Airbus Delays Delivery of A380 Again, Costs May Rise (Update5)

By Andrea Rothman

Sept. 21 (Bloomberg) -- Airbus SAS delayed its A380 superjumbo for a second time in three months as the European planemaker struggles to install the wiring on the aircraft, raising the likelihood of additional cost overruns.

``The current status is that we have not finalized the schedule of deliveries nor the financial impact of any delays,'' Airbus parent European Aeronautic, Defence & Space Co. said in a statement today. EADS said it will give more information on the status of the planes within four weeks.

Delays in production of the A380 and development of the long- range A350 have left Airbus trailing Boeing Co. in orders for the first time in five years. EADS said on June 13 that the 555-seat superjumbo was behind schedule by at least a year, reducing earnings by 2 billion euros ($2.5 billion) between 2007 and 2010.

http://www.bloomberg.com/apps/news?pid=20601100&sid=aAY_GOQ8AxzI&refer=germany

I heard new s yesterday that some of the potential customers are cancelling their orders or asking for reimbusement of deposits. This is having an economic impact on the customers as well. If this keeps up maybe Fed Ex will go with the 747-400 ER instead.;) :yes:

Airlines who have ordered A380 would be silly to cancel orders, and they will not because of two facts which the delays will not change:

1 - The A380 will eventually fly for airlines and roll off the production line at full speed.

2 - Due to the delays the airlines with orders will get them at a huge bargain.

:grouphug:

On the contrary, some airlines with small order quantities might find it convenient to avail themselves of the opportunity to be relieved - without penalty - of a burden which they had either been "forced" to order (eg. Thai) or had now find themselves in a difficult position (eg. M'sia) to carry through with the purchase. Other substantial customers like Emirates could possibly cancel part of their big orders (as a tactic, they could threaten to cancel the entire contract and then extract a disproportionally high amount of compensation for the part of the order that they did not cancel).
As for the "windfall" from the compensation, they will amount to only about 5% (or at most 10) of the purchase price; a relatively small sum which they could get from Boeing (who's really to pounce on any fallout from the fiasco) as a further discount for an alternative order of the 747-8.

Nobody (and that includes the affected customers themselves) is sure of any cancellation at the moment as the situation is still being played out.