More Production Delays for Airbus A380 Announced

Airbus parent EADS said Tuesday delivery of the flagship A380 superjumbo jet will be delayed by another year, until the second half of 2007, prompting some airlines to consider canceling their orders.

Virgin Atlantic Airways Ltd. and Emirates — the biggest A380 customer — both said they were examining their options as a result of the delays, which EADS NV said will shave a total of $6.1 billion off operating profit.

EADS, which had confirmed last month that A380 would be held up again but did not give details, also said it would launch a new restructuring plan designed to cut costs and improve productivity at Airbus and would investigate possible management responsibility for the delays.

The third round of delays, announced by airlines Tuesday, add up to a total setback of about two years compared with the original delivery dates.

Air France and Lufthansa said earlier Tuesday that their jets were delayed by another year, while Dubai-based Emirates announced a slightly shorter delivery holdup but indicated that the future of its bumper 45-plane order could be in doubt.

"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," Chief Executive Tim Clark said in an e-mailed statement.

"This is a very serious issue for Emirates and the company is now reviewing all its options," he added.

Emirates had warned last month that its 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.

Germany's Lufthansa said it will receive its first A380 between May and September 2009, and Air France said its first delivery is now set for early in the second quarter of 2009. But both European carriers appeared to rule out cancelations.

While Air France "can only regret" the latest delays, the airline said in a statement, they will have no impact on its growth strategy.

"We're still convinced that the A380 is a success story and the A380 is a growth aircraft," Lufthansa spokeswoman Stefanie Stotz said.

Emirates, which had originally been scheduled to take delivery of an A380 this month, will receive the first plane 22 months late. Air France had initially booked its first plane for spring-summer 2007, while Lufthansa had expected to take its first delivery in the last quarter of same year.

In recent days, Airbus has been informing A380 customers of the latest delays as it tries to gauge the likely compensation bill.

In June, the plane maker 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 euros ($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 2.5 million euros ($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 2.75 billion euro ($3.5 billion) sale.

Shares in EADS, which had fallen recently in anticipation of big new delays, closed 1.1 percent higher at 22.65 euros ($28.85) in Paris after the announcements by Emirates and Lufthansa.