Airbus admits further delay on A380
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Airbus admits further delay on A380
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In today's Sydney Morning Herald:
Super jumbo roll out stretched
June 14, 2006 - 12:35PM
European aircraft maker Airbus has delayed its A380 super jumbo program another seven months, throwing the fleet plans of Qantas and 12 other airlines in disarray.
The French-based Airbus blamed the delay on the "definition, manufacturing and installation of electrical systems and resulting harnesses".
While Airbus said the A380's flight test program was still on schedule, it said the production glitches would result in only nine of the jets being delivered in 2007. This is despite 15 of the aircraft already assembled on the Airbus factory floor in Toulouse.
The delays will also result in a "shortfall" of up to nine A380s in 2009 and five in 2009.
Qantas chief executive Geoff Dixon told a transport forum in Canberra he was only informed of the delay last night.
Mr Dixon declined to say how the latest A380 delay would impact the national carrier, which has ordered 12 of the aircraft.
But when Airbus announced a year ago the delivery of Qantas's first A380 would be pushed back six months to April 2007, Mr Dixon warned another delay could cause serious problems.
Qantas has already been forced to delay the planned retirement of some of its ageing 747s due to the previous A380 delay. The latest could cause serious headaches at the national carrier.
In a media statement, Airbus said it "is fully aware of the burden this industrial issue represents for the airlines who are anxious to begin operating the A380".
The delay is also expected to result in Airbus paying hundreds of millions of dollars in penalties to its customers. The company said the latest delay would result in a €500 million ($850 million) hit on its earnings over four years.
Singapore Airlines said it still expected to be the first airline to recieve an A380 in November. But it has warned there could be delays in the delivery of its nine other A380s.
"All we can say is that we're not happy about the delay," said Singapore Air spokesman Stephen Forshaw. "We are being told by them [Airbus] that we will have the [first] aircraft by the end of the year."
Singapore Air hopes to first fly the aircraft between Sydney to London via Singapore.
Emirates is expected to suffer the most, given it is the largest customer of the A380, having order 45 of the aircraft. Other A380 customer hoping to fly the 555-seat aircraft to Sydney include Thai Airways, Malaysia Airlines, Qatar Airways and Virgin Atlantic. Qantas plans to first use the aircraft from Melbourne and Sydney to Los Angeles. Airbus has 159 "firm" orders for the aircraft.
Super jumbo roll out stretched
June 14, 2006 - 12:35PM
European aircraft maker Airbus has delayed its A380 super jumbo program another seven months, throwing the fleet plans of Qantas and 12 other airlines in disarray.
The French-based Airbus blamed the delay on the "definition, manufacturing and installation of electrical systems and resulting harnesses".
While Airbus said the A380's flight test program was still on schedule, it said the production glitches would result in only nine of the jets being delivered in 2007. This is despite 15 of the aircraft already assembled on the Airbus factory floor in Toulouse.
The delays will also result in a "shortfall" of up to nine A380s in 2009 and five in 2009.
Qantas chief executive Geoff Dixon told a transport forum in Canberra he was only informed of the delay last night.
Mr Dixon declined to say how the latest A380 delay would impact the national carrier, which has ordered 12 of the aircraft.
But when Airbus announced a year ago the delivery of Qantas's first A380 would be pushed back six months to April 2007, Mr Dixon warned another delay could cause serious problems.
Qantas has already been forced to delay the planned retirement of some of its ageing 747s due to the previous A380 delay. The latest could cause serious headaches at the national carrier.
In a media statement, Airbus said it "is fully aware of the burden this industrial issue represents for the airlines who are anxious to begin operating the A380".
The delay is also expected to result in Airbus paying hundreds of millions of dollars in penalties to its customers. The company said the latest delay would result in a €500 million ($850 million) hit on its earnings over four years.
Singapore Airlines said it still expected to be the first airline to recieve an A380 in November. But it has warned there could be delays in the delivery of its nine other A380s.
"All we can say is that we're not happy about the delay," said Singapore Air spokesman Stephen Forshaw. "We are being told by them [Airbus] that we will have the [first] aircraft by the end of the year."
Singapore Air hopes to first fly the aircraft between Sydney to London via Singapore.
Emirates is expected to suffer the most, given it is the largest customer of the A380, having order 45 of the aircraft. Other A380 customer hoping to fly the 555-seat aircraft to Sydney include Thai Airways, Malaysia Airlines, Qatar Airways and Virgin Atlantic. Qantas plans to first use the aircraft from Melbourne and Sydney to Los Angeles. Airbus has 159 "firm" orders for the aircraft.
