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Airbus' A380 Costs to Grow by $1.93 Billion

December 16, 2004|From Bloomberg News

Airbus' development costs for the A380, the world's biggest passenger jet, will exceed budgets by an "alarming" 1.45 billion euros ($1.93 billion), the European Aeronautic Defense & Space Co. said Wednesday.

The program will cost about 15% more than the original $10.7-billion projected, EADS Co-Chief Executive Rainer Hertrich said in Munich. EADS owns 80% of Airbus.

"The extra costs are sizable," Hertrich said. "The numbers started to be alarming only in the course of this year." Costs rose as Airbus struggled to lower the plane's weight and meet the deadline for the first test flight in March, Hertrich said.

Airbus, which passed Boeing Co. last year to become the world's largest plane maker, expects the 555-seat A380 to help maintain that lead. The Toulouse, France-based company forecast Wednesday that airlines will need 1,902 jumbo aircraft over the next 20 years. Boeing decided against a large plane to replace its 747, concluding that demand would not be enough to justify the investment.

Airbus has 129 orders for its A380 and another 10 commitments that have yet to be signed.

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