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Airbus Group SE said Wednesday that its most closely watched earnings measure fell 21% in the third quarter and more cash went out the door, underscoring the financial difficulties the European plane maker faces as it struggles to boost production of its jetliners.

The company reported earnings before interest and taxes, excluding some one-time items, of €731 million ($796 million), compared with €921 million in the July-through-September period. Sales in the period declined 1% to €14 billion, or €122 million below the prior-year level.

Net income plummeted 87%, to €50 million from €736 million. Airbus said it had a higher effective tax rate in the period.

The Toulouse, France-based company has had a difficult year. Though years of record orders have swelled its backlog of planes to be delivered to more than 6,700 units, the plane maker has struggled to translate that business into strong shareholder returns.

Airbus maintained its full-year guidance, but has left itself much work to do to meet its cash-flow target. The company had almost €1.5 billion in cash outflow in the period. Airbus, which typically generates most cash in the fourth quarter, must generate almost €6 billion in free cash flow in the last quarter to meet a full-year target of cash before mergers and acquisitions of around €1.2 billion.

"For the remaining months of the year we remain totally focused on deliveries to achieve our earnings and cash guidance," said Airbus Chief Executive Tom Enders.

Airbus's cash position has been burdened by €500 million in aircraft financing it has had to provide because government export credit agency backing has been suspended. The state-owned lenders froze assistance to Airbus this year after the company reported it had filed inaccurate paperwork on some loan applications.

Chief Financial Officer Harald Wilhelm said the figure would likely grow before year-end. When financial support would be resumed is uncertain, he said, though talks to do so with the agencies were constructive.

The U.K. Serious Fraud Office is also investigating the issue.

Mr. Wilhelm said the company would deliver more than 670 planes this year, raising its goal by 20 aircraft to meet earnings targets.

Airbus has fallen behind delivering its newest A320neo single-aisle plane and is struggling to meet full-year targets for its A350 long-range jet. Suppliers are largely to blame, though on the A350 Airbus too has suffered missteps. Mr. Wilhelm said the company still targeted 50 plane deliveries this year, though it would be "a hell of a job."

Earnings also have been hurt by pricing on its A330 plane, which has weakened as Airbus moved to sell the last models of an existing version before the updated A330neo is introduced next year.

Commercial aerospace investors worry the pace of new plane orders at Airbus and rival Boeing Co. is slowing, particularly for some of the companies' most lucrative long-range planes.

New order bookings would outpace deliveries, Airbus said.

Airbus last month announced a major restructuring to generate cost savings, integrating its headquarters with its commercial airplane unit that generates most profit. It has begun talks with unions about job cuts, but hasn't said how many positions may go. Airbus also elevated Fabrice Bré gier, who runs the jetliner unit, to the newly created role of group chief operating officer.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

October 26, 2016 04:05 ET (08:05 GMT)

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