With the A380 hitting a major production snag leading to production and delivery time overrun, it threatens to turn into a crisis for Europes largest aircraft maker, Airbus. However, it could be music to the ears of the arch rival, Boeing.
Until
last year, Airbus, Europe's largest aircraft maker, ruled
the global aviation industry. The France-based firm had overtaken
its American rival Boeing in order numbers in 2001, and in
deliveries in 2003. And it looked all set to extend its reign
with its much hyped A380 aircraft. Indeed, A380, nicknamed
Superjumbo (for its capacity to carry over 550 passengers),
which was unveiled a year ago, was expected to give an envious
edge to Airbus over Boeing. However, as the world's largest
passenger jet developed production glitches, it is causing
serious problems for the Airbus and its parent, European Aeronautics
Defence and Space (EADS), as the delay in delivery of the
planes to clients is feared to cost the firm millions. It
is not for the first time that the firm is facing engineering
glitchesearlier, A350, which Airbus expected to compete with
Boeing's 787 Dreamliner, too had to face technical problems.
The
delay over delivery of A380 planes has already seen the parent
EADS' shares take severe drubbing on the bourses; EADS' shares
plunged by 26% after the company acknowledged that A380 production
delays would lower operating profits by a combined 2 bn euros
($2.5 bn) between 2007-2010; $625 mn each year between 2007
and 2010. "The delays, caused by difficulties in installing
electrical wiring systems, mean that some airlines now will
have to wait about a year longer than expected to receive
their planes", commented BusinessWeek recently.
Earlier, EADS announced that Airbus will deliver nine A380s
in 2007, and there will be five to nine fewer planes that
scheduled to be delivered in 2008 and five fewer in 2009.
Airbus, in a separate statement, attributed the delay of an
additional six to seven months due to "industrial issues."
"This announcement comes as a big blow", said a
shocked Noel Forgeard, former EADS' co-Chief Executive, who
as Airbus' ex-boss oversaw the A380's development, to s
in a conference call. Though Airbus has denied that there
have been no cancelations so far, s express fear that
this could nevertheless create significant problems for the
aircraft maker. Already carriers like Singapore Airlines and
Qantas have announced that they are in compensation talks
with the European aircraft maker. |
