Wednesday, November 1, 2017

This Cloud Hanging Over Boeing Rival Airbus Just Got Darker

Boeing rival Airbus disclosed Tuesday that there were "certain inaccuracies" with its regulatory filings regarding U.S. arms exports.

The European aerospace and defense giant said the discrepancies were over payments to third-party agents who brokered sales of U.S. equipment to non-U.S. customers.

The surprise disclosure adds to growing international scrutiny into the company's sales practices. The U.K. Serious Fraud Office and France's Parquet National Financier are looking into reports of alleged corruption. Germany and Austria are also investigating Airbus.

Airbus said it is in talks with the State Department and Justice Department and couldn't say yet if there would be a fine, but warned of potential penalties in the U.K. and France.

For now it's "business as usual" with the U.S., which continues to grant Airbus export licenses, Chief Financial Officer Harald Wilhelm told reporters.

Airbus' U.S.-listed shares shot up 4.1% to close at 25.67 on the stock market today, hitting a record high. Boeing dipped 0.5% to 257.98, remaining in buy range.

On the commercial side, Airbus said would miss its target of delivering 200 A320neo planes this year, as United Technologies' Pratt & Whitney unit is behind in its deliveries of jet engines.

In July, Airbus said Pratt & Whitney has to "work harder" to fix delays and reliability problems with the Geared Turbofan. United Tech said last week that it has shipped 245 Geared Turbofan engines so far this year and backed its target of 350-400 deliveries for 2017. Management also said the company is speeding up production for the engines used in the A320neo.

Airbus also said adjusted Q3 earnings fell to $811 million while sales rose 2% to $16.57 billion, both topping views.

(Gillian Rich - Investor's Business Daily)

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