Big Airbus A380 Delays Expected

[britmaveric]

Big Airbus A380 delays expected

PARIS - Lufthansa and Emirates said Tuesday that their orders for A380 superjumbos will be delayed by up to a further year, and Airbus parent EADS was expected to reveal the full extent of production problems holding back its flagship jet program.

"We have received information from Airbus that we're going to receive the first A380 in summer 2009," said Lufthansa spokeswoman Stefanie Stotz. "That's one year later than anticipated up to now."

EADS declined to confirm or deny that its board was scheduled to discuss a restructuring plan for Airbus and a new delivery timetable for its troubled A380, which was already about a year behind schedule when the latest production problems were disclosed.

Dubai-based Emirates also said Tuesday it had received notice that its A380s will be delayed by 10 more months.

"Emirates has been advised by Airbus of a further 10 month delay to its A380 program, which means that our first aircraft will now arrive in August 2008," Emirates CEO Tim Clark said in a statement.

The new setback is a "very serious issue for Emirates," Clark said, adding that the airline is now reviewing all its options.

The first delivery to Emirates — originally scheduled this month — will now be almost two years late. Stotz said Lufthansa now expects delivery between May and September 2009, a similar delay compared with the original delivery target of late 2007.

But Lufthansa appeared to rule out order cancelations.

"We're still convinced that the A380 is a success story and the A380 is a growth aircraft," Stotz said. "As we want to grow, we still believe this is the aircraft we need, especially when capacities and traffic rights are limited."

In recent days, Airbus has been informing A380 customers of the latest setbacks as it tries to gauge the likely compensation bill. EADS had confirmed last month that the plane would be delayed, without giving details.

The announcement had already prompted Emirates to warn on Sept. 21 that its 45-plane order, worth about $13 billion at list prices, was "up in the air." Virgin Atlantic Airways Ltd. also said the delay could affect its order for six superjumbos.

Virgin Atlantic reiterated Tuesday that it had received tentative information from Airbus on the new delays, but declined to give details.

French financial daily La Tribune reported that EADS also plans to announce drastic production changes that would see the closure of A380 cabin-fitting, paint shop and delivery centers in Hamburg, Germany, and the transfer of their workloads to Airbus headquarters in Toulouse, France — saving on transportation time and costs.

In return, Germany's share of the production of the A320 single-aisle jet family would be increased, according to the unsourced report. It also said Airbus will deliver fewer than four A380s in 2007.

In a statement June 13, the plane maker had already slashed the number of scheduled deliveries in 2007 to nine from 25 as it announced the 555-seater A380's second six-month delay and a 2 billion euro ($2.5 billion) profit warning. EADS shares plunged 26 percent the next day.

The crisis led to the sacking of Airbus boss Gustav Humbert and EADS co-CEO Noel Forgeard — who remains under investigation by market authorities after it emerged that he exercised stock options to make a profit of $3.2 million just weeks before ordering an internal probe into the delays.

EADS is tightening its control over Airbus and is expected to buy BAE Systems PLC's 20 percent stake in the plane maker. BAE shareholders vote Wednesday on a management recommendation to go ahead with the $3.5 billion sale.

EADS shares, which had fallen recently in anticipation of big new delays, were 0.5 percent higher at 22.51 euros ($28.55) in Paris trading.

-AP News

By LAURENCE FROST

3 Oct 2006

[Soju]

Wow, that's quite a delay. I think everyone had resigned to the fact that Airbus was going to delay it some, but I wasn't expecting it to be a whole year. I bet Singapore Air isn't too happy with Airbus now. They seemed to have bet heavily on the A380 in their future plans. All their advertising about them being the first to fly the A380 in 2006 is now just a big black eye. Wonder if they'll shift some of their business to Boeing now.

But hey, at least they didn't do like Suvarnabhumi and say it will be ready by December 31, 2006 no matter what. A rushed airport is one thing. A rushed aircraft is something totally different.

[britmaveric]

Wow, that's quite a delay. I think everyone had resigned to the fact that Airbus was going to delay it some, but I wasn't expecting it to be a whole year. I bet Singapore Air isn't too happy with Airbus now. They seemed to have bet heavily on the A380 in their future plans. All their advertising about them being the first to fly the A380 in 2006 is now just a big black eye. Wonder if they'll shift some of their business to Boeing now.

