Airbus Warns of Another Delay In Delivering A380 Jumbo Jets
More Trouble With Wiring Will Reduce Shipments To Nine From 20 Next Year
By DANIEL MICHAELS
June 14, 2006;*Page*A12

PARIS -- European plane maker Airbus said new production delays would
reduce the number of A380 jumbo jets it can deliver to customers through
2009, in the latest setback to the manufacturer's plans for the world's
largest passenger jet.
The two-deck A380 is already six months behind schedule for its first
deliveries, now set for the end of this year. European Aeronautic
Defence & Space Co., which owns 80% of Airbus, said in a separate
statement yesterday that the new delay of six to seven months wouldn't
hurt profit this year. But the company said it expects ¤500 million, or
about $630 million, less in earnings before interest and taxes, or Ebit,
from the A380 between 2007 and 2010 than it had projected because of the
delays.
EADS had never published an earnings target for these years. For this
year, the company has predicted overall Ebit of ¤3.2 billion to ¤3.4
billion.
Britain's BAE Systems PLC owns 20% of Airbus and is in talks to sell its
stake to EADS.
In its statement, Airbus said the new delays result from the same
problem that delayed the A380 in 2005: difficulties customizing the
aircraft and installing complex wiring. The company added that the A380
is on track for certification this year and that Singapore Airlines will
receive the first A380 by year end. Airbus said the plane is performing
well in flight tests.
Instead of delivering more than 20 A380s next year, Airbus now expects
to deliver only nine. In 2008, Airbus expects to deliver as many as nine
fewer planes than originally planned and five fewer than planned in
2009. Airbus said it is working to make up the shortfall. The company
faces penalty payments to customers for the delays, which are spelled
out in purchase contracts but confidential.
Chief Operation Officer John Leahy said that no customers canceled
orders after being informed of the new delays. Mr. Leahy said that the
customers had been hurt financially by the disruption of plans but that
"they understand the complexities."
Mr. Leahy added that although the plane itself is performing well, "the
first year of production is woefully inadequate from an airline
perspective."
The fresh delays come as Airbus faces possible limits to the plane's
operations because of the amount of turbulence it causes as it flies.
Singapore Airlines, Emirates Airlines of Dubai and Qantas Airways of
Australia are due to receive the first A380s this year and next. Mr.
Leahy said they will all get planes but fewer than planned, and
deliveries to other airlines will be shifted around.
Write to Daniel Michaels at