Airbus faces further production delay

24-08-2006

Production difficulties have caused a new six month delay in the delivery of the Airbus A380 superjumbo, parent company EADS warned yesterday.

Problems installing electrical wiring harnesses and a surge in demand for customised interiors have forced the firm to cut delivery targets for the new double-decker plane to nine, down from the 20 to 25 aircraft expected to be completed in 2007.

Airbus also expects shortfalls of five to nine planes in 2008 and around five in 2009.

EADS, which currently owns an 80 per cent stake in Airbus, said that this year's profits would be unaffected by the delay and stressed that the first A380 would still be delivered to Singapore Airlines on schedule in 2006.

But the European aerospace and defence group warned that the delay was expected to cause losses of around €500 million a year between 2007 and 2010.

The company also stressed that the figure did not include the possible cancellation of orders by any of the airlines affected by the delay.

"Possible contract terminations under the new timetable have not been taken into account in this estimate," EADS said in a statement.

The planemaker also acknowledged that it would have to pay additional penalties to airlines following the second six-month delay in production of the A380. EADS announced last June that the delivery of the plane would be delayed due to engineering complexities, sparking a wave of compensation demands from airlines.

EADS currently has 159 orders from 16 carriers for the A380, with Emirates, Qantas and Virgin Atlantic among the airlines awaiting delivery of the plane.

But the company has yet to recoup the €12 billion it spent on developing the world's largest airliner.

News of the latest delay in the delivery of the plane comes as UK-based firm BAE Systems prepares to sell its 20 per cent stake in Airbus, leaving EADS as the company's sole shareholder.


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