European aerospace giant EADS NV revealed Wednesday that lower charges for delayed programs such as its A400M military transport plane helped it return to profit in the fourth quarter.
However, the parent company of Boeing rival Airbus forecast flat earnings in 2011.
EADS reported it made euro355 million ($493 million) in the last three months of 2010, compared with a loss of euro1.1 billion in the same period a year earlier when spiraling costs on its new military transport, the A400M, and its A380 superjumbo jet took a heavy toll on earnings.
Chief Financial Officer Hans Peter Ring said EADS also benefited from "an impressive rebound in the commercial market, especially in growth-hungry developing markets."
Investors cheered the results despite EADS' forecasting flat operating earnings of euro1.3 billion this year before any one-off charges. The company's stock in Paris rallied 3 percent in early trading to euro20.43.
A more detailed look at the results statement shows that Airbus took in orders for 574 new aircraft last year worth $74 billion at list prices, besting its U.S. rival for the third year running. A strong upturn in the aviation market, especially in fast growing Asian countries, has spurred a raft of new jet orders from airlines scrambling to meet demand.
On Wednesday, Hong Kong's largest airline Cathay Pacific Airways announced an order for 27 new jets including 17 from Airbus and 10 from Boeing.
And Tuesday ILFC, the world's largest aircraft leasing firm, announced plans to buy 100 of Airbus' new A320neo jets, in an attention-grabbing deal potentially worth over $9 billion at list prices.
Airbus says the A320neo has aerodynamically improved wingtip extensions and fuel-efficient engines which will deliver up to 15 percent in fuel savings. It foresees a potential market for about 4,000 A320neo aircraft.
EADS Chief Executive Louis Gallois predicted that U.S. airlines would also begin ordering planes, after the steep two-year drop caused by the recession sapped their profitability.
"I'm confident that thanks to their improving profitability, U.S. airlines will start a new ordering wave," Gallois said.
EADS is a European holding company that also encompasses Eurocopter helicopters, Astrium satellites and Cassidian defense electronics businesses.
Airbus' civil aviation arm accounts for almost two-thirds of EADS sales.
Gallois' stated aim of increasing its share of sales from military aircraft received a major setback last month when the U.S. Air Force chose Boeing Co. to build its new fleet of aerial refueling tankers, a contract worth $35 billion.
EADS' Ring said the company's euro11.9 billion in net cash gives it "a lot of headroom" to make defense acquisitions, and said the company was looking "probably across the Atlantic." Ring said EADS could afford between euro1 billion and euro2 billion on acquisitions, adding "I'm confident something is going to happen in 2011."
EADS' ambitious plan of building an assembly line in Alabama was dropped when it lost the Air Force tanker contract. But Gallois said that if or when EADS makes a move into the United States, the south remains the company's favored destination.
"If we want to develop, we know where we need to go, where we'll be welcome," Gallois said, naming Alabama, Mississippi and Texas as potential locations for investment.
EADS said its full-year earnings were euro553 million, on sales of euro45.8 billion. The company said it will deliver between 520 and 530 aircraft this year, up from a record setting 510 last year.
Gallois said the company aims to raise its profitability to around 10 percent by 2015, describing this as "an ambition, not a target." Last year EADS profitability was only 2.7 percent, weighed down by continued development costs of the A380 program.
Asia's rapidly growing middle classes are driving demand for new airplanes, with Airbus forecasting some 8,560 new passenger jets worth $1.2 trillion will be delivered in Asia by 2029.
The European plane maker expects that the Asia Pacific area will account for a third of global passenger aircraft deliveries over the next two decades, up from about a quarter in the previous 20 years