Airbus Is Clearing the Books for Its New CEO

(Bloomberg) -- Airbus SE Chief Executive Officer Tom Enders scrapped the company’s totemic but unprofitable A380 jet and booked more than 1.1 billion euros ($1.2 billion) in charges to leave a clean slate for his successor.

In addition to scrapping the flagship superjumbo, Enders, who stands down in April, announced extra costs for restructuring the A400M military transport program and revealed the loss of a major order for its newest wide-body jet.

Airbus Is Clearing the Books for Its New CEO

The shares rose, as the disclosures about aircraft projects that have dogged Airbus for years will help prepare the ground for incoming chief Guillaume Faury. That will ease a worry list that still includes responding to the impact of Brexit on U.K. wing plants and dealing with fallout from a bribery probe into the use of middlemen to secure sales.

In his final results statement, Enders, 60, predicted a 15 percent gain in earnings this year and said he was leaving behind a company that’s on a “solid growth trajectory.” Defense and helicopter arms that have struggled for sales are also “in good shape” for Faury and his team to take over, he said.

The shares advanced as much as 5.4 percent, the most in more than a month. Airbus was up 5.1 percent to 109.74 euros at 9:03 a.m. in Paris, taking gains for the year to about 30 percent.

In addition to terminating the A380 superjumbo at a cost of 463 million euros, Airbus booked a charge of 436 million euros after reaching an agreement with government customers on revamping the A400M program. It also expensed 123 million euros for compliance issues and 81 million euros in unspecified costs.

Adding to the landslide of revelations on Thursday was news that Abu Dhabi-based Etihad Airways will cut an order for the latest A350 wide-bodies by 42 planes. The carrier’s Persian Gulf neighbor Emirates is picking up 30 of the type as it slashes its A380 backlog, triggering the end of that program.

Amedeo, a Dublin-based leasing firm, piled on Thursday, dropping its order for 20 A380s. That brought the backlog, which stood near 80 at the beginning of the month, down to 20.

Airbus, based in Toulouse, France, posted an adjusted profit of 5.8 billion euros in 2018 on sales of 64 billion euros, and raised its dividend to 1.65 euros per share. In addition to the predicted earnings jump in 2019, the company said it expects 4 billion euros in free cash flow.

Airbus Is Clearing the Books for Its New CEO

‘Favorite in Waiting’

Enders is kitchen-sinking costs from problem programs as he prepares to leave after this year’s annual shareholder meeting. The strategy may be wise given investor impatience about the pace of progress, Jefferies International analyst Sandy Morris said in a note. The 2019 outlook is above consensus and makes Airbus the “favorite in waiting” among European capital goods stocks, he said.

The outgoing CEO, an ex-paratrooper who rose through the ranks at Airbus and was appointed chief after running the jetliner unit, has had a long goodbye after announcing that he planned to leave as long ago as December 2017.

For much of the period since he had seemed determined to preserve the A380 even as sales slowed, before announcing on Feb. 1 that the key order from Dubai-based Emirates was under review.

Airbus aims to hand over between 880 and 890 aircraft this year. That could narrow the gap to Boeing Co., the world’s biggest planemaker, to five jets from six in 2018 after the U.S. company set itself a goal of 895 to 905 deliveries.

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