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New Delay Seen for Super-Jumbo Jet

Difficulties with wiring may force Airbus to yet again postpone deliveries of its A380.

October 02, 2006|From Bloomberg News

Airbus is likely to delay deliveries of its A380 super-jumbo jet for a third time and reduce costs as much as $2.5 billion by cutting jobs and shifting production, according to three people with knowledge of the plans.

The Toulouse, France-based aerospace company probably will deliver just four A380s in 2007 -- less than half the number forecast in June -- because of delays in installing wiring, said the people, who asked not to be identified.

Airbus Chief Executive Christian Streiff presented a plan Friday to the board of Airbus parent European Aeronautic, Defense & Space Co. in Amsterdam, the people said. No final decision was made.

Airbus, facing late-delivery penalties to airlines and rising costs on its A380 program, may eliminate jobs through early retirement and by moving production of its A320 jetliner to Hamburg, Germany, from Toulouse, the people said.

Delays of the A380 have angered customers and sparked the departure of two top executives, and the shares of EADS have plunged 29% this year. Airbus has beaten Boeing on total orders in each of the last five years, but trails Boeing in orders this year by 2-to-1 margin.

"The only way Airbus can get out of its current problems is by reducing costs," said Doug McVitie, managing director at Arran Aerospace, an aerospace industry consultant in Dinan, France.

"If they consolidate narrow-body planes in one location and wide-body planes in another, then you have two separate cost centers. That makes sense," McVitie said.

Louis Gallois, co-chief executive of EADS, said in an interview after EADS' board meeting Friday that directors would meet again "within a few days."

EADS said Sept. 21 that it would release details of the final delivery schedule within four weeks.

"Discussions are going on and, as announced by EADS, the company will say something in the near future," Airbus spokeswoman Barbara Kracht said. She declined to comment on figures.

"The board will continue to discuss the A380," said Michael Hauger, a spokesman for Munich, Germany-based EADS.

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