Production trouble cuts back delivery estimates for Airbus A-380 6/14/2006 12:18 AM
By Roger Yu, USA TODAY Airbus has pared back its ambitious delivery schedule for some of its first A-380s, the superjumbo that will be the world's largest passenger aircraft. The European planemaker said Tuesday that the A-380's safety certification and delivery to its launch customer, Singapore Airlines, will occur later this year as scheduled. But, because of production troubles, Airbus now projects nine deliveries in 2007, down from the 20 to 25 previously projected. The 70 jets the company now expects to deliver in 2008 and 2009 are about 10 fewer than previously expected.
Among other things, problems involve installing electrical systems and customizing orders, Airbus says. The 555-seat double-decker, which has been in development for 12 years, is the centerpiece of Airbus' strategy to compete with Chicago-based Boeing on long-haul routes connecting major international cities.
"Airbus is fully aware of the burden this industrial issue represents for the airlines who are anxious to begin operating the A-380," the jetmaker said in a statement. To address the issues, Airbus says it's re-organizing the final assembly line.
The A-380 snag comes as Airbus is also considering an expensive redesign of its proposed A-350, a model intended to more closely match the Boeing 787 Dreamliner. Airbus is looking at the redesign after criticism from customers.
This is Airbus' second major delay for the A-380. Last year, it pushed back the first delivery date by six months to the second half of 2006, drawing complaints from customers.
Repeated delays, on top of operational concerns stemming from A-380's massive size and power, could trigger cancellations, says Paul Nisbet, an aviation analyst at JSA Research. "It's amazing how they've gone from being the king of the mountain to the current state in six months to a year," he said.
Airbus is lobbying for changes in international regulations that will reduce the number of miles between the A-380 and trailing planes, Nisbet says. Because the four-engine A-380 leaves such a turbulent wake, trailing planes have to be at least 17 miles behind when cruising, or 11 miles if the jumbo jet is landing or taking off. The requirement for the current largest jet, the Boeing 747, is six miles for both.
The delay will cost Airbus money and credibility, says Richard Aboulafia, an analyst at the Teal Group. Airlines' negotiated terms for the A-380 that were "notoriously lenient," and some customers could be looking for financial compensation if their orders are delayed, he says.
But he says the bigger concern for Airbus is that a lot of engineering and cash are allocated for the A-380, while customers are increasingly looking for a smaller, medium- to long-range jet, such as Boeing's 787 Dreamliner.
"That's the real issue," he says. "These resources are needed in a far more important market segment. (The A-380) is a sideshow."
European Aeronautic Defence & Space, which owns 80% of Airbus, says the slower deliveries will result in future earnings that are lower than currently anticipated.
By Andy Pasztor and Daniel Michaels, The Wall Street Journal
The Airbus A380 airliner, already buffeted by years of production and development headaches, is likely to face a daunting challenge once it enters service next year: unprecedented operating restrictions intended to protect nearby aircraft from flying into the air turbulence churned up by the superjumbo jet.
Rules that include special flight restrictions and extra spacing could pose an immediate marketing problem for Airbus because other planes in the A380's vicinity will likely have to either slow down or wait longer to take off to allow for the additional distance. Airbus designed and marketed the $300 million plane amid promises that it would fit seamlessly into existing global air-traffic patterns.
International aviation regulators and aerodynamic experts failed again last week to reach a consensus about the extent of the safety hazards created by the A380's unusually powerful wake, according to people involved in the deliberations. Meeting behind closed doors in Montreal, a study group including U.S. and European government officials continued to disagree about permanent safeguards to ensure that turbulence created by the A380 won't affect airplanes during takeoff, cruising and landing. In extreme cases, such turbulence is capable of wrenching even a large jetliner out of control.
Without a set of permanent standards, some version of the strict interim guidelines now in effect -- requiring at least twice the normal in-flight separation when trailing the twin-deck Airbus model -- likely will stay in place until well into 2007. Barring a last-minute breakthrough, these people said, this means that the world's largest passenger aircraft is poised to begin service with significantly more-stringent separation rules than any other jet.
Airbus has touted the 555-seat A380 as "the economical solution for heavily traveled routes." But the interim guidance from the International Civil Aviation Organization calls for minimum separations of 10 nautical miles for all aircraft following a landing A380, compared with the typical five miles required when following today's largest aircraft. For aircraft flying the same route directly behind an A380 at cruising altitude, the recommended minimum spacing is tripled to 15 nautical miles. A further complication is that controller organizations previously warned they may need as long as nine months preparation time to phase in new standards.
