Thai Airways Avoids Penalty In A380 Deferral Deal

[george]

THAI avoids penalty in A380 deferral deal

By John Le Fevre

BANGKOK (thaivisa.com): -- Thailand’s national carrier, Thai Airways International (THAI), has reached an agreement with European aircraft maker Airbus SAS to defer delivery of six A380 superjumbos by almost two years while avoiding default penalties on the $US1.8 billion order.

In the absence of any agreement, THAI faced the loss of $US700 million it had already paid to Airbus and other contractors for the six aircraft it ordered in 2004, along with cancellation charges if the deal did not proceed.

At the same time as its deferral deal was being finalized, the airline was taking delivery of the 1,000th A330/A340 aircraft from Airbus in southern France, bringing to 25 the number in the THAI fleet.

Under the deferred delivery agreement THAIs first superjumbos will now not take place until the third quarter of 2012, instead of in late 2010 as originally scheduled.

Airbus executive vice-president Kiran Rao said Airbus understood THAIs concerns regarding the order given the slump in international air travel and the dilemma it faced in choosing to cancel the order and face default penalties, or changing the order in favor of the smaller A350-1000 model currently under development and which is not scheduled to enter service until 2015.

THAI is believed to have considered the economic climate, the depressed international air travel industry and the slump in inbound tourist arrivals to Thailand, all would have made continuing with the original delivery schedule an economic millstone around its neck.

On it’s website Airbus states, “due to the current economic and aviation crisis and following specific customer requests for deferrals, Airbus is adapting its A380 aircraft delivery schedule for 2009/2010.

“According to the new plan, Airbus expects to deliver 14 double-decker aircraft in 2009 and more than 20 aircraft in 2010.

“Onward production rates and deliveries are dependent on airline demand and availability of customer financing. Airbus will take mitigating actions against the negative effects of the new A380-plan on [the] free cash-flow of the company.”

Despite this, Rao predicted a positive future for the A380, capable of carrying up to 525 passengers, saying once the economy recovers air travel figures will return to the normal four to five percent growth rate of the past, with passenger numbers doubling every 15 years and tripling every 20.

On its website Airbus SAS currently has 200 confirmed orders for the superjumbo, with Emirates Airlines topping the list with an order for and additional 58, followed by Australia’s flag carrier Qantas with a further 20, and Singapore Airlines (SIA) order a further 19. The website though does not specify the delivery schedule for any of the orders.

SIA was the first to take delivery and introduce into service the jumbo-sized jumbo, followed by Emirates and Qantas.

Since it’s first flight on October 25, 2007, more than 1.5 million passengers have been carried on 4,200 flights lasting over 41,000 flight hours on SIAs A380.

-- thaivisa.com 2009-08-03