Airbus faces delivery delays for superjumbo jets
As Airbus appeared to have beaten its American rival, Boeing Co., for a $4 billion deal to provide 35 new jets to Lufthansa, it was battered yesterday by the news that deliveries of its A380 superjumbo airliner will be hit with more delays.
The announcement immediately increased speculation about how bad further losses might be in the troubled A380 line, which, capable of carrying more than 800 passengers, would be the largest passenger jet in the world.
Sixteen airlines have placed orders for the superjet. But already some of these Airbus aircraft orders may be in jeopardy, with Emirates airlines telling the Associated Press that its contract for 45 Airbus A380 jumbo jets was now "up in the air."
It is the second embarrassing delay for the A380 this year. In the worst of them, the European aerospace group, EADS, which owns 80 percent of Airbus, announced in June that production setbacks would delay delivery of the jet for up to a year. That announcement led to a 26 percent drop in the company's stock price and calls for new management. Both Airbus head, Gustav Humbert, and EADS's co-chief executive, Noel Forgeard, heeded the calls. The chief of the A380 program, Charles Champion, left earlier this month.
So far, there hasn't been any agitation for further management changes at the top, with French Finance Minister Thierry Breton saying that "the fact that there has been a bit of turbulence at this time, it's something that is part of company life. I am happy to say that EADS, from what it has decided to communicate, communicates."
France has a 15 percent stake in EADS.
Airbus CEO Christian Striff, who was brought over from the multinational Saint-Gobain Group, has frozen all hiring at Airbus and has begun a sweeping audit. His report on further neccessary changes at Airbus is expected to be presented at the company's board meeting September 29. Speculation has swirled that he will propose a restructuring that could include moving production out of Europe to cut costs.
Concerns about the A380 jet's massive size have plagued the program for years, with critics worrying about everything from the jet possibly damaging taxiways to possible problems with its wing strength. Most of its delays, including the latest one, have had to do with the complexity of the electrical wiring system for the massive planes.
In a statement, EADS said that "[c]ontinuing industrialization challenges with the wiring of production aircraft have been identified and are being tackled. Consequently, from what is known today, there will be further delays" EADS gave no hint on how long the delay would be saying it had "not finalized the schedule of deliveries nor the financial impact of any delays." However, industry speculation had put the delay at six months.
Even with the delays in its superjumbo jet, the company continues to be a powerful foil to Boeing. This week, Russia decided to give Airbus half its order for 44 wide-bodied aircraft. For a while, it looked like Boeing might have won that one too.