Airbus, which is 80 percent-owned by European Aeronautic Defence & Space Co. and 20 percent-owned by Britain's BAE Systems PLC, declined to comment on the turbulence issue. Some Airbus officials recently have expressed a willingness to accept a modified version of the present standards as a first step -- with the understanding that permanent rules would follow relatively quickly. The scientific work initially was supposed to be finished around the start of this year, but verifying certain computer-modeling techniques has been especially tough.
The strength of a wake depends partly on the weight of the aircraft that produced it. Wind and weather conditions can make turbulence hard to measure accurately around airports. Turbulence levels are also particularly tough to evaluate while a jet is climbing or cruising at high altitudes.
Since the controversy erupted last year, Airbus has invested millions of dollars and months of extensive flight tests to try to demonstrate that the wake of the 500-ton A380 poses no greater potential safety threat than turbulence generated by Boeing's largest model, the 747, which weighs about 100 tons less. There haven't been any recent crashes of jetliners attributed primarily to wake encounters, though over the years some business and private planes have experienced serious incidents and even crashed after following a larger aircraft too closely near an airport.
Industry and government officials on both sides of the Atlantic increasingly predict that Airbus will be forced to accept different rules than it anticipated. Andre Auer, head of the Joint Aviation Authorities, a European umbrella group with some regulatory responsibilities, said in an interview days before last week's Montreal sessions that the interim guidelines for the A380 "are likely to stay in place until commercial service starts."
The ICAO, which issued the preliminary safety standards in November, confirmed that no final agreement has been reached. The study group is interested in "harmonizing the new specifications, whatever they may be," so they apply equally all over the world, said spokesman Denis Chagnon. He added that the study group "is working well together" and hopes to issue a report in mid-November that ICAO officials could then review.
Privately, even some Airbus officials predict the A380 temporarily may have to be put into a new air-traffic-control category, until its safety is proved in actual conditions.
The A380 has faced other head winds, including a six-month production delay. Separately, engineers were recently forced to reinforce some structural elements inside the wings after they fell short on a stress test in February.
Also Air India must be real happy it stuck with Boeing all the way. After the nasty quarrel with Airbus when deciding over the mega-plane deal, must be happy about its decision.
The new delays are caused by industrial issues only. They are mainly traceable to bottlenecks formed in the definition, manufacturing and installation of electrical systems and resulting harnesses. As testing and development advances, as well as customisation specifications from airlines are integrated, modifications of electrical systems and reworks have been necessary at section level, progressively disturbing the final assembly flow. A new organisation for the equipment of sections and a revised pacing of transfer to the final assembly line have been put in place, to absorb past inventory build-up and to deal with further mitigating factors. As a result, there are currently 15 aircraft already assembled, including the static and fatigue test frames, while production of sections for aircraft serial number 36 has started. A recent programme review has led Airbus to the conclusion that 2007 deliveries will likely be limited to nine, and that a shortfall of five to nine aircraft deliveries in 2008 and around five aircraft in 2009 could be expected, compared to initial delivery planning. The review also concluded that further actions are required to secure a ramp-up recovery in 2008 and 2009. Today, Airbus President and CEO Gustav Humbert has ordered the immediate setting up and implementation of such a recovery action plan. Airbus also announced to regularly update airlines and all stakeholders on the progress of the recovery action plan.
BBC and CNN say that Airbus' credibility will take a real knocking.
First the A350 has been scraped. Now a delayed A380 and the premium customers like SQ, Emirates and Qatar are all threatening to cancel and move to Boeing.
Malaysian Air reviewing Airbus purchase agreement Wed Jun 14, 2006 8:04 PM IST
KUALA LUMPUR (Reuters) - Malaysian Airline System Bhd said on Wednesday it was reviewing the terms of its agreement with Airbus to buy six A380s after the plane maker announced delays in delivery of the superjumbo.
"We were advised by Airbus yesterday that only nine of the A380 jets would be delivered in 2007 to its launch customers," the national carrier said in a statement.
"In view of this development, Malaysia Airlines and its holding company, Penerbangan Malaysia Bhd, are reviewing the terms of the purchase agreement to decide on the next steps," it said, without elaborating.
Airbus revealed new delays of at least six months in deliveries of its A380 on Tuesday.
PARIS (Reuters) - The French co-chief of European aerospace group EADS, Noel Forgeard, apologised for delays in the Airbus A380 aircraft programme which thrashed its stock on Wednesday but sidestepped questions over his own future.
Deeply embarrassed by extra delays to a project which he pioneered while head of Airbus, Forgeard issued an implicit warning that the EADS subsidiary must get its house in order or face tighter controls from headquarters.
"As one of the co-CEOs of EADS appointed one year ago, I am extremely sorry for all of you and the investors who have placed confidence in EADS," Forgeard said.
"I have built my entire industrial career on building confidence for shareholders. Since I have been Airbus we have never missed a projection that we gave and this announcement comes as a big blow," he told analysts in a conference call.
