The only way is up for Italian aerospace group Finmeccanica after it announced record losses of €2.3 billion ($3 billion) on March 27. Massive “exceptional events” and “non-recurring” charges totaling almost €3.2 billion ($4.3 billion) accounted for most of the financial hit. Substantial portions of the charges relate to additional costs incurred due to problems with Boeing’s delayed 787 program, for which Finmeccanica’s aeronautics division had served as a key strategic partner. It had to absorb further costs due to “reduced industrial efficiency of certain production processes and higher costs for the completion of some orders” relating to programs including the Italian group’s contributions to the Airbus A380 widebody.

The value of Finmeccanica’s new orders logged in 2011 fell by 22 percent, to €17.4 billion ($23.1 billion), but most of the decline related to businesses outside the aeronautics sector. The stake that Finmeccanica’s Alenia Aermacchi division holds in regional airliner manufacturer ATR continues to be a great consolation for Finmeccanica’s otherwise distressed balance sheet, with 2011 having been a record year for its ATR 42 and ATR 72 twin turboprops. Another possible ray of light centers on Alenia’s involvement in Russia’s Superjet narrowbody challenger, schedules for which call for deliveries to accelerate this year.

Announcing the epically bad results, Finmeccanica’s new chairman and CEO, Giuseppe Orsi, candidly assessed the challenges he and his comprehensively overhauled management team face in rebuilding the group. “2011 was an extraordinarily difficult year during which we carried out a comprehensive but necessary review of the group’s industrial strategy and business and technological approach,” he said. “2012 will be characterized by an improvement in our key balance sheet indicators and will be a year of calibrated transition toward a new Finmeccanica.” For this year, the group is forecasting that new orders will remain stable at around €17.5 billion ($23.3 billion), in line with virtually unchanged revenues of between €16.9 and €17.3 billion ($22.5 to $23.1 billion). However, Orsi said he believes that his coming reforms—including substantial workforce reductions in the aeronautics division still subject to negotiation with unions—will yield quick results as evidenced by a projected return to profitability for 2012 of approximately €1.1 billion ($1.5 billion).