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UPS to Nix Order for 10 Airbus A380 Air Freighters

Associated Press
Published | Updated

ATLANTA – UPS Inc. (UPS), the world's largest shipping carrier, said Friday it will cancel its order for 10 Airbus A380 freighters, following delivery delays. The decision will leave the European aircraft manufacturer with no firm orders for its jumbo freighter.

The news follows an earlier decision by Memphis, Tenn.-based FedEx Corp. (FDX) to cancel its order for the freight version of the A380.

Atlanta-based UPS said the final cancellation decision will be formally presented to Airbus on the first date specified under an agreement reached last week that gives either party the right to terminate the order.

Last week's agreement specified a revised schedule that delayed delivery of the first A380 jumbo freighter to UPS from 2010 to 2012. UPS originally expected its first freighter in 2009.

UPS said it had intended to complete an internal study of whether it could wait until 2012 for the aircraft, but now understands Airbus is diverting employees from the A380 freighter program to work on the passenger version of the plane.

"Based on our previous discussions, we had felt that 2012 was a reasonable estimate of when Airbus could supply this plane," David Abney, UPS chief operating officer and president of UPS Airline, said in a statement. "We no longer are confident that Airbus can adhere to that schedule."

FedEx had responded to the new plane's delays by canceling its A380 order with Toulouse, France-based Airbus in November and announcing it would purchase 15 U.S.-made Boeing 777 freighters with an option to buy 15 more.

UPS, also known as United Parcel Service Inc., ordered its first 10 A380 aircraft in January 2005 for use on U.S.-Asia routes. The deal included an option to buy 10 more planes.

UPS said Friday it is confident it has the resources to continue expanding internationally, but it did not immediately announce any aircraft orders to make up for the A380 cancellation.

UPS shares fell 53 cents to $69.59 in morning trading on the New York Stock Exchange. Shares of Boeing Co. (BA) were up a penny at $87.86.