5 Takeaways From Airbus's Results

Airbus delivered a strong increase in profit and a bullish outlook for long-term earnings improvement on Friday. Shareholders that have often punished the plane maker for missteps, rewarded the company’s prospects, sending shares soaring more than 7% in a sign they are starting to shrug off some long-held skepticism about execution problems at the European plane maker. Here are five things to know about what Airbus said.

#1: More A320 Jets Are Coming

Airbus has been steadily increasing production of its A320 single-aisle jets amid strong demand from budget airlines and network carriers for the plane. Orders for both the current A320 and follow-on A320neo—its first delivery is planned this year—have been strong over recent years. Airbus said today it would boost production for the narrow-body to 50 planes a month starting in 2017. Chief Executive Tom Enders said more may be in the offing as Airbus studies production rates of more than 60 single-aisle jets every month.

#2: Euro’s Wane Is Airbus’s Gain

For years Airbus has struggled with the strong euro against the dollar. The company has most sales in dollars though its costs are in euros which created a mismatch as the euro strengthened a decade ago and forced Airbus to pursue multiple rounds of cost-cutting measures. Now the dollar is strengthening which, Mr. Enders said, “provides opportunities for us to improve our profitability.” The effect is somewhat delayed, to around 2017, from the large currency hedges Airbus has taken to protect against exchange-rate volatility.

#3: Military Planes Inflict Pain

Airbus booked a €551 million ($617 million) charge on renewed problems in building the A400M military transport plane that previously weighed on results when it fell years behind schedule and ran over cost. The company, which replaced the head of its military aircraft programs last month, wants to double production of A400M cargo planes this year as it seeks to allay customer concerns about delays and quality problems. Meanwhile, the company is looking for more sales of its poorly-selling Eurofighter Typhoon combat jet it builds with BAE Systems PLC and Finmeccanica SpA. Mr. Enders said more deals will materialize “in the coming years.”

#4: A380 Superjumbos Losses Ending

The A380 superjumbo has been Airbus’s flagship for years, but it’s been a financial burden. Planes delivered so far have been unprofitable. Airbus expects to deliver around 30 of the jets this year, including the first that break even financially. Airbus is years from actually recouping its upfront investment on the plane, if that ever happens. Meanwhile, Emirates Airline, the biggest customer of the jet, is now pushing Airbus for a major upgrade to the A380, including adding new engines. Mr. Enders would not commit to such an effort, instead saying the plane will undergo continuous improvement.

#5: Give and Take

Earnings this year for Airbus benefited from the disposal of 8% of its stake in French combat jet maker Dassault Aviation SA. It also sold its stake in Finnish defense firm Patria. The two combined to a €383 million one-off benefit. Airbus plans to sell more of its Dassault Aviation stake this year and could shed more defense assets. On the other hand, Mr. Enders said Airbus could deepen its involvement in European missile joint venture MBDA if Finmeccanica goes forward with plans to sell its involvement. “If there is an opportunity to own a larger share we certainly will go for it,” Mr. Enders said, though he warns that the involvement also of BAE Systems in the JV could complicate such a transaction.