Zodiac Aero Profit Hit By Seat Delays

Zodiac Aerospace reported a 45 percent drop in core annual earnings, hurt by production delays at its troubled aircraft seats division.

After a series of recent profit warnings, its underlying profit margin more than halved to 6.4 percent as its 2014/15 ordinary profit fell to EUR€314 million (USD$334 million).

Zodiac has struggled to erase a backlog of delayed seat deliveries that has disrupted some aircraft production and strained relations with Airbus and Boeing.

Seeking to end a crisis which has gripped the company for over a year, Zodiac disclosed the results of an internal review of its operations showing flaws in engineering, production, processes and management.

It named cabins head Yannick Assouad to an enlarged three-person executive committee and said it had carried out immediate measures to stabilise its operations.

The number of seats affected by delays had fallen to 500 from 1,700 in September and 6,000 at the peak.

Chief executive Olivier Zarrouati pledged to end the delays "as soon as possible" but declined to set a date.

"For us the only figure that counts is zero (delays)... but we are not discovering any more bad news which is a positive sign," he said.

Asked whether he would contemplate resigning if the company failed to recover, Zarrouati said the board had settled this issue when he was re-appointed last month.

"The only thing I can add is that I have a mandate with a mission, which is to transform the group... and I think you have seen today that all parts of the group are very active in executing this mission," he said.

Zodiac, which faces a lawsuit and partial cancellation from American Airlines, said the full cost of aircraft seat delays including penalties had sliced 6.6 percentage points off its operating margin. In September, it had predicted the cost overruns would equate to 5 percentage points.

For the current September-August financial year, the French company predicted slight growth in revenue and an operating margin around 10 percent, followed by 12 percent in 2016/17.