EADS Exec: Airbus Underestimated Rival Boeing

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The co-head of European aerospace firm EADS admitted its Airbus unit had underestimated archrival Boeing Co (BA) and said its priority was to fix problems at Airbus, which is trailing its U.S. competitor in aircraft sales.

Airbus's mid-sized A350 model, which is being redesigned to compete with Boeing's bigger-selling 787, had to be a superior aircraft, Tom Enders told a briefing restricted to Stuttgart-based journalists late on Tuesday. His comments were embargoed for publication on Wednesday.

He added that Airbus was not under time pressure and said the timing of a decision on the design of the A350 was not bound by next week's Farnborough Air Show in Britain, a showcase for the industry.

Former joint EADS Chief Executive Noel Forgeard had said at the Berlin Air Show in May that decisions would be made on the slow-selling A350 by Farnborough.

But Forgeard resigned at the start of this month, having lost a bitter struggle to keep his job after Airbus announced further six-month delays to deliveries of the A380 superjumbo in June, news that wiped a quarter off the value of EADS shares.

Forgeard's successor Louis Gallois told reporters after meeting French Prime Minister Dominique de Villepin late on Tuesday that EADS had abandoned his predecessor's plans to unveil a revamped version of the A350 before the air show.

"We'll talk about it calmly at Farnborough," he said.

By 0921 GMT on Wednesday, EADS shares were up 1.1 percent in Paris at 21.48 euros, broadly in line with France's blue chip CAC 40 index.


Airbus said on Monday aircraft sales plunged by more than half in the first six months of this year to 117 mainly single-aisle planes, down from 276 in the year-earlier period.

That compared with 480 orders for Boeing, boosted by the success of its 787, up from 441 a year earlier.

But Enders said: "The problems at Airbus do not mean we are a restructuring case."

He said delays to the A380 had not yet prompted any airline customers to cancel orders for the aircraft, the world's largest passenger plane.

An audit was in place to provide an independent assessment of the schedule of the A380 and he was not in a position to rule out further delays until that was completed, he added.

Enders also said Airbus was on track to deliver more than 400 aircraft this year. Airbus chief salesman John Leahy said last week it would deliver 430 planes in 2006.

That would keep it ahead of Boeing, which is forecasting about 395 deliveries for 2006, a 36 percent rise from 290 planes delivered last year.

EADS recently came under fire from the French government for announcing 1,000 job cuts and a plant closure at its Sogerma maintenance unit.

Gallois said after the meeting with de Villepin that he expected to propose a solution for financial difficulties at the business within days.

EADS is also stepping up pressure on its defense business to increase its contribution to group earnings and reduce EADS's dependence on Airbus.

A French newspaper reported on Wednesday that EADS expects defense revenues of 2.5 billion euros ($3.2 billion) in France this year, up from 2.3 billion last year.

Citing internal forecasts, La Tribune reported that EADS was also looking for 2.2 billion euros of defense orders this year, up from 1.6 billion last year. EADS declined to comment.