Airbus took a €1.3 billion hit on its delayed A400M military transport plane, lifting charges on Europe's troubled defence project above €8 billion and clouding higher than expected underlying profits and cash.
But shares in Europe's largest aerospace group gained over 9% as Airbus lowered costs on its new A350 jet.
It also confirmed it was looking at raising output of the best-selling A320 model by 17% to 70 a month amid strong demand.
Airbus called on its engine makers to get to grips with delays that have disrupted deliveries of the upgraded A320neo and said its target of 800 total deliveries this year would depend on the performance of these suppliers.
"We have plenty of challenges going forward, but it is manageable," chief executive Tom Enders said today.
Airbus posted an 8% increase in adjusted 2017 operating profit of €4.253 billion on flat revenues of €66.767 billion and predicted a 20% rise in the widely watched core profit item.
Analysts were on average expecting adjusted 2017 operating profits of €3.996 billion and revenues of €67.343 billion. The company also lifted its dividend by 11%.
The A400M charge comes after Airbus last week reached a provisional agreement with seven European NATO buyer nations over further delays for the new troop carrier.
"This certainly ain't pretty but we are making good progress overall," Enders told analysts, adding the deal would significantly reduce remaining risks.
Airbus also took a €117m fourth-quarter charge following a settlement with German prosecutors over a corruption case linked to a fighter sale to Austria in 2003. The charge includes €35m of ongoing legal costs.
On the commercial side, Airbus is in the middle of a switchover to an upgraded A320, but has been beset by delays in engine supplies mainly from Pratt & Whitney as well as some delays at engine maker CFM International.
The company said it was still looking at the impact of a fresh round of problems with Pratt engines that saw some jets grounded and certain deliveries halted this week.
Enders said he had been in touch directly with the heads of Safran and General Electric, the owners of CFM which has reported delays of several weeks in engine deliveries.
The planemaker, which competes with Boeing, reported "good progress" on production of the new A350 wide-body jet and reiterated plans to reach output of 10 a month by end-year.
In a respite from recent compliance rows, Airbus said it had reached agreement with European credit agencies allowing it to apply for export credits on a case by case basis.
The funding was suspended in 2016 when Airbus acknowledged having made misleading applications, triggering a corruption investigation.
However, it also raised the prospect for the first time that the US could be drawn into the Anglo-French probe, saying it had been asked to supply information to US authorities about conduct under their jurisdiction.
