Airbus announces 6 month delay

[Floyd 0]

Reuters

Airbus Delays Deliveries Of A380

02/06/2005 06:34 AM - Reuters

 

Airbus said deliveries of its 21st-century flagship, the double-decker A380 superjumbo, would be delayed by up to six months, taking the flourish off one of the most trumpeted aviation launches in decades.

 

Disgruntled airlines, at least one of which intends to seek compensation, announced the delay in delivering the largest passenger jet ever built just weeks after its maiden flight.

 

Airbus had already starting preparing the ground for such an announcement - Singapore Airlines, which is due to fly the first scheduled A380 service between London Heathrow and Singapore, first said on May 3 it had been notified of a postponement - and delays to new aircraft are not uncommon.

 

But it adds to a growing list of headaches at the European aircraft builder as it slides into a major trade dispute over subsidies with arch-rival Boeing and struggles to fill an internal power vacuum created by its squabbling shareholders.

 

Keeping the 10-billion-euro A380 project on track after cost overruns and now delays will be a major task for the next head of Airbus, who has yet to be appointed after its fiery French boss Noel Forgeard fought to become the next co-CEO of parent EADS.

 

The world's second-largest aerospace group had given Forgeard and his German counterpart in EADS until June 1 to come up with a list of appointments to put an end to months of Franco-German discord over who should run Airbus. But an industry source said the EADS board was not yet ready to meet.

 

The job is expected to go for the first time to a German aerospace executive, Forgeard's number two Gustav Humbert.

 

Shares in EADS fell as much as much as 2.2 percent on news of the A380 delays, leading decliners on the French blue-chip index. At mid-session they were off 1 percent at 23.77 euros.

 

The shares had opened on the defensive after Australian carrier Qantas Airways said delivery of the A380 aircraft which it has bought would be delayed six months to April 2007.

 

Singapore Airlines said it would take delivery of the first A380 in the fourth quarter of 2006 instead of mid-year.

 

Emirates - the biggest customer with an order for 43 planes worth over $12 billion - would also be affected, Qantas said, adding that "manufacturing issues" at Airbus meant it would now receive the first of 12 A380s in April 2007.

 

Penalties

 

Qantas said it planned to seek compensation from Airbus.

 

"This is disappointing, given that we have met all of Airbus' deadlines for Qantas specifications," Qantas Chief Executive Geoff Dixon said.

 

"We are developing contingency plans to ensure there is no impact on our schedules or available capacity during the six-month delay."

 

In Paris, Air France also reported delays in its order of 10 planes due to be delivered in April 2007.

 

Airbus confirmed deliveries would be delayed up to six months.

 

"It can vary but it is up to six months, depending on the serial number (of the plane)," a spokeswoman for the Toulouse-based aircraft manufacturer said, adding that delays were not linked to any serious flaws discovered in test flights.

 

She declined to comment on the question of penalties.

 

A senior official with one of the A380 buyers told Reuters the delays were caused at least partly by bottle necks in the supply of equipment for cabin interiors.

 

Industry analysts said it was not clear how much Airbus might have to pay in compensation to airlines for the delay.

 

"Presumably it would be related to the cost of not having the aircraft and running other planes in the interim," said one aerospace analyst.

 

Another said penalties may already be built into the 1.45 billion euros of cost overruns already announced by Airbus but that delays could weigh on operating income during 2006.

 

Airbus contributes virtually all operating profit at EADS, which owns 80 percent of the company. The balance is held by BAE Systems Plc, whose shares rose 1.2 percent.

 

Airbus operating margins are benefiting, however, from a rebound in the dollar, the payment currency for aircraft.

 

Airline officials said a delay of six months or more could hamper plans.

 

"We are concerned about its effect on Emirates' growth plans, but until we receive the revised schedule and have an opportunity to study it, we will not be able to ascertain its impact," a spokeswoman for Emirates said.

 

News of the delay could also give potential new customers reason for pause, analysts said, noting the Paris air show which is a major event for Airbus order announcements, is less than two weeks away.

 

Preparations for the air show already risk being poisoned by a major transatlantic trade clash over aviation subsidies, with Boeing and Airbus each accusing the other of lapping up billions of dollars in illegal taxpayer assistance.

 

Washington and Europe filed tit-for-tat lawsuits this week in what could become the biggest commercial dispute in history.

[rb 20]

wow

I cann't imagion wanting to get on an aircraft that holds 800 pax. even with the additional jetways, having 800 people looking for 1600 bags at bag claim and then everybody ay customs and taxi stand competing with one another would tend to make me postal, even if i did save a couple hours flight time.

[echster 1]

wow

I cann't imagion wanting to get on an aircraft that holds 800 pax. even with the additional jetways, having 800 people looking for 1600 bags at bag claim and then everybody ay customs and taxi stand competing with one another would tend to make me postal, even if i did save a couple hours flight time.