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I've cut and pasted this direct from my Reuters screen, so no url available. This looks really grim for EADS.
09:03 14Jun2006 RTRS-UPDATE 1-EADS shares nosedive as A380 delay spooks investors
(Adds details, analyst comments)
PARIS, June 14 (Reuters) - Shares in EADS <EAD.PA> plunged 20 percent to a near 2-year low on Wednesday as news of fresh delays in the delivery of the Airbus A380 superjumbo fueled a flood of sell orders and brokers slashed their ratings of Europe's aerospace giant.
A fresh six-month delay in delivery of the Airbus A380 superjumbo revealed on Tuesday will cost EADS 2 billion euros ($2.5 billion) starting in 2007 just as it looks to fund an all-new, mid-sized model and buys out stakeholder BAE Systems Plc <BA.L>.
Exane BNP Paribas analysts said in a research note that the delay, the second to be announced for the A380, raised questions about credibility.
"While the likelihood of a further delay was not really a surprise, the magnitude of the delay and the EBIT shortfall is much more significant than we had anticipated and seems to relate mostly to exceptional costs," they said, cutting their 2007 earnings per share forecast by 16 percent and their target price to 26 euros.
With this second six-month delay for the world's biggest airliner, Airbus could now risk airlines dropping out of the programme, which has not yet won enough orders to cover its development costs of 12 billion euros.
EADS said this year's earnings would not be affected, but the delay would hit earnings before interest and tax to the tune of 500 million euros a year between 2007 and 2010.
EADS, a Franco-German-Spanish company, hinted at the possibility of cancellations, which would be a marketing disaster for Airbus given the focus on its boldest project.
"Possible contract terminations under the new timetable have not been taken into account in this estimate," EADS said in a statement issued late on Tuesday.
The setback comes as 20-percent stakeholder BAE of Britain prepares to bail out of Airbus, leaving EADS as sole owner.
By 0800 GMT, EADS shares were down 20.8 percent at 20.13 euros, their lowest level since August 2004.
BAE Systems shares were down 2.44 percent in London at 340-1/4 pence.
Deutsche Bank cut its recommendation on EADS to "hold" from "buy", and HVB lowered EADS to "outperform" from "buy" while several analysts trimmed their price targets.
((Writing by Dominique Vidalon; Editing by Margaret Orgill; Reuters Messaging: rm://[email protected]; email: [email protected]; Telephone: +33 1 49495432))
09:03 14Jun2006 RTRS-UPDATE 1-EADS shares nosedive as A380 delay spooks investors
(Adds details, analyst comments)
PARIS, June 14 (Reuters) - Shares in EADS <EAD.PA> plunged 20 percent to a near 2-year low on Wednesday as news of fresh delays in the delivery of the Airbus A380 superjumbo fueled a flood of sell orders and brokers slashed their ratings of Europe's aerospace giant.
A fresh six-month delay in delivery of the Airbus A380 superjumbo revealed on Tuesday will cost EADS 2 billion euros ($2.5 billion) starting in 2007 just as it looks to fund an all-new, mid-sized model and buys out stakeholder BAE Systems Plc <BA.L>.
Exane BNP Paribas analysts said in a research note that the delay, the second to be announced for the A380, raised questions about credibility.
"While the likelihood of a further delay was not really a surprise, the magnitude of the delay and the EBIT shortfall is much more significant than we had anticipated and seems to relate mostly to exceptional costs," they said, cutting their 2007 earnings per share forecast by 16 percent and their target price to 26 euros.
With this second six-month delay for the world's biggest airliner, Airbus could now risk airlines dropping out of the programme, which has not yet won enough orders to cover its development costs of 12 billion euros.
EADS said this year's earnings would not be affected, but the delay would hit earnings before interest and tax to the tune of 500 million euros a year between 2007 and 2010.
EADS, a Franco-German-Spanish company, hinted at the possibility of cancellations, which would be a marketing disaster for Airbus given the focus on its boldest project.
"Possible contract terminations under the new timetable have not been taken into account in this estimate," EADS said in a statement issued late on Tuesday.
The setback comes as 20-percent stakeholder BAE of Britain prepares to bail out of Airbus, leaving EADS as sole owner.
By 0800 GMT, EADS shares were down 20.8 percent at 20.13 euros, their lowest level since August 2004.
BAE Systems shares were down 2.44 percent in London at 340-1/4 pence.
Deutsche Bank cut its recommendation on EADS to "hold" from "buy", and HVB lowered EADS to "outperform" from "buy" while several analysts trimmed their price targets.
