Wednesday, May 07, 2008
(From THE WALL STREET JOURNAL)
By Stefania Bianchi, Daniel Michaels and David Pearson
European plane maker Airbus has warned major Middle Eastern airlines that it is reviewing its ability to meet a promised schedule for deliveries of its A380 superjumbo.
United Arab Emirates-based carriers Emirates Airline and Etihad Airways said in separate statements that the unit of European Aeronautic Defence & Space Co. has informed them in writing of possible delays.
"We'll know in the next couple of weeks whether the deliveries of our A380 will be affected," Emirates President Tim Clark told Zawya Dow Jones in a phone interview after the statement was issued.
Emirates, whose order for 58 A380s makes it the world's largest customer for the plane, is depending on the 555-passenger jet to anchor its growth strategy.
Airbus CEO Thomas Enders said in Dubai last week that the company is in "a battle" to deliver the A380 to customers on time. He said that Airbus is reviewing its production plans and that the study should be completed in coming weeks.
The review aims to assess prospects for increasing production of the world's biggest passenger jetliner over the next two years. Crippling production problems in 2006 forced Airbus to halt work on new A380s. Airbus workers have since been rewiring 26 of the two-deck planes that had cables incorrectly installed.
Next year Airbus plans to finish fixing troubled A380s and start mass-producing new ones correctly. It has promised to quadruple output from around one A380 per month this year to almost four per month in 2010.
The ramp-up -- and the changeover from rewiring to steady production -- is in a "critical" phase, Airbus has told its customers. It said a major review of the transition phase is standard practice.
A big concern for Airbus is whether its suppliers can accelerate production of components fast enough, after freezing their A380 work two years ago. Airbus rival Boeing Co. has faced severe problems with its new 787 Dreamliner in part because some important suppliers have been unable to deliver parts fast enough.
"We don't know if there is an issue, but if there is one we want to head it off," an Airbus official said of the letter.
A spokesman at Airbus headquarters in France said the letter to several A380 customers "doesn't make any reference to specific delays."
Any setback to the A380 program would be a further blow to Airbus, which is under pressure to cut costs amid intense competition with Boeing and continued weakness of the U.S. dollar, the currency in which jetliners are priced. Much of Airbus's costs are in strong European currencies.
Mr. Clark at Emirates said that while he is confident that A380 deliveries expected this financial year, ending March 30, will arrive, orders from next April onward may be affected if Airbus faces delays. Emirates expects to receive as many as 10 A380s next financial year. "If this morphs into a further delay, then it would be very serious for us. We don't want to destabilize any of our plans," Mr. Clark said.
A spokesman for Abu Dhabi's Etihad told Zawya Dow Jones that the airline would face minimal impact from any delays as it has four A380s confirmed for delivery in 2013.
A spokeswoman for Qatar Airways declined to comment on whether the Doha-based carrier, which has five A380s on order, has been warned of possible delays.
A spokesman for Australian carrier Qantas Airways Ltd. declined to comment on the letter or possible delays. Qantas is slated to receive its first A380 in August, around the same time as Emirates gets its first A380.
A spokeswoman for Air France-KLM SA said its Air France unit, which is scheduled to receive its first A380 next year, hasn't received notice of possible delays. A spokesman for Deutsche Lufthansa AG, which also expects to get its first A380 next year, said the German carrier hasn't been notified of potential delays.
Airbus has booked a total of 192 firm orders for its 555-seat A380s and has commitments for an additional four.
(END) Dow Jones Newswires
07-05-08 0412GMT