It's quite true the A380 is more than capable of carrying 800 pax. Fortunately, the airlines that are to receive them first - Singapore, Emirates, Qantas - have stated they'll only seat 500-525. Granted, that's a lot of folks but much less than they can hold.

[mister_handy 124]

It's quite true the A380 is more than capable of carrying 800 pax. Fortunately, the airlines that are to receive them first - Singapore, Emirates, Qantas - have stated they'll only seat 500-525. Granted, that's a lot of folks but much less than they can hold.

800 also wouldn't be economical most places... on long haul international routes, high-priced passengers in first and business tend to pay more than their share and actually subsidize part of the cost of coach passengers... only on a few routes would an all-coach A380 actually be possible.

 

Look at the 747 - right now it CAN hold well over 500 passengers, but about the only place that's been done is for domestic Japanese flights - the worst single air crash was a packed 747 with 500+ passengers aboard in Japan back in the 1980s. But very few carriers can operate it profitably, without the higher-fare-paying business- and first-class passengers.

[BigDUSA 71]

With a all new state of the art air frame, I'm surprised the delay is not longer. As far as passenger loads go as soon as the airlines can put 800 on the plane they will do it. Share holders will demand it.

[mister_handy 124]

With a all new state of the art air frame, I'm surprised the delay is not longer. As far as passenger loads go as soon as the airlines can put 800 on the plane they will do it. Share holders will demand it.

All new airframe: yeah, even in this day of all-CAD designs (pioneered with the 777), only missing the target by 6 months is pretty damn good for a program this big. Of course, I haven't followed it closely enough to remember if there were much in the way of delays previous...

 

As for passenger loads and "putting 800 on the plane," not necessarily... the issue to shareholders is dollars/euros/yen per dollar/euro/yen invested, not passengers per plane.

 

Look at it this way: if you can fit 800 coach seats at an average of $500 each (one way), that's $400,000 .... if you can fit 20 1st class seats at $5000 each, 100 business class seats at $1500 each, and 400 coach seats at $500 each, that's - if I'm doing my math right - $450,000.

 

While the cost of food and amenities is higher in business or first class, they also involve less weight - a lot fewer passengers' bodies and bags - so there's fuel savings (hence Singapore's going to NO standard coach class on their ultra-long-range fleet), or the weight can be used on cargo instead (often more profitable than coach passengers.)

 

Airlines will do what makes them the most money. If there's enough demand for the coach product AT A HIGH ENOUGH PRICE, I'm sure they'll start increasing the number of coach seats... just as if there's enough demand for paid first and business class seats, the number of those seats will go up. But the demand for coach seats is on most routes quite dependent on price.

[Eneukman 1]

All new airframe: yeah, even in this day of all-CAD designs (pioneered with the 777), only missing the target by 6 months is pretty damn good for a program this big. Of course, I haven't followed it closely enough to remember if there were much in the way of delays previous...

 

As for passenger loads and "putting 800 on the plane," not necessarily... the issue to shareholders is dollars/euros/yen per dollar/euro/yen invested, not passengers per plane.

 

Look at it this way: if you can fit 800 coach seats at an average of $500 each (one way), that's $400,000 .... if you can fit 20 1st class seats at $5000 each, 100 business class seats at $1500 each, and 400 coach seats at $500 each, that's - if I'm doing my math right - $450,000.

 

While the cost of food and amenities is higher in business or first class, they also involve less weight - a lot fewer passengers' bodies and bags - so there's fuel savings (hence Singapore's going to NO standard coach class on their ultra-long-range fleet), or the weight can be used on cargo instead (often more profitable than coach passengers.)

 

Airlines will do what makes them the most money. If there's enough demand for the coach product AT A HIGH ENOUGH PRICE, I'm sure they'll start increasing the number of coach seats... just as if there's enough demand for paid first and business class seats, the number of those seats will go up. But the demand for coach seats is on most routes quite dependent on price.

I've got to go along with mister handy here. A 6 month delay on a project of this type is pretty good.

 

Whilst the plane will theoretically be able to carry around 800 passengers, I don't see many airlines carrying much more than around 550 or so. The real money is made from 1st and business class passengers (except when you manage to wangle a free upgrade as I did with QANTAS few years back ).

 

BA's economy plus is pretty good and only £300 or so more expensive than cattle class. OK - you get the same hold baggage allowance but double the hand baggage allowance - and the food's the same crap as they offer in cattle class. I flew this way last November and I found the 7 inches extra leg room sp much more comfortable. By the way, I ain't exactly tall at 5ft 6in but I have problems with my knees seizing up from time to time.

 

I'm treating myself to a once in a lifetime flight in 1st in a few days time. I'm expecting (at least) a nice sirloin steak (well done) with a pepper sauce and a bottle of Bollinger to wash it down for the price I'm paying!

 

Alan