From Bloomberg News
Emirates to `Review Options' on New Airbus A380 Delay (Update1)
By Will McSheehy and Andrea Rothman
Oct. 3 (Bloomberg) -- Emirates airline, the largest customer for Airbus SAS's A380, said it will ``review all of its options'' after being told delivery of its first superjumbo will be delayed an additional 10 months to August 2008.
``This is a very serious issue for Emirates,'' spokesman Mike Simon in a phone interview today, reading from a statement written by President Tim Clark. ``We've started a review to see how we can minimize impact on our expansion plans.''
The company is ``not talking about compensation at the present time,'' Simon said, though the issue may be pursued ``at a later date.'' It now expects to receive four A380s in 2008.
Emirates, the biggest Arab airline, ordered 45 of the 555-seat A380s and in June said it will receive its first delivery in October 2007. That's a year later than originally scheduled when the Dubai, United Arab Emirates-based carrier signed for the planes.
``These are very strong words for Emirates and catastrophic news for Airbus,'' Doug McVitie, managing director of the Dinan, France-based aviation consulting firm Arran Aerospace, said in a phone interview. `For Emirates this is a matter of prestige, not of penalties. I'm hearing it's increasingly likely Emirates will defer or cancel half its order, perhaps in favor of Boeing's passenger 747-8 planes.''
Airbus, controlled by European Aeronautic, Defence & Space Co., first disclosed construction delays in 2005, then announced further delays June 13 when it slashed its delivery forecast for 25 planes in 2007. Airbus can probably deliver just four A380s next year, less than half the number it predicted in June, three people with knowledge of the plans said Oct. 1.
Firm Orders
Airbus has 159 firm orders from 16 customers for the plane, which has cost at least $13.5 billion to develop. The A380's delays have angered airline customers, who are demanding compensation, and have also prompted the departure of two top executives and the demotion of the executive who ran the A380 program.
Boeing Co., the world's No. 2 commercial aircraft maker, is counting on the new 747-8 passenger plane to help it fight off competition from the A380. Planning for the passenger-version configuration of the plane will be finalized in mid-2007, the Chicago-based company said Sept. 25.
EADS shares have lost 31 percent of their value this year, and Toulouse, France-based Airbus is trailing Boeing in orders for the first time in five years.
Singapore Airlines Ltd., scheduled to be the first carrier to operate the A380, yesterday said it is waiting for details from Airbus on further delays. In July the Asian carrier said it may order nine more of the superjumbos, taking its total to 19. Its first A380 delivery is currently due in December, more than six months behind the initial schedule.
Airline Frustration
While no customer has said it will cancel its order, airlines have begun expressing their frustration. U.K. billionaire Richard Branson, chairman of Virgin Atlantic Airways Ltd., indicated Sept. 27 that the airline will stick with its order for six A380s only if the plane offers the passenger load and range promised.
``We would like the plane if the plane is delivered as originally promised,'' Branson said. ``We'll have to wait and see if Airbus can overcome these problems.''
Airbus has told Virgin Atlantic its A380s will also be subject to further delays, spokesman Paul Charles said in a phone interview today. The airline will say more ``this evening or tomorrow morning,'' he said.
Airbus blames the A380 delays on the complexity of installing 300 miles of wiring in each of the double-decker planes. The wires are bundled in harnesses that are strung through the aircraft, controlling in-flight entertainment, lights, air conditioning and the plane's operating systems.
Airbus allowed each customer to customize the entertainment systems, adding to the challenge of getting the correct wire in the right place.