"We have come very suddenly and recently to an area in which the message was that there was no longer a risk but a certainty of delays in deliveries," Forgeard said.
Usually an approachable and ebullient public performer, Forgeard avoided the press on Wednesday and confined his remarks to an audience of financial analysts in a call replayed on the Internet. EADS press handlers declined requests to speak to him.
The six months of extra delays come on top of a similar setback last year and are being blamed on problems integrating the 500 km of wiring in the world's largest airliner. The huge airliner is now more than a year behind its original schedule.
...
EADS is under pressure to explain why the gloomy outlook for A380 deliveries contrasts so starkly with the company's confidence on its revised schedule, expressed as recently as May, once airlines had absorbed previous delays of six months.
Some analysts have questioned the legacy which Forgeard left his successor Gustav Humbert when he was promoted last year.
Forgeard said he and other executives had spoken in good faith on the basis of information available from Airbus at the time, but the Frenchman is closely linked to the A380 project which he championed while head of Airbus until last year.
"I think it is a shareholder decision," he said, asked if he saw a threat to his future. "We have a board of directors which has to appreciate the situation ... The aim is to find the right way forward without finger-pointing," he added.
He said EADS would not rush into management changes but took up the chance to repeat his preference for a more tightly organised EADS structure -- a proposal which split EADS's French and German shareholders during a power struggle last year.
"It is true that we face a new situation because we had no reason to believe Airbus could not handle the problem and obviously we were wrong. So either we the change the rules together with Gustav Humbert and take some measures inside the team or we change the overall scheme to be more centralised."
Cracks in the relationship between Forgeard and the first German head of Airbus emerged at the Berlin air show last month when Humbert rejected Forgeard's talk of a "growth crisis".
Humbert, who had served as Forgeard's number two, said he had always argued for better processes at the world's largest plane maker and was happy his boss had "joined the party".
The report said small changes, like moving small pieces of equipment, were affecting the system creating the need for additional adjustments in wiring. Every little change has to be recertified pushig everything below back again. Main affected are the in-flight video and the 132-channel DVD system as there is major wiring changes. Modifications of electrical systems and reworks have to be done all over again affecting assembly.
Korean Air is upset, while Air China has been told it may get its A380 in time for the Olympics. AC wants it in time for that.
FRANKFURT (MarketWatch) -- European Aeronautic Defence & Space Co NV (5730.FR) management was first told of possible delays in the delivery of the new Airbus (ABI.YY) A380 aircraft in mid-April, EADS spokesman Michael Hauger told Dow Jones Newswires Thursday. At that point, it still wasn't possible to determine the extent of the delays, Hauger added. Airbus had only indicated that there were problems bringing the mass-production process up to speed, he said.
The spokesman was reacting to questions on whether EADS Co-Chief Executive Noel Forgeard knew of the possible delivery delays when he and three of his children sold shares in the company in mid-March. According to official declarations made to the stock market regulator AMF, Forgeard exercised two tranches of his stock options at a price of EUR32.01, for a total of EUR2.5 million before commissions. The options were distributed in two programs in 2002 and 2003. In a statement March 17, three of Noel Forgeard's children reported selling 42,666 EADS shares each between March 15 and 17, for an average price of EUR32.82-a-share. All share transactions by management fully meet the company's compliance rules, the spokesman said. Members of the board had only a short period of time in which it was possible for them to trade their EADS shares, he added.
i wonder if the inevitable question will be asked..... knowing that the A380 has a MASSIVE amount riding on it........... will a mass backout by their customers be enough to send Airbus down and out of the game for atleast a few long years?
its got the entire stock of the Airbus consortium riding on it..... and it really doesnt look good for them right now.
Malaysia is now talking in terms of a traffic potential review of the A380. In other words, it might be a step towards cancellation. They have ordered 6. They now say they feel they don't need them after all.
BBC TV (June 16) says that Airbus is hinting that a futher delay cannot be ruled out.
Oh boy! Talk about rubbing salt into the wounds of Airbus. I have been saying all along that instead of fighting Boeing on multiple flanks by introducing newer and newer models, Airbus should consolidate their existing business. Focus on the timely delivery of aircrafts on order rather than coming out with fantasies....
I agree, if the A380 falls flat, Airbus is down and out. They would have to be content with playing second fiddle to Boeing by focussing on delivering A319s and A320s. The long range market looks like shifting to Boeing.
karatecatman wrote:
Malaysia is now talking in terms of a traffic potential review of the A380. In other words, it might be a step towards cancellation. They have ordered 6. They now say they feel they don't need them after all. BBC TV (June 16) says that Airbus is hinting that a futher delay cannot be ruled out. What's happening?