Cost of Airbus A380 super-jumbo soars

15th December 2004, Comments 0 comments

MUNICH, Germany, Dec 15 (AFP) - The cost of developing Airbus's new A380 super-jumbo will be much higher than planned, but the European Aeronautic Defence and Space Company still hopes to meet or exceed its earnings forecasts this year, EADS co-chief Rainer Hertrich said on Wednesday.

MUNICH, Germany, Dec 15 (AFP) - The cost of developing Airbus's new A380 super-jumbo will be much higher than planned, but the European Aeronautic Defence and Space Company still hopes to meet or exceed its earnings forecasts this year, EADS co-chief Rainer Hertrich said on Wednesday.

In comments to journalists late Tuesday, but released for publication only on Wednesday, Hertrich said the research and development costs of the giant 555-seater aircraft would come out EUR1.45 billion (USD 1.9 billion) higher than planned.

"The extra costs are sizeable, it's rather hefty," Hertrich said.

"The numbers started to be alarming only during the course of the year," he said.

Until now, EADS had been pencilling in development costs of USD 10.7 billion (EUR 7.9 billion) for the giant 555-seater aircraft. Furthermore, that forecast had been made at a time when the dollar and euro exchange rate was more or less equal.

But Airbus, which is 80-percent owned by EADS, required additional investment to make aircraft lighter and to keep to the timetable, Hertrich explained.

"We're sticking to our aim for a first flight before the end of March 2005," Hertrich said. Customers would take first delivery of the aircraft in the first half of 2006.

Hertrich said that 2004 had been the best year in EADS's history.

"We've met or exceeded all our targets," he said.

Sales were estimated to have risen from EUR 30 billion to EUR 32 billion and operating profit, as measured by earnings before interest and tax (EBIT), is likely to be up 45 percent.

The number of aircraft deliveries is expected to have risen from 305 to at least 315, putting EADS ahead of arch-rival Boeing for the second year in a row.

Turning to the current power struggle at the helm of EADS, Hertrich said the company may well be headed by a single chairman in future instead of two at present.

EADS currently has a German and a French chairman, reflecting the bi-national balance of power at the aeronautic and defence giant. But a power struggle has recently broken out, with France perceived as being keen to install its own candidate, Airbus chief Noel Forgeard, as sole head of the group.

Hertrich recently announced he would not be renewing his contract when it expires next July and Germany promptly named Thomas Enders, the head of EADS' military division, to replace him.

But France still has to decide whether the current French co-chairman, Philippe Camus, will stay on or be replaced by Forgeard.

Hertrich insisted that the current dual-leadership system would remain in pace for the time being.

But in the longer term, a single chairman was feasible, he said.

"That will happen once the conditions that were required to set up EADS in the first place are no longer imperative," Hertrich said.

© AFP

Subject: French News

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