro loss in defence and space.

Analysts polled by Reuters had expected operating profit of 1.06 billion euros.

Airbus Group maintained its financial forecasts for the year as first-half revenue and core profits rose 6 percent.

Its shares were up 3.6 percent at 64.64 euros at 1036 GMT.

Chief Executive Tom Enders said the world's second-largest aerospace firm behind U.S. rival Boeing was focusing on the execution of aircraft programmes such as the A350 passenger jet and the troubled A400M military plane.

Cumulative provisions on Europe's largest defence project topped 5 billion euros ($5.47 billion) as Airbus took a fresh charge of 290 million on new development delays following the crash of an A400M during a test flight in May.

Reuters reported on Thursday that the accident had led to new development delays of up to three months.

Airbus said the crash had caused setbacks for the delivery schedule that were still being assessed, while low inflation had also pushed a system for price adjustments into the red.

Airbus has told buyer nations that not all the systems for protecting the plane from external threats and other military features will be available when they are needed, and in some cases not at all, defence sources say.

Airbus aims in 2015 to deliver up to 17 of the troop and cargo carriers, which were developed for seven European NATO nations at a cost initially set at 20 billion euros.

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After delays to the A400M and the double-decker A380 jetliner, Airbus has overhauled the way it develops aircraft and those efforts are said to be paying off for its newest commercial model, the A350.

Airbus said the increase in A350 production was "gaining traction" and reiterated its revamped A320neo would be delivered this year. Flight tests resumed this week with Pratt & Whitney engines, following a recent technical halt.

Airbus plans to decide by end-year whether to further increase production of its A320 medium-haul family, the source of most of its cash for other projects.

"The momentum of commercial aircraft is still clearly there," Enders told analysts.

Also lifting sentiment was an improvement in the company's currency hedging book that has seen it unable to benefit significantly from a strong dollar until about 2018.

Alexander Hauenstein of DZ Bank said the results supported growing confidence for the rest of the year, but noted that "a seasonally uptick in H2 earnings is necessary".

Airbus Group shrugged off difficulties in the oil and gas sector noted by rival helicopter makers as revenue at the company's helicopter unit rose 5 percent in the first half.

Airbus Group booked a 748 million euro gain from the sale of an 18.75 percent stake in Dassault Aviation and said it would sell its remaining 23.4 percent by the end of 2016.

($1 = 0.9136 euros)

(Editing by James Regan and Jason Neely)