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Airbus Hit by New A380 Delivery Delay

Reuters
Tuesday, 13 May 2008 | 12:16 PM ET

Planemaker Airbus announced another delay in deliveries of its A380 superjumbo on Tuesday, deepening the woes of Europe's biggest industrial project and risking further penalties with unhappy airlines.

Airbus said it was unable to boost production as quickly as it hoped as it tries to recover from two years of production delays caused by problems in installing the wiring on the world's largest passenger plane.

"As a result, Airbus plans now for 12 (instead of 13) deliveries in 2008 and 21 (instead of 25) in 2009. Details about the new plan and the further ramp-up and delivery slots in 2010 and the following years will be discussed with customers in the coming weeks," it said in a statement.

It gave no details on the financial impact of the latest delays for the world's biggest passenger airliner, which is already two years behind schedule.

"The extent of the additional costs will be influenced by the actual production and delivery scenario. This will follow discussions with the customers and a more precise evaluation of the implications of the new delivery schedule for 2010 deliveries and beyond," it said.

The announcement sent shares in Airbus parent EADS down 0.1 percent to 15.72 euros.

It was the fourth time Airbus had announced delays in delivering the 525-seat double-decker plane.

But the damage to the production schedule was not as severe as some had expected.

"It's not a big surprise. The financial impact should also be minor but it's really hard to estimate," UniCredit analyst Stefan Halter said.

"Given the number of affected planes -- we are just talking about five planes -- the impact really should be minor. They now have to enter negotiations with the airlines. The impact very much depends on which airline is affected," he said.

The fresh setback to the A380 came days after Airbus was forced to scrap plans to sell some of its factories to attract investment in new materials for the A350, a future mid-sized jet needed to catch up with rival Boeing.

It also came weeks after Airbus announced a major review of production on the A380.

It said last week Chief Executive Tom Enders had written to all A380 customers telling them production had reached a critical phase.

Tim Clark, the powerful head of Emirates which is by far the biggest A380 customer with 58 planes on order, has warned the airline faced "serious damage" from any further delays.

Landsbanki analyst Pierre Boucheny wrote in a note: "This announcement ... stresses the visibility on the story is still pretty limited. It's too early to give a precise estimation for the penalties due to the new A380 delay, but we are talking without doubt about several hundreds of millions of euros."

The A380 went into service last year with Singapore Airlines.

So far four planes have been delivered with 17 in various stages of production.

Airbus sank into loss last year partly as a result of penalties to airlines already facing A380 delivery delays.

The A380 sells for $300 million at list prices and the planemaker is paid most of that when the jets are delivered.

The mammoth pan-European venture has faced repeated setbacks since 2006, when A380 sections reached the French assembly plant from Germany with wiring flaws that caused production to halt.

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