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UPDATE 2-Airbus Q2 profit rise beats forecasts, delivery challenges ahead

Tim Hepher and Cyril Altmeyer

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PARIS, July 31 (Reuters) - Airbus on Wednesday posted stronger-than-expected core second-quarter earnings, led by the switch to efficient new single-aisle jets, and maintained its profit forecast for the year while warning of delivery challenges in the second half.

Europe's largest aerospace group said second-quarter adjusted operating profit rose 72% to 1.98 billion euros ($2.2 billion), led by a more-than-twofold rise at the main Airbus commercial planemaking arm. Revenues rose 23% to 18.32 billion euros.

Analysts were on average forecasting adjusted quarterly operating income of 1.774 billion euros on revenues of 17.824 billion, according to a company-compiled consensus.

Airbus is trying to overcome industrial delays at a newly expanded plant in Hamburg, Germany, which is responsible for enhanced cabins for the in-demand A321neo, the largest version of the planemaker's best-selling single-aisle family.

Airbus said it was looking at options to increase the share of the A321neo in the wider A320neo family.

"The second half of the year in terms of deliveries and in particular free cash flow continues to be challenging," Chief Executive Guillaume Faury said in a statement.

Airbus is nonetheless on course to be the world's largest planemaker in 2019 as U.S. rival Boeing faces a longer-than-expected grounding of its 737 MAX, ordered by worldwide regulators in March in the wake of two fatal accidents.

Boeing last week posted its largest-ever quarterly loss due to the grounding crisis.

Airbus took 75 million euros in new charges in the second quarter related to the cost of winding down its A380 superjumbo programme after deciding to scrap output due to weak demand.

Air France-KLM on Tuesday announced plans to retire the world's largest jetliner to concentrate on smaller models like the A350, which Airbus said was on track to break even this year after "good progress" in reducing costs.

Airbus took 90 million euros in other charges including compliance costs as it pursues a four-year-old investigation into the use of middlemen in aircraft and other sales. It said in its accounting notes that it was too early to assess liability for potential fines or other lawsuits.

The European company warned formally for the first time of damage to deliveries and finances if the United States goes ahead with plans to imposes tariffs on European planes as part of a long-running transatlantic trade dispute over subsidies.

Airbus said it continued to support a negotiated solution.

($1 = 0.8967 euros) (Reporting by Tim Hepher; Editing by Sudip Kar-Gupta and Richard Lough)