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Delay is $3 billion threat to Airbus

Airbus SAS could lose a $3 billion order for the A380 superjumbo jet, as delays anger airlines and investors press for a management shakeup. International Lease Finance Corp., the world's largest aircraft-leasing company, said late Monday that it might cancel its order for 10 of the 555-seat planes after Toulouse, France-based Airbus delayed delivery for a second time because of difficulties installing wiring. Airbus SAS could lose a $3 billion order for the A380 superjumbo jet, as delays anger airlines and investors press for a management shakeup.

International Lease Finance Corp., the world's largest aircraft-leasing company, said late Monday that it might cancel its order for 10 of the 555-seat planes after Toulouse, France-based Airbus delayed delivery for a second time because of difficulties installing wiring.

"We could cancel and are considering canceling all or some of our A380 order," International Lease Chief Executive Steven Udvar-Hazy said. "We are not happy and on safe ground to cancel the order."

Airbus told the Los Angeles-based company the planes will now be delivered 12 to 14 months later than scheduled in the original agreement, he said.

The International Lease warning follows demands for compensation by Emirates, the A380's biggest customer, and Singapore Airlines Ltd., and could encourage carriers to switch to Chicago-based Boeing Co.'s new version of the 747.

A cancellation would heighten pressure on Noel Forgeard, the co-CEO of European Aeronautic, Defense & Space Co., Airbus' parent.

"EADS is far from being at the end of its troubles," said Xavier Debeugny, a fund manager at Paris-based Oddo & Cie.'s private banking unit, which sold most of its EADS shares three months ago. "This is one more element that shows that Forgeard needs to go."

Emirates, the largest Arab airline, said Tuesday that it is standing by its order for 45 of the A380s.

"We are not considering canceling our A380 order even though we have the ability to do so," said Maurice Flanagan, vice chairman of the carrier. "We don't think further delays are likely."

Udvar-Hazy said International Lease's contract allows it to scrap the A380 order without penalties after a six-month delay.

"Hazy won't cancel," said Scott Hamilton, an aviation analyst for Seattle-based Leeham Co., "though I bet he renegotiates the A380 price way down."

Boeing could sell more of its competing model, the 747-8, which has 18 orders for cargo versions of the plane and one order for a passenger model. The A380s are now at least a year behind schedule.

"The momentum clearly is in Boeing's favor, and is in their favor for the foreseeable future, barring a major misstep of their own," said Matthew Spahn, a money manager at TCW Group in New York.

Top executives at EADS held an emergency meeting Monday to discuss Airbus' problems as controversy continued to swirl around a stock sale by Forgeard. Regulators are investigating whether he sold shares based on inside information.

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Retired Systems Test Engineer Vought
Written by Guest on 2006-07-09 15:26:01

[EMAIL] [/EMAIL] It is interesting that EADS after all this time are having some of the same problems that Boeing is having mainly wireing problems. It seems to me that the cut in the past and loss of in house capability may be catching up with both companies. There has been to much outsourceing and it is now becoming back to haunt them. I think that that for the aircraft industry it will proove good in the long run. It bad that we have to re learn again what the "old hands" already knew.

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