Airbus SE promised earnings growth of 20 per cent this year, pushing the stock up the most since 2012 -- so long as it can iron out persistent manufacturing problems on two key aircraft programs. 

The European planemaker ended 2017 with a record order backlog and delivered more jets than ever before. The shares advanced as much as 10 per cent after the Toulouse, France-based company assured investors Thursday it can top last year’s output and build 800 aircraft despite the engine issues that have slowed production of its top-selling A320neo.

Airbus’s struggles with the narrowbody model and the A400M military transport plane have at times overshadowed the benefits of a surge in commercial aircraft sales. Chief Executive Officer Tom Enders said in a statement that the company is working on measures to gain control over both problem programs.

“The A320neo ramp-up remains challenging and requires that the engine suppliers deliver in line with commitments,” Enders said, adding that the impact on deliveries of the latest turbine issues is under assessment.

A 1.3 billion-euro charge against the A400M, which takes total cost-overruns on the program beyond 8 billion euros, is meant to draw a line under the losses. Airbus last week reached a deal with customer nations that improves its viability.

Earnings before interest and tax before one-time items increased 8 per cent in 2017 to 4.25 billion euros, the planemaker said. Analysts had predicted a profit of 3.99 billion euros, the average of 13 estimates. This year’s figure should gain 20 per cent, so long as delivery targets are met, the company said.

Sandy Morris, an analyst with Jefferies International, said he was reassured by Airbus’s forecasts for earnings and free cash flow growth. He said he remained concerned about pricing for older A320ceo and A330ceo models, but noted the company’s optimistic tone.

“In truth, we are not sure whether rummaging around in the detail matters much, not when Slide 17 in today’s presentation states: ‘Earnings and FCF taking off!”’

The shares advanced as much as 10 per cent. They were up 9.8 per cent to 92.39 euros as of 11.21 a.m. in Paris.

Airbus last week reached an outline deal with the A400M’s seven customer nations aimed at resetting the military airlifter project after years of cost overruns and performance setbacks. The new charge concerns revisions to the plane’s delivery schedule and capabilities, together with the retrofit of examples already delivered, the company said.

ENGINE TROUBLE

At the same time, Airbus has been blindsided by yet another flaw with Pratt & Whitney engines that power its best-selling A320neo narrow-body. The latest issue, which emerged last week after Enders suggested Airbus had finally moved on from two years of setbacks, relates to a seal that Pratt replaced after the an earlier version exhibited durability issues.

Deliveries of A320neos equipped with a rival power plant made by the CFM International alliance of General Electric Co. and France’s Safran SA are also behind schedule, due to less serious “maturity” concerns, the planemaker said.

“We’re expecting to deliver another record number of deliveries in 2018,” Enders said on a conference call. “Of course we need engines for these aircraft, but I am confident our partners will not let us down.”

Airbus faces the added distraction of a series of bribery probes concerning payments to middlemen in marketing campaigns. It booked costs of 117 million euros related to compliance issues for the full year, including a 99 million-euro sum to settle a corruption investigation by German prosecutors into the sale of Eurofighter warplanes to the Austrian military. The company said Thursday that U.S. authorities had requested documents related to French and U.K. probes into bribery at its passenger-jet business.

While still grappling with the A400M and A320neo, Airbus appears to be gaining control over the A350 wide-body program, where initial handovers were held up by supplier issues with seats and interior fittings. A $16 billion order for the A380 superjumbo from Dubai-based Emirates, sealed on Sunday, will meanwhile sustain production for years to come, it said.

Financial Highlights:

• 2017 revenue up 0.3% to EU66.8b
• Adjusted EBIT up 8% to EU4.25b
• Annual dividend EU1.50/share, up 11%
• A400M charge EU1.3 billion
• 2018 adjusted EBIT forecast to rise 20% if engine makers meet commitments