Airbus profits rise but A400M problems resurface

PARIS (Reuters) - Airbus Group reported a stronger-than-expected 12 percent rise in nine-month underlying operating profit on Friday, led by its planemaking and helicopter divisions, and reaffirmed its profit forecasts for the year.

However, it warned of a possible accounting impact from a resurgence of production delays in its A400M military airlifter, which it said would be assessed with its full-year results.

Europe's largest aerospace group said nine-month operating earnings before one-off items rose to 2.6 billion euros (3.23 billion US dollar) as revenue grew 4 percent.

It continued to target stable revenue and aircraft deliveries, and "moderate" operating margin growth in 2014.

Airbus said it had run into delays in enhancing the military capabilities of the A400M and that a clause allowing buyers to cancel had come into effect from Nov. 1. But it said it was "highly unlikely" that this right would be exercised.

The A400M was developed at a cost of 20 billion euros for seven European NATO countries and received a 3.5 billion euro bailout in 2010 following delays and cost overruns, which Airbus blamed in part on a poorly designed fixed-price contract.

In a statement, Airbus said the heavy cargo and troop plane had been hit by "military functionalities challenges", and delays in producing and delivering the aircraft to customers.

Actions to address this "are under assessment and will be finalised for the 2014 full-year accounts," it said.

Airbus reaffirmed plans to deliver the first of its new A350 jetliners to Qatar Airways in the fourth quarter after it received safety approval from U.S. and European regulators.

Chief Executive Tom Enders said in a statement the ramp-up of A350 and A400M production, as well as a planned upgrade to the A330 jet, "continue to require strong management focus".

In the third quarter, Airbus Group posted operating profit of 744 million euros, up 14 percent, and flat sales.

Analysts were on average predicting third-quarter operating profit up 1.7 percent and a 1.5 percent dip in revenue, according to a Reuters survey.

U.S. rival Boeing last month reported an 18 percent increase in quarterly profit and raised its full-year core earnings forecast.

(1 US dollar = 0.8046 euro)

(Reporting by Tim Hepher and Cyril Altmeyer; Editing by James Regan)