Airbus profit falls in 'challenging year'

The A400 - gear box troubles

Airbus shares have fallen 6% after it warned investors of mounting costs on its A400M military aircraft programme.

It also said delays in deliveries of its new A350 and A320neo airliners were creating a drain on cash.

The world's second largest aircraft maker reported a 23% fall in first quarter operating profits to €501m ($568m; £390m).

Chief executive Tom Enders said: "2016 turns out to be the challenging year we anticipated."

Finance director Harald Wilhelm said the financial impact from recent problems with the gearbox on the A400M's giant turboprop engines could be "significant".

Airbus has already taken charges of more than €4bn for delays to the A400m programme, as well as a €3.5bn bailout from government customers in 2010.

The company also said problems in its supply chain had led to a queue of A350 and A320neo jets waiting for delivery. But it said it would ramp up deliveries in the second half of 2016 and should hit its target of 50 this year, although Mr Wilhelm admitted it would be "tougher".

Airbus' profits from its helicopter business have also been hit by weaker demand from the oil industry.

The freezing of export credits by European agencies this month has forced Airbus to provide its own financial help to customers

Airbus offered €255m in loans to customers in the last three months - compared with just €31m in the same period last year.

European export credits were put on hold after Airbus said it had uncovered errors in declarations on the use of foreign sales agents and reported them to the UK authorities. Airbus said it was confident the credits would be restored later this year.