Giant Airbus soars into skies but shares tumble

28th April 2005, Comments 0 comments

TOULOUSE, France, April 28 (AFP) - The Airbus A380, the biggest airliner ever built, has broken records with it maiden flight, but investors are worrying whether the costly European programme could break the bank.

TOULOUSE, France, April 28 (AFP) - The Airbus A380, the biggest airliner ever built, has broken records with it maiden flight, but investors are worrying whether the costly European programme could break the bank.  

The highly anticipated first flight of the A380 double-decker at Toulouse in south-western France on Wednesday appeared to remind Airbus shareholders of the bottom line instead.  

Shares in the European Aeronautic Defence and Space Company, the parent of Toulouse-based aircraft maker Airbus Industrie, fell 2.35 percent to close at EUR 22.04, while the CAC 40 index finished 1.64 percent lower at 3,927.68 points.  

The strength of the euro and stubbornly high oil prices, coupled with cautious forecasts on world economic growth - three key factors for the EADS stock - weighed on sentiment, as well as the latest major aircraft orders announced this week by US rival Boeing.  

"The medium-term success of the plane remains to be seen," said analyst Pierre Anthony Vastra of Ixis bank.  

"At the moment, the plane has brought nothing but costs, for its entry into service and the commercialization won't happen until the summer of 2006," he said.  

Airbus shareholders, EADS and BAE Systems of Britain, have already invested heavily in the program: more than EUR 10 billion (USD 13 billion), and another EUR 1.45 billion may be needed.  

Airbus is banking on the A380 to be the world's most profitable plane, with a 15-20 percent lower operating cost per seat.  

The mammoth plane, capable of carrying about 840 passengers, is due to enter service in mid-2006, with Singapore Airlines the first operator.  

The "think big" concept has proved a market hit so far: 15 airlines have signed contracts for 154 planes, of which 144 are firm. The tally comes close to Airbus's forecasts of selling 150 A380s by mid-2005, at a catalogue price of between USD 260 million and USD 290 million.  

The company baptized the flagship the A380 for two reasons: the number "eight" suggests the double-decker feature and also is considered a lucky number in Asia, where Airbus sees its fortunes growing the most.  

But Airbus has had to hike its break-even point on the programme several times in recent months, raising investor eyebrows and sending the stock lower. The company now considers 300 A3800s would need to be sold for the programme to stop losing money.  

Wednesday's thumbs-down on the market came as tens of thousands of spectators cheered the touchdown of the double-decker at 2:23 pm on the Toulouse-Blagnac airport runway after a flight of three hours and 54 minutes.  

Political leaders across Europe hailed the achievement as a milestone that proves the might of European unity, a month ahead of a French referendum tipped to reject the proposed European Union constitution.  

French President Jacques Chirac pointed to the "magnificent result of European industrial cooperation", and in Berlin, deputy economy minister Ditmar Staffelt called the flight "proof of Europe's high technical capabilities".  

In Brussels, the European Commission called the debut a "success story".  

"The A380's development shows what Europe can do through cooperation and investment in skills, research and technologies," said industry commissioner Guenter Verheugen, a German national.  

The first flight represented a pivotal moment for the European group, which has punched its way to the top of the civil aircraft industry to challenge the Boeing 747's long dominance of the jumbo jet market.  

The Airbus prototype took off and landed on runway 32, dubbed the Concorde, from where the world's only supersonic jetliner made its maiden flight in 1969.   

The needle-nosed Concorde - an aviation icon - was a commercial flop, and was pulled from the skies in 2003, three years after one of the planes crashed outside Paris killing 113 people.  

At takeoff, the prototype A380 weighed 421 tonnes, the heaviest civil airliner to date, the company said. Its maximum takeoff weight is 560 tonnes.  

Yet doubts about the vision of Airbus as it competes with Boeing clouded the day's clear success.  

The European group faces a stiff challenge from Boeing's smaller but yet-to-fly B787 Dreamliner.  

"On the eve of the A380's maiden flight, the US group, more aggressive commercially than Airbus, played its hand by announcing several large orders, all is fair in love and war," one analyst commented.  

Boeing this week announced major orders by Air Canada, along with a nearly USD 7 billion deal with Air India.



Subject: French News

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