Airbus Admits New A380 Delay

After conducting a production review, Airbus says it will only be able to produce 12 A380s in 2008 rather than the 13 planned. In 2009, production will total 21 instead of the originally scheduled 25, and in 2010 the airframer might not be able to produce all 45 originally planned. However, Airbus says the new delays are not 'catastrophic.' Credit: Airbus S.A.S. 2007 - Photo by exm Company / H. Goussé

PARIS (AP) — Airbus on Tuesday announced new delays on deliveries of the superjumbo A380, already almost two years late, saying the company is behind schedule in switching to automated production.

The setback deals a blow to Airbus' hopes of putting the woes of its flagship superjumbo project behind it, and risks financial penalties from customers.

The European planemaker is also struggling with the weakening dollar, which is eating into profits, and the global credit crisis, which has impeded plans to sell factories.

The European aircraft maker said in a statement Tuesday that it will deliver 12 planes in 2008 instead of 13, and 21 planes in 2009 instead of 25. Executives will talk to customers about deliveries for 2010 — originally foreseen at 45 — in the coming weeks.

Airbus CEO Tom Enders said the switch from individual production of the planes to serial production is about two to three months delayed. He declined to say when Airbus will meet its goal of delivering four A380s per month, a pace the planemaker had hoped to meet in 2010.

“This is unfortunately not the first delay and as CEO of Airbus I have to say I regret this very much,“ Enders said in a conference call.

But he said the additional delays should not be compared to the problems that have so far plagued the superjumbo program.

Delays not catastrophic: Airbus

“We are not talking about a catastrophic scenario,“ he said.

A series of increasingly worrying announcements beginning June 2005 revealed missteps, technical setbacks, communication failures and financial improprieties that tarnished the planemaker's image.

Botched management of production of the 525-seat superjumbo compounded wiring difficulties and communication failures among Airbus plants in Germany and France.

As a result, the first 25 A380s are being outfitted by hand. Starting with the 26th, Airbus planned to switch to a full automated process.

The delay comes as little surprise to investors, who initially sent shares higher on Tuesday's announcement before letting them fall. Enders said last month Airbus was conducting a “major review“ of its planned delivery schedule for its A380.

“The financial impact will be negative but minor,“ Natixis analyst Olivier Brochet said of the delays. “It's not as bad as it could have been.“

Shares in Airbus' parent EADS were down 0.4 percent at euro15.67 ($24.18) in Paris afternoon trading.

The airline industry is getting used to hearing about production difficulties with new jet projects.

Boeing 787 production problems

Airbus rival Boeing Co. is dealing with delays to its long-range 787 jetliner that analysts say will cost billions of dollars. The Chicago-based planemaker has pushed back the date for delivering the first of the 787s three times.

Japan's All Nippon Airways, the first customer on the list, was supposed to receive its first jetliner this month, but that was recently rescheduled for the third quarter of 2009.

Airbus, which is owned by European Aeronautic Defence & Space Co., says total orders for the A380 stand at 192. The planemaker has delivered four A380s to Singapore Airlines so far.

It has 17 more superjumbos destined for customers including Emirates Airlines — the A380's largest client with 58 jets on order — that are in various stages of production.

“The changes in production schedules will potentially have some impact; the details of which we will need to understand from Airbus,“ Singapore Airlines, which has ordered 19 A380s, said in a statement.

Cancellations unlikely: Leahy

John Leahy, Airbus' chief salesman, said he doesn't expect any cancellations as a result of the new delays.

Enders declined to say how much the financial penalties from the additional late delivery will cost Airbus until he has spoken with customers. Combined with spiraling development costs, penalties have already wiped billions from Airbus profits.

Airbus is in the midst of a restructuring plan that would cut 10,000 jobs over four years and sell off plants in France, Germany and Britain.

The company recently announced that talks to sell three German and two French plants have failed.

Airbus is also grappling with the weak dollar, the currency in which jets are sold. Unlike its U.S. rival Boeing, many of Airbus' costs are in euros.

EADS is to release first-quarter earnings Wednesday.

Associated Press Writer Angela Charlton contributed to this report in Paris.

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