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. Last Updated: 07/27/2016

EADS Warns of Long Delays for Expected Military Aircraft

PARIS -- Shares in Airbus parent EADS sank after the company warned on Monday that a six-month delay on the delivery of its A400M military aircraft would cost as much as 1.4 billion euros ($2.03 billion).

EADS said the charge, which exceeds analysts' expectations, would hurt profits. The company is junking its full-year guidance for earnings before interest and taxes and said it would announce a revised forecast Thursday when third-quarter earnings are released.

And there could be worse to come. In a statement, EADS warned again of "a risk of a further slippage of up to half a year."

Shares in European Aeronautics Defense and Space Co. sank 3.5 percent to 22.09 euros in Paris as the announcement reminded investors of recent troubles with the superjumbo A380, delivered last month to Singapore Airlines, almost two years late.

"Not only is the impact worse than we thought, but they are announcing the possibility of extra delays and extra charges," Aurel-Leven analyst Harald Liberge-Dondoux said.

"Even in the worst-case scenario, it will never be an A380 repeat in terms of financial impact, but there is a real fear that we are looking at a mini A380 scenario."

EADS first announced a six-month delay to the A400M on Oct. 17, citing slow progress in engine development.

Liberge-Dondoux said he had calculated the delays would cost 750 million euros, or just over half what EADS predicts.

EADS said that its calculations were not finalized but that it expected to spend 1.2 billion to 1.4 billion euros, of which more than 1 billion euros is for Airbus.