((Writing by Dominique Vidalon; Editing by Margaret Orgill; Reuters Messaging: rm://[email protected]; email: [email protected]; Telephone: +33 1 49495432))
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So this is how they'll shift some A340s!!
DJ UPDATE: Qantas, SIA Seek A380 Compensation From Airbus
By Barbara Adam Of DOW JONES NEWSWIRES
CANBERRA (Dow Jones)--Australias Qantas Airways Ltd. (QAN.AX) and Singapore Airlines Ltd. (S55.SI) said Wednesday they will seek compensation from Airbus (ABI.YY) over more delays to deliveries of the super-jumbo A380.
Qantas Chief Executive Geoff Dixon will also request short-term replacement aircraft from Airbus, which announced Tuesday another six to seven month delay in deliveries of its 555-seat new model that costs almost US$300 million.
Singapore Airlines said the new delays wont affect its status as "first to fly" the worlds largest passenger jet with the first super-jumbo still due to be delivered by the end of this year.
The first A380 was originally scheduled for delivery around April this year and flights were supposed to commence mid-2006 with Singapore Airlines, which has ordered 10 of the aircraft.
Qantas first A380 was to be delivered in April 2007 with the first four super-jumbos to be put into service on the airlines most profitable route between Australia and the U.S. It was to be the first airline to fly the A380 into Los Angeles International Airport.
Dixon said he hoped to minimize capacity and timetable issues caused by the A380 delay by deferring the retirement of other aircraft in Qantas 213-strong fleet.
The aircraft delays shouldnt cause a long-term disadvantage for Qantas, as long as Airbus sticks to its original delivery sequence, said Center for Asia Pacific Aviation Chief Executive Andrew Miller.
"The only issue is the extra capacity they would have had with the A380, they may be a little short of capacity for while," he said.
France-based Airbus blamed the latest delivery delays on engineering bottlenecks. Airbus is majority owned by European Aeronautic Defense & Space Co. (EAD.P). BAE Systems PLC (BA..L) has a minority interest.
The setback for Singapore Airlines comes as Australia rebuffed a renewed push for the airline to access the lucrative Australia-U.S. route.
Singapore Prime Minister Lee Hsien Loong, on the first day of a five-day visit to Australia, said he wanted the Australian government to reconsider its February decision to block Singapore Airlines from the route.
"We believe open skies is in both countries interests," Lee said in a joint media briefing with Australian Prime Minister John Howard.
Current air right agreements allow Australian, U.S., German, Italian and Indian airlines to fly the transpacific route, although Qantas 75% market share on the Sydney-Los Angeles route is challenged only by United Airlines (UALAQ.BB).
Richard Bransons discount Australian carrier, Virgin Blue Holdings Ltd. (VBA.AX) and Qantas cut-price carrier, Jetstar, have expressed interest in flying the U.S. route but their U.S. expansion plans are being hampered by a lack of available landing slots in the U.S.
Australian Transport Minister Warren Truss, who met with Lee early Wednesday, said the government wouldnt allow Singapore Airlines access to the transpacific route anytime soon.
Truss said open skies agreements remained an "aspirational goal" but the Australian government wasnt going to trade away its main bargaining chip, the Australia-U.S. route, without getting something substantial in return.
"Essentially, Australia has not closed off for all times the prospect of Singapore Airlines being able to operate on that route but it is not likely to happen in the near future," he said.
Australia is seeking increased access to airports in Europe and Japan and more through-rights from Hong Kong and China.
Several carriers, including Air Canada (ACNA.YY), Emirates (EA.YY) and Qatar Airways are seeking increased capacity to Australia.
Vietnam Airlines (VAI.YY) walked away from negotiations with Australian officials for more flights to Australia after disagreeing on a timetable to double its capacity, according to a spokeswoman for Truss.
An Australian academic, meanwhile, proposed Australia, New Zealand and ASEAN nations should consider pooling ownership of the regions airlines, or at least negotiate their own aviation networks.
"If those things roll together, when we go talk to the European Union, arent we a different animal now?" said Professor Christopher Findlay, head of the University of Adelaides school of economics.
-By Barbara Adam, Dow Jones Newswires; 61-2-6208-0901; [email protected]
-Edited by Graham Morgan
(END) Dow Jones Newswires
14-06-06 0945GMT
Copyright (c) 2006 Dow Jones & Company, Inc.
DJ UPDATE: Qantas, SIA Seek A380 Compensation From Airbus
By Barbara Adam Of DOW JONES NEWSWIRES
CANBERRA (Dow Jones)--Australias Qantas Airways Ltd. (QAN.AX) and Singapore Airlines Ltd. (S55.SI) said Wednesday they will seek compensation from Airbus (ABI.YY) over more delays to deliveries of the super-jumbo A380.
