VARIOUS: Airbus parent EADS pounded over A380 delays

The world's airlines were forced to review growth plans and investors hammered the shares of Airbus parent EADS on Wednesday (October 4) after the European plane-maker announced more delays to its A380 superjumbo. With fresh delays of a year, the world's largest airliner is now running two years behind its delivery schedule as engineers struggle to control a jinx in the wiring installation. EADS and Airbus said they would now look for cost savings by consolidating manufacturing sites, but that triggered a nervous response as both Germany and France spoke out on protecting jobs "The major result today is that we are going to delay further, significant delays on the 380. On the other hand Christian Streiff you know, our still new Airbus CEO, his team have elaborated already a very comprehensive program for improvement in terms of cash, in terms of debit, cost cutting and also in terms of improving processes," said Airbus CEO Tom Enders. EADS shares plunged as much as 11.7 percent and touched 20 euros for the first time since previous wiring snags plunged the company into financial and management turmoil in the summer. By 1300 GMT, they were down 4.9 percent at 21.54 euros, trimming EADS' market value by nearly 1 billion euros. "The clients are certainly in an extremely difficult situation because of us and we are really very sorry for that. What we trying to do at the moment is work with them in order to compensate the loss of capacity that this represents. So all of Airbus' commercial teams are on the ground at the moment. The discussions and work sessions have been, I must say, very positive. The reactions of the clients were extremely positive. Many of them are currently suffering in order to help us, while saying 'we will discuss financial matters later, first let's do some very good work together," said Airbus CEO Christian Streiff. Debt rating agency Standard & Poor's warned it might cut its rating on EADS on the back of a profit warning and the delays. And as airlines issued the strongest signals yet that they might cancel orders, investors fretted whether the latest bad news from Europe's rival to Boeing would be the last. Australia's Qantas Airways Ltd. said it was reviewing its capacity needs because of the delivery gap. "It would be a very significant event for us to cancel those orders but we have to review our options at this stage," said Qantas Chief Financial Officer Peter Gregg. EADS is predicting a profit shortfall of 2.8 billion euros over four years on top of 2 billion euros disclosed in June and is embarking on sweeping reforms of its industrial processes spread across 16 plants in France, Germany, Britain and Spain. The profit warning includes provision for extra penalties to airlines to compensate them for late delivery, but no more. British defence firm BAE Systems won shareholder approval on Wednesday (October 4) to sell its 20 percent stake in Airbus to EADS for 2.75 billion euros (3.49 billion U.S. Dollars (USD)). EADS will pay in cash and the deal is due to close by Oct. 14. BAE flagged its intention to sell the stake in April, getting out ahead of an expected rise in costs at Airbus as it sorts out the A380 and presses on with building the A350. Dubai airline Emirates, the top A380 customer with 43 superjumbos on order worth USD 13 billion at list prices, put purchases on review. Virgin Atlantic Airways did the same, while loss-making Malaysian Airline System said it was very disappointed and called for a clear delivery plan.. Singapore Airlines, which is among the airlines with the most to lose in branding because it has the right to fly the headline-grabbing first commercial flight, also hit out saying the delays were "disappointing". It will not get an A380 until October 2007 instead of end-2006, which was already six months behind the first schedule. The promised industrial shake-up at EADS, which aims to save two billion euros a year, sent tremors through Airbus's 55,000-strong workforce with unions preparing for a showdown with managers at Airbus headquarters in Toulouse on Wednesday (October 4). Any severe French job cuts would risk political uproar ahead of presidential elections in April and May next year. Prime Minister Dominique de Villepin waded in to a row over maintenance job cuts at sister firm Sogerma in the summer and unemployment of 9 percent is a chronic sore in French politics. Villepin expressed support on Wednesday (October 4) for the management of troubled aircraft maker Airbus and its parent EADS after the company announced more delays to its A380 superjumbo. "I have full confidence in the management of Airbus, as I have in the management of EADS and its President Gallois. What we wish for is that the difficulties of today are overcome as quickly as possible, it is part of the industrial life but also part of the life," he said at a news conference. The French government owns 15 percent of EADS. DaimlerChrysler, the German car firm, and French media group Lagardere are reducing their stakes by 5 percentage points each to 22.5 percent and 7.5 percent respectively. Daimler said it would review its own profit forecasts in light of the EADS problems. French Finance Minister Thierry Breton said late on Tuesday he stood by EADS and called its recovery plan "credible".

ITN Source | October 5, 2006

Tags:. .defence. .overcome. .headquarters. .penalties. .maintenance