A write down in the value of assets and a dip in income left Airbus's Irish-based aircraft leasing arm with an $18 million (€14.2 million) loss last year, writes Barry O'Halloran.
Airbus Finance Company Ltd's latest annual return shows that its operating income in 2003 dropped almost 25 per cent to $13.6 million from $17.6 million the previous year.
But operating expenses more than doubled in the same period to $31.8 million from $15.3 million in 2002.
Notes to the accounts show that the operating expenses figure included a provision of $26.4 million to cover a fall in the value of its aircraft.
This included a normal depreciation provision of $5.8 million, and an additional charge of $20.9 million. The company said it had written down the value of its aircraft to reflect the recoverable amount of the assets.
The write down was the result of a review carried out to ensure that the company's accounts complied with financial reporting standards.
The increased operating expenses left it with a pre-tax loss of $18.1 million for 2003, compared with a $2.2 million profit before tax in 2002.
A $2.2 million tax credit eased the losses for the financial year to $15.9 million. The deficit drove the profit and loss account for the year into the red to the tune of $10.5 million.
However, the company had a strong balance sheet at the end of last year. Shareholders' funds stood at $48.3 million compared with $45.5 million at the end of 2002.
The increase in funds was the result of a contribution to reserves of $18.6 million from its shareholder, Airbus Financial Services. The accounts state that this was made to ensure that the company could meet its financial covenants.
Its total debt stood at $206 million. This was mainly accounted for by $200 million that it owed on foot a fund raising in the US in 1996. That is due to be repaid in 2006. The company's total assets were $259 million.
Airbus Finance Company is based in the Dublin's International Financial Services Centre (IFSC).
It is a subsidiary of Netherlands based European Aeronautic Defence and Space Company (EADS), one of whose divisions manufactures Airbus aircraft.
The Irish-based company leases aircraft to the group's customers, mainly airlines. Dublin is one of a number of global centres for aircraft leasing.
Along with Airbus aircraft, EADS produces military aircraft, helicopters, defence systems and equipment for space transportation and satellites. It is second in the world in the sector to US giant, Boeing, which is its main competitor.
In the first half of this year, EADS had revenues of €14.5 billion and made a pre-tax profit of €823 million. The company ended the first half with net income of €387 million.