Qantas Chief Executive Geoff Dixon will also request short-term replacement aircraft from Airbus, which announced Tuesday another six to seven month delay in deliveries of its 555-seat new model that costs almost US$300 million.
Singapore Airlines said the new delays wont affect its status as "first to fly" the worlds largest passenger jet with the first super-jumbo still due to be delivered by the end of this year.
The first A380 was originally scheduled for delivery around April this year and flights were supposed to commence mid-2006 with Singapore Airlines, which has ordered 10 of the aircraft.
Qantas first A380 was to be delivered in April 2007 with the first four super-jumbos to be put into service on the airlines most profitable route between Australia and the U.S. It was to be the first airline to fly the A380 into Los Angeles International Airport.
Dixon said he hoped to minimize capacity and timetable issues caused by the A380 delay by deferring the retirement of other aircraft in Qantas 213-strong fleet.
The aircraft delays shouldnt cause a long-term disadvantage for Qantas, as long as Airbus sticks to its original delivery sequence, said Center for Asia Pacific Aviation Chief Executive Andrew Miller.
"The only issue is the extra capacity they would have had with the A380, they may be a little short of capacity for while," he said.
France-based Airbus blamed the latest delivery delays on engineering bottlenecks. Airbus is majority owned by European Aeronautic Defense & Space Co. (EAD.P). BAE Systems PLC (BA..L) has a minority interest.
The setback for Singapore Airlines comes as Australia rebuffed a renewed push for the airline to access the lucrative Australia-U.S. route.
Singapore Prime Minister Lee Hsien Loong, on the first day of a five-day visit to Australia, said he wanted the Australian government to reconsider its February decision to block Singapore Airlines from the route.
"We believe open skies is in both countries interests," Lee said in a joint media briefing with Australian Prime Minister John Howard.
Current air right agreements allow Australian, U.S., German, Italian and Indian airlines to fly the transpacific route, although Qantas 75% market share on the Sydney-Los Angeles route is challenged only by United Airlines (UALAQ.BB).
Richard Bransons discount Australian carrier, Virgin Blue Holdings Ltd. (VBA.AX) and Qantas cut-price carrier, Jetstar, have expressed interest in flying the U.S. route but their U.S. expansion plans are being hampered by a lack of available landing slots in the U.S.
Australian Transport Minister Warren Truss, who met with Lee early Wednesday, said the government wouldnt allow Singapore Airlines access to the transpacific route anytime soon.
Truss said open skies agreements remained an "aspirational goal" but the Australian government wasnt going to trade away its main bargaining chip, the Australia-U.S. route, without getting something substantial in return.
"Essentially, Australia has not closed off for all times the prospect of Singapore Airlines being able to operate on that route but it is not likely to happen in the near future," he said.
Australia is seeking increased access to airports in Europe and Japan and more through-rights from Hong Kong and China.
Several carriers, including Air Canada (ACNA.YY), Emirates (EA.YY) and Qatar Airways are seeking increased capacity to Australia.
Vietnam Airlines (VAI.YY) walked away from negotiations with Australian officials for more flights to Australia after disagreeing on a timetable to double its capacity, according to a spokeswoman for Truss.
An Australian academic, meanwhile, proposed Australia, New Zealand and ASEAN nations should consider pooling ownership of the regions airlines, or at least negotiate their own aviation networks.
"If those things roll together, when we go talk to the European Union, arent we a different animal now?" said Professor Christopher Findlay, head of the University of Adelaides school of economics.
-By Barbara Adam, Dow Jones Newswires; 61-2-6208-0901; [email protected]
-Edited by Graham Morgan
(END) Dow Jones Newswires
14-06-06 0945GMT
Copyright (c) 2006 Dow Jones & Company, Inc.
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SIA buys 20 787s
Not sure that the delivery delays were a significant factor, but:
(AP) Singapore Airlines said Wednesday it will buy 20 Boeing 787-9 aircraft for $4.52 billion, hours after it expressed unhappiness about delays in Airbus' delivery of its A380 superjumbo.
In a statement, the carrier said it has purchase rights for another 20 aircraft from Chicago-based Boeing.
......
"The decision to purchase the 787-9 is the culmination of an extensive evaluation of the performance characteristics and operating economics promised for the different versions of Boeing's new 787 aircraft," the statement said.
.....
It also added that deliveries will be scheduled between early 2011 and mid-2013, and will be for "fleet renewal as well as to cater for growth."
