Airbus superjumbo en route for yet more delays

21st September 2006, Comments 0 comments

PARIS, Sept 21, 2006 (AFP) - European aerospace group EADS admitted Thursday that its Airbus A380 superjumbo was set for further delays, and a newspaper report said huge cost cuts and a production switch out of the eurozone were being considered.

PARIS, Sept 21, 2006 (AFP) - European aerospace group EADS admitted Thursday that its Airbus A380 superjumbo was set for further delays, and a newspaper report said huge cost cuts and a production switch out of the eurozone were being considered.

"Continuing industrialisation challenges with the wiring of production aircraft have been identified and are being tackled," EADS said in a statement. "Consequently, from what is known today, there will be further delays."

The announcement implies a second big setback for the company and its customers after a crisis over production delays three months ago.

The Guardian newspaper on Thursday echoed a report in a French newspaper the day before when it reported that a further six-month delay would be announced for deliveries of the A380.

The British paper also said that the new Airbus chief executive Christian Streiff was working on radical restructuring ahead of an EADS board meeting on September 29.

His plans could involve job cuts and cost cutting of EUR 2 billion a year, and possibly a shift of some production out of the eurozone, the paper said.

An EADS spokesman said The Guardian report was "speculation" and underlined that there was "no danger for European factories".

The A380, which can carry 840 people and will be the biggest commercial airliner in the world when it enters service, is of vital importance for the reputation of Airbus amid a fierce battle for orders with US rival Boeing.

Deliveries are already running more than a year behind schedule and production problems in June caused a crisis at Airbus and parent company EADS, forcing management changes and damaging the standing of EADS in financial markets. EADS owns 80 percent of Airbus.

The statement that another delivery delay was expected was the third such announcement by the European Aeronautics Defence and Space Company (EADS) and Airbus since June last year.

The Guardian report said that shifting production outside Europe would help counter the strength of the euro.

It also said that as few as four A380 planes could be delivered in 2007. The company had originally planned to deliver 25 aircraft, cutting this to nine in June this year.

A source close to the company who had told AFP on Wednesday that only half of the planned nine A380 deliveries next year would be made.

In its statement on Thursday, EADS said it had "not finalized the schedule of deliveries nor the financial impact of any delays", but it said it would provide more information within four weeks.

The price of shares in EADS was down 2.37 percent to EUR 22.26 when the Paris CAC 40 stock market closed on Thursday.

There have been repeated reports that Airbus underestimated the complexity of adapting the wiring in the A380 to suit the specific and different requirements of airlines which have ordered the aircraft. The wiring problems are believed to concern particularly in-flight entertainment systems.

Meanwhile French Finance Minister Thierry Breton said on Thursday:  "Everyone knows there have been problems at Airbus. There is a new management that has been put in place at Airbus with Christrian Streiff, who is proceeding with an evaluation, and all of this will be made public."

The A380 has been ordered by 16 airline companies worldwide including Singapore Airlines, Air France, Dubai-based Emirates, Malaysia Airlines and Australia's Qantas.

Singapore Airlines has expressed disappointment about the delays, Emirates has stressed that the A380s are vital for its expansion plans and Malaysia Airlines threatened in June to review its purchase agreement for the jets.

Emirates said Thursday that its multi-billion-dollar deal for 43 A380s stands despite the announced delays in delivery. That is the largest single order of the double-decker plane.

Copyright AFP

Subject: French news

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