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Airbus faces A400M charges, no immediate currency windfall

A newly delivered A400M Atlas aircraft is parked in a hangar at RAF Brize Norton, central England, November 27, 2014. REUTERS/Peter Nicholls

PARIS (Reuters) - Airbus Group (AIR.PA) may take up to 500 million euros in charges for the latest delays to its A400M military transport plane when it reports 2014 earnings on Friday, analysts said.

At the same time, it is unlikely to reap immediate benefits from a sharp drop in the value of the euro, despite being one of Europe's largest exporters. Its hedging policies leave little room for manoeuvre until 2018.

The European aerospace group shook up the management and organization of the A400M military transport program last month after the latest in a long series of delays and technical woes.

While Airbus has promised to give a financial update on the project with its annual earnings, it is likely to take longer to establish a definite new timetable for deliveries.

Analysts polled by Reuters in partnership with Inquiry Financial forecast A400M charges of between 200 million and 500 million euros in the fourth quarter, on top of 4.2 billion euros already taken over the life of the defence project, Europe's largest.

Airbus' operating earnings before one-offs will rise 1.4 percent to 1.272 billion euros, according to the survey of 16 analysts. On average they see one-off items of 274 million euros, including A400M and others.

Despite some market predictions that Airbus Group would be in the front line to benefit from a recent 10 cent drop in the euro to $1.13 since late December, people familiar with the aerospace group warn this will not be felt straightaway.

Airbus appears fully hedged at above $1.30 for 2015 and there is little leeway in the hedging book through 2017.

"The dollar effect starts to kick in during 2017 but it could be felt strongly in 2018," said a person close to the company. Airbus Group declined comment ahead of its results.

Deutsche Bank said Airbus Group may have been more active in hedging than previously expected in the fourth quarter, locking in rates before the slump in the single currency.

The focus will also be on any updates on output targets. Airbus is discussing a possible increase in A320 production to 50 jets a month as early as 2017, a senior industry source said.

At the same time it is reviewing A330 output, which is widely expected to be cut soon, because of slow sales.

(Reporting by Tim Hepher, Victoria Bryan and Cyril Altmeyer; Editing by Steve Orlofsky)