Singapore Airlines plans to deploy the 787-9 aircraft on routes to North Asia, the Indian subcontinent and the Middle East.
In a statement, the carrier said it has purchase rights for another 20 aircraft from Chicago-based Boeing.
......
"The decision to purchase the 787-9 is the culmination of an extensive evaluation of the performance characteristics and operating economics promised for the different versions of Boeing's new 787 aircraft," the statement said.
.....
It also added that deliveries will be scheduled between early 2011 and mid-2013, and will be for "fleet renewal as well as to cater for growth."
Singapore Airlines plans to deploy the 787-9 aircraft on routes to North Asia, the Indian subcontinent and the Middle East.
Last edited by SaturnV; 14th Jun 2006 at 16:25.
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Wait for EK
SQ's order was expected for quite a while; indeed, it had been expected that it would include orders for 777-200LRs and possibly 747-8Fs, which would have been a triple blow to SQ - the 772LRs (which will probably be ordered soon anyway) would replace the A340-500s and the 747-8Fs, if ordered, would be instead of the A380-800F.
However, EK is expected to place a significant order for 787-10s, the new version of the twinjet. The airline had long been seen as a potential A350 customer.
This is turning into a terrible year for Airbus.
However, EK is expected to place a significant order for 787-10s, the new version of the twinjet. The airline had long been seen as a potential A350 customer.
This is turning into a terrible year for Airbus.
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Dark Wednesday at the Euronext.
(AFP) Paris. EADS plunged into a stock market vortex, losing about 5.5 billion euros or more than one-quarter of its value on further production delays to the super-jumbo A380 airliner developed by its main arm Airbus.
The stock in the European Aeronautic Defence and Space Company ended the day at 18.73 euros, down 26.32 percent from the close on Tuesday, causing co-chief executive Noel Forgeard to apologise profusely to shareholders.
At one point, EADS shares had shed 34.10 percent to 16.75 euros, marking a decline of 52.7 percent from a peak this year of 35.42 euros on March 27.
The storm continued late on Wednesday when Credit rating agencies downgraded EADS.
The stock in the European Aeronautic Defence and Space Company ended the day at 18.73 euros, down 26.32 percent from the close on Tuesday, causing co-chief executive Noel Forgeard to apologise profusely to shareholders.
At one point, EADS shares had shed 34.10 percent to 16.75 euros, marking a decline of 52.7 percent from a peak this year of 35.42 euros on March 27.
The storm continued late on Wednesday when Credit rating agencies downgraded EADS.
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Originally Posted by Mac the Knife
"Some people say that Concorde will never fly. They said the same thing about the Titanic"
So....is the A380 program going to sink? What's the big deal. The French can now say they have the biggest airliner in the world. Does anything else , you know, like profits matter?
Ecce Homo! Loquitur...
Hmmm. What does this do to the price that EADS has to pay BAe for their shares? They´re in arbitration. This could save EADS a packet.
And if the the delays later turn out to be not so bad and the shares rebound.........
And if the the delays later turn out to be not so bad and the shares rebound.........
Last edited by ORAC; 15th Jun 2006 at 06:39.
Rotate on this!
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Originally Posted by eal401
You got it ORAC.
BAE are certainly suspicious of EADS motives in this "announcement."
BAE are certainly suspicious of EADS motives in this "announcement."
Hehe.....do you really think that BAE have not got 'positions' in the market to cover themselves?
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I've just typed a fairly long account of how BAE would have shorted EADS in the options market the moment they decided to get rid of their stake. This would have been a cheap way to cover for eventualities such as the massive fall yesterday.
I've just lost how exactly it would have been done
Suffice to saySLFguy is spot on.
If BAE didn't take any hedging action, then I hereby apply to become their Finance Director.
I've just lost how exactly it would have been done
Suffice to saySLFguy is spot on.
If BAE didn't take any hedging action, then I hereby apply to become their Finance Director.
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The question has to be asked as well, why did all the big cheeses and their families sell thier shares etc a few months back. A lot of money changed hands when that happened.
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I've been skeptical of the A380 all along. It appears that Boeing, too, has been making some promises regarding the B787 it might not be able to keep on time.
It's very adept of companies who obtained penalties for late/non-delivery. Not so adept of airport authorities to invest infrastructure funds before the airplane has a certificate.
Airbus has advanced the art in many ways, and I hope it will recover, having learned a costly, but valueable lesson.
It's very adept of companies who obtained penalties for late/non-delivery. Not so adept of airport authorities to invest infrastructure funds before the airplane has a certificate.
Airbus has advanced the art in many ways, and I hope it will recover, having learned a costly, but valueable lesson.