Airbus says A380 fix could hit deliveries

Planemaker Airbus warned airlines and investors on Friday of possible delivery setbacks for the world’s largest airliner in the wake of last week’s A380 engine blowout, denting its recovery from a long spate of delays.

The scale of new delays will depend on the amount of work needed to repair what Rolls-Royce identified as a problem with a single piece of the engine that forced a Qantas superjumbo to make an emergency landing last week.

Officials at Airbus, the world’s largest planemaker ahead of Boeing, said four of the double-decker aircraft were waiting to be delivered to reach the company’s official target of handing over 20 planes in 2010, double last year’s output.

Three of those aircraft already have Rolls-Royce Trent 900 engines fitted under their wings, identical to the one which disintegrated mid-air on Qantas flight 32 in the worst safety scare since the 500-seat European plane entered service in 2007.

Another two aircraft are nearly ready for delivery and might have been squeezed on to the roster for 2010 as production hits its stride following birth pangs in recent years.

Airbus said it would give priority to the job of ensuring any retrofitting of new parts required by Rolls and European safety regulators went ahead as quickly as possible. It raised question marks over deliveries especially for 2011.

“In such a situation, of course, the customer has priority, and the priority is to keep the 39 aircraft flying or back in the air as quickly as possible and I would not rule out some impact on the delivery schedule,” Airbus chief executive Tom Enders told reporters.

“I do not know how severe that would be,” he said, referring to deliveries in 2011.

The finance chief of parent Eads, Hans Peter Ring, suggested this year’s remaining deliveries could also be affected.

“It is a very recent development and is being managed on a daily and even hourly basis,” Ring told financial analysts.

Enders said he had full confidence in Rolls-Royce, whose shares rose after the company announced plans to fix the engine problem, while Eads sagged on the possible impact on deliveries.

“It is not an incident that makes us or airlines happy but I am absolutely sure, given the positive reception received so far from airlines and passengers … that the reputation of the aircraft will remain untarnished and increase in years ahead,” Enders said.

Keeping the A380 on track and lowering production costs has been a major headache for Airbus, even before last week’s Qantas scare. Eads said the cost situation on the A380 was improving.

Eads shares were down 1% to €18,81 at 1.32pm GMT.

Airbus also said it was targeting first delivery of the A350, a carbon-composite plane designed to compete with Boeing’s 787, in the second half of 2013 instead of mid-2013.

“There are continued challenges and we are more cautious,” Ring said. There was no financial impact from the move, designed to win back a margin for delays which had been used up already.

The Rolls-powered A350 is seen as crucial for Airbus as it responds to Boeing’s success in the lucrative mid-sized market.

Record output
The post mortem on the A380 emergency, and what few analysts expect to be the last delay in the future A350, took the shine off third-quarter Eads earnings which showed further signs of a sharp rebound from the aviation industry’s worst recession.

Eads raised one of its targets for 2010 operating profit by 10% to €1,1-billion after posting an 88% increase to 378-million in the third quarter. Revenue rose 18% to 11,25-billion. The group swung to a quarterly net profit of 13-million from a loss of 87-million.

Deposits on plane orders meant Eads’s cash surplus breached €10-billion ($13,6-billion) for the first time. It reiterated a search for US acquisitons and Ring said the cash pile “definitely leaves room for strategic opportunities”.

Analysts had on average forecast a €312-million quarterly operating profit and revenue of 10,82-billion.

The update came weeks after Boeing beat quarterly-profit expectations and raised forecasts, as the two aircraft giants rake in orders from the Middle East and Asia.

In a breakthrough for Airbus in Japan, Skymark, the country’s third-largest carrier, placed a provisional order for four A380s and talked of ordering 11 more.

To meet demand, Airbus said it would increase output of wide-body A330 and A340 jets to nine per month from the first quarter of 2012. It currently makes 8,5 a month. It already plans production increases of smaller A320-family aircraft.

The Toulouse-based planemaker predicted total 2010 orders of up to 500 jets, up from a previous target of over 400.

It also expected to break the 500-plane barrier for deliveries in 2010, marking a record in civil plane production.

Airbus lags rival Boeing on 2010 plane orders but remains ahead on deliveries this year. – Reuters

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