But hey, at least they didn't do like Suvarnabhumi and say it will be ready by December 31, 2006 no matter what. A rushed airport is one thing. A rushed aircraft is something totally different.

Singapore Air ordered 10 additional 787, so if thats any indication than yes I think they are re-thinking Airbus a bit.

[britmaveric]

Boeing executives quiet amid Airbus woe

Boeing executives have refused to crow about the problems that have engulfed Airbus, its arch-rival in the de facto monopoly controlling the market for large passenger and cargo jets.

The two companies have engaged in fierce battles for customers and disputes over state aid, but the crisis at Airbus also provides Boeing with a sharp reminder of the transformation of its own fortunes over the past two years following a period when many analysts and investors questioned its long-term commitment to the business.

The US group suffered its own share of production mishaps, management upheaval and aborted product launches during the 1990s and early part of this decade, allowing its European rival to overtake it in a market transformed by new technology and the emergence of a new customer base centred around emerging markets in Asia and the Middle East.

There is also limited upside for Boeing, whose order book is almost sold out through the end of the decade following the successful launch of its 787 Dreamliner programme and rejuvenated sales for its smaller 737 aircraft.

Scott Carson, who last month replaced Alan Mulally as head of commercial airplanes, has pledged to limit production increases to avoid the manufacturing problems which forced the group to shut down production lines for a month in 1997.

The threats by some A380 customers to shift orders to Boeing are tempered by the US group's ability to produce more aircraft, though it could help win the first orders for the passenger version of its 747-800, a new derivative of the original jumbo jet. Moreover, aircraft financiers expect Airbus to offer more aggressive pricing across its product range in an effort to keep existing customers.

Mr Carson and his sales team received much of the credit for the recovery in Boeing's commercial business, building up a $142bn order book to leverage the cost cuts and efficiency measures promoted by his predecessor. While ethical scandals saw the group burn through three chief executives in as many years, Boeing has made a virtue from the orderly transition at its commercial arm following Mr Mulally's departure last month to head Ford.

Jim McNerney, chairman and chief executive, elevated Mr Carson and created a new position of chief operating officer. Jim Jamieson, a long-time engineering executive, has been charged with executing the roll-out of the 787 and avoiding production mishaps, freeing up Mr Carson to provide the strategic lead and the sort of sales support to key clients which some carriers believed was missing from Mr Mulally's armoury. Larry Dickenson, head of sales in Asia-Pacific, was this week promoted to replace Mr Carson.

The warning by Airbus that it could take 15 years to recover lost ground over Boeing reflects the long lead times in the commercial aircraft business, and how easily fortunes can change. The US group spent part of the early 1990s looking to develop an ultra-large passenger jet in partnership with its rival before opting to launch the 777 and then the 787.

-MSNBC

Doug Cameron

5 Oct 2006

Edited October 5, 2006 by britmaveric

[Heng]

Spruce Goose II.

[britmaveric]

Rolls-Royce suspends work on A380 engines

LONDON (Reuters) - Aero-engine maker Rolls-Royce said on Friday it had suspended work on the Trent 900 engine for the Airbus A380 superjumbo for about 12 months.

The A380 is now not expected to start deliveries until the last quarter of 2007, two years late, as engineers work to fix problems in wiring the mammoth doubledecker plane.

"We are suspending production for about 12 months," a Rolls-Royce spokesman said. "We made the announcement to employees yesterday."

He said the company did not expect immediate layoffs or any change in its financial guidance for the year.

"We are continuing to talk to Airbus about the exact details of their future requirements. Once we have the detailed engine program requirements from Airbus and are clear on any potential impact on Rolls-Royce, we will consult with employee representatives."

Rolls shares were down 1.1 percent at 457-1/2 pence versus the FTSE 100 index <.FTSE> which was up 0.01 percent as of 9:57 a.m.

The rival GE-P&W Engine Alliance made up of U.S. companies GE Aviation (GE) and Pratt & Whitney, a unit of United Technologies Corp. (UTX), is offering an engine for the A380 as well which is called the GP7200.

The Trent 900 makes up a small part of Rolls-Royce's annual turnover, which includes production and support for engines for several models of planes from Airbus, Boeing (BA) and other manufacturers.

In addition to aircraft engines, Rolls-Royce manufactures ship engines and equipment used in the energy industry.

