Company Watch - Airbus

AirGuide Business, May 5, 2008

May 5, 2008

Airbus may run into problems selling some of its factory sites, and could be forced to further delay some deliveries on its A380 superjumbo, according to German media reports. The divestment of French plants in Meaulte and St Nazaire Ville to aerospace firm Latecoere may be terminated as financing the deal could be difficult in current market conditions, German daily Die Welt reported on Saturday, quoting Airbus Chief Operating Officer Fabrice Bregier. A decision will be taken in May, Bregier added. A spokeswoman at Airbus declined to comment. Latecoere is in exclusive negotiations to buy control of two Airbus factories at Meaulte in northern France and and Saint-Nazaire in western France. The divestment process is a key plank of Airbus's "Power 8" restructuring plan aimed at cutting costs in the wake of damaging delays to its aircraft production timetable, and in the face of a strong euro. May 4, 2008

Die Welt and German business magazine WirtschaftsWoche also said Airbus may have to further delay deliveries of its A380 superjumbo, the world's largest airliner. The magazine said, citing an insider, Airbus would not be able to meet its target of delivering 25 planes in 2009 due to mounting production problems, and that the company had already informed customers of the delay in a letter. The plans are opposed by unions and caused political fireworks in France and Germany last year, while the relentless rise of the euro against the dollar has led Latecoere, which makes doors for Airbus and Boeing, to move its own production out of the euro zone. Asked for a reaction, the spokeswoman at Airbus cited comments Chief Executive Tom Enders made on Tuesday in the United Arab Emirates on the A380 superjumbo's delivery targets. Airbus has not ruled out fine-tuning the A380 delivery timetable, which has already slipped three times. Deliveries of the A380 have fallen almost two years behind schedule after a series of industrial problems since 2005. The A380 went into service last year with Singapore Airlines but is heavily bankrolled by Dubai-based airline Emirates, which ordered 58 of the USD$300 million planes in a historic civil aviation order worth over USD$17 billion. May 4, 2008

Airbus paid Dubai's Emirates USD$110 million during the last year in compensation for the late delivery of the A380, of which the Arab carrier is the largest customer, Emirates said. Emirates, which has ordered 58 of the world's largest passenger planes, received AED404 million dirhams (USD$110 million) during the year to March 31 in "liquidating damages", according to its annual report released on Wednesday. Liquidating damages refers to compensation from parties who failed to meet contractual obligations with Emirates, the largest Arab airline. There were none the previous fiscal year. "A large part of that was part of the compensation deal for the delay of the A380s," Emirates President Tim Clark said in Dubai on the day the state-owned carrier said profit rose 62 percent to AED5.02 billion dirhams in the year to March 31. Clark declined to give further details about the compensation agreement with Airbus, following a near two-year delay in the delivery of the 525-seat, double-decker planes. Airbus Chief Executive Officer Tom Enders told reporters in Dubai on Tuesday that meeting a new schedule for delivering the A380 to customers was a "battle" and always of concern. The reputation of parent EADS is seen at stake as it strives to deliver 13 of the planes this year. Clark said he was confident he would receive five A380s before March 31, and expects to received another 12 in the year to March 31, 2010. "It would be a huge blow if there were further delays," Clark said. "There are rumors that are starting to rattle" about further delays, he said. May 1, 2008

Airbus reviews 2008 delivery schedule for A380 Airbus is evaluating whether it can meet the A380 delivery schedule for this year. Executives at the jetmaker noted that they must take supplier problems into account when reviewing the schedule. Apr 30, 2008

Both Boeing and Airbus have played down expectations for plane orders this year, after the unprecedented boom which resulted in 2,754 orders between them last year. Most analysts are expecting about half that number this year. The shape of the year will likely become clearer at July's Farnborough International Airshow in Britain, when airlines like to unveil big plane orders. May 1, 2008

Airbus pays carrier compensation for A380 delay. Emirates said it received $110 million in 2007 from Airbus to compensate the airline for A380 delays. Emirates has ordered 58 of the superjumbo jets. May 2, 2008

A team of Northrop Grumman and Airbus parent EADS cleared a key legislative hurdle when lawmakers announced Thursday that the Senate Armed Services Committee has approved startup funding for a new fleet of Air Force tankers. Supporters of The Boeing Co.'s losing bid to build the planes have said they will try to halt the program through congressional action. But Sen. Carl Levin, D-Mich., chairman of the Senate committee, said Thursday that he would not support any such action before the Government Accountability Office rules in mid-June on the merits of an appeal from Boeing. Chicago-based Boeing claims that the Air Force erroneously selected the EADS team for the multibillion-dollar program. The Air Force stunned the aerospace industry Feb. 29, by choosing a team of Airbus parent European Aeronautic Defense and Space Co. and Los Angeles-based Northrop Grumman to build a fleet of new midair refueling tankers. The initial program is valued at around $35 billion but could grow to $100 billion if the consortium wins future Air Force orders. May 1, 2008