-Rueters

6 Oct 2006

[britmaveric]

FedEx drops A380 order, buys Boeing 777s

PARIS - FedEx Corp. canceled its order for 10 Airbus A380 jets on Tuesday, the first customer to retract an order for the new jumbo double-decker plane that has been dogged by numerous delays.

The world's largest express transportation company cited Airbus' production delays and said in a statement that its FedEx Express unit has ordered 15 Boeing Co. 777 freighters with a list price of $3.5 billion and taken options on an additional 15.

"The availability and delivery timing of this aircraft, coupled with its attractive payload range and economics, make this choice the best decision for FedEx," said FedEx Chairman and CEO Frederick W. Smith.

Boeing's stock rose more than 3 percent on the news while shares of Airbus parent European Aeronautic Defense & Space Co. slumped in European trading.

Airbus regrets the decision by FedEx, company spokeswoman Barbara Kracht said, "but we understand their need to urgently address their capacity growth."

The European plane maker recently doubled its estimate of production delays for the A380 jet to two years. To streamline production, Airbus announced Monday that it will slash the number of suppliers it uses from 3,000 to 500.

Boeing said delivery of its aircraft to FedEx Express will begin in 2009.

"We're looking forward to working with FedEx on this new chapter in our relationship," said Ray Conner, vice president of sales for the Americas for Boeing Commercial Airplanes.

Airbus shocked investors and customers in June by doubling the 555-seater A380's production delay to one year, blaming problems with wiring. But in early October, it doubled the holdup again to a total of two years and said the delay would cost it $6 billion in lost profits of its parent company, EADS, over four years.

Emirates, which has ordered 45 of the A380s and is the program's largest customer, said last month it would send a team of technicians to France to assess the accuracy of promised delivery dates for the A380 superjumbo.

Virgin Atlantic Airways also said last month it would defer the delivery of the first of its six Airbus A380 superjumbo jets until 2013.

Airbus had previously taken a total of 167 firm orders for the A380, including an eight-plane order from Qantas Airways Ltd. announced last month.

FedEx said it did not expect the shift in aircraft buys to adversely affect its operations. The company relies on such big planes with their large payloads for its international flights.

Lane said the Boeing Co. 777s will carry slightly smaller payloads that Airbus 380s.

"There are different capacities, but we believe that we have created advantages in more nonstop, point-to-point transoceanic routes that have shorter flight times but improved service offerings to FedEx customers," said spokesman Maury Lane at the company's headquarters in Memphis, Tenn.

FedEx expects to get four of the 777s in 2009, eight in 2010 and the rest the following year.

Boeing spokesman Bob Saling declined to say how far out it has booked orders for the 777, saying only that it had some positions available in 2009 that it was able to make available to FedEx.

Boeing will assemble the freighter version of the 777 on the same production line, in Everett, north of Seattle, as the passenger version of the airplane.

Saling said the company is constantly evaluating whether to boost production of its airplanes but that he didn't expect this order to prompt any production increases.

The firm order for the 15 777s is valued at $3.5 billion at list prices, Saling said, although airlines often can negotiate price breaks.

Boeing launched the cargo version of the long-range, twin-engine 777 in mid-2005, after winning an order from Air France.

Shares in EADS fell 3 percent Tuesday to euro20.66 ($26.26) in Paris. FedEx shares rose 68 cents to $114.62 in afternoon trading on theNew York Stock Exchange, where Boeing shares gained $2.73, or 3.4 percent, to $83.21

-AP News

By LAURENCE FROST,

7 Nov 2006

[binnsy]

FEDEX cancels order for 10

SINGAPORE AIR orders 9

[lomatopo]

Spruce Goose II.

This is of course exactly what most people, experts and laymen alike, were saying about Boeing and their development of the 747 in the late 1960's.

Having said that, I remain a bit skeptical on the long term success of this airframe. On very high density routes (OZ-USA, SIN-LHR, LHR-USA, USA-NRT) it has a lot of appeal because of the low CASM (Cost per available seat mile), and for cargo carriers who utilize hub/spoke topologies it is perfect. But the question remains, are these applications enough to justify long-term success? Airbus are in a challenging position. Cancelling the program now, which might be the best possible long-term decison, is probably not being considered due to fear of looking bad. So they'll just muddle along, and maybe in 5 - 10 years there will be more applications for this bird? Not every gamble pays off, but hopefully that won't stop people from innovating.