Monday May 5, 05:42 PM
EADS shares fall sharply after report of more A380 problems
PARIS (AFP) - Shares in European aerospace giant EADS (Paris: NL0000235190 - news) fell sharply on Monday after reports that its Airbus unit faces more production delays on its A380 super jumbo, the world's largest passenger aircraft.
The German business magazine Wirtschafts-Woche cited a letter by Airbus chief executive Thomas Enders to customers, together with company sources, as saying there could be additional problems on the A380 and it might not be able to deliver the 25 planes promised in 2009.
Airbus would "almost" reach this year's delivery target of 13 planes but would likely not be able to make four planes a month as planned eventually, it said.
Quality problems on components as well as requirements by airlines concerning interior design, which makes production more complex, were causing difficulities, it said.
A spokeswoman for Airbus noted that Enders had announced a fundamental review of the A380 programme and told AFP that clients had been informed of this.
The spokeswoman said that with this review in progress, it was "too early to speculate about anything at all."
Asked about how long the review would take, she said "the time needed."
In Paris, EADS shares closed down 3.82 percent at 16.38 euros. The overall French CAC 40 index slipped 0.13 percent.
At Lansbanki Kepler, analyst Pierre Boucheny said EADS shares had fallen partly in line with the market which had been set back by profit taking, and partly by the report in Wirtschaftswoche.
At Natixis, analyst Olivier Brochet said: "The announcement of a new delay in deliveries of the A380 would be a blow for the industrial credibility of the group."
Airlines including Emirates, with most A380s on order, and Lufthansa (Xetra: 823212 - news) told AFP they had not been informed of any fresh delays on their planes.
EADS, based on French and German interests, is in the middle of a massive restructuring programme involving the disposal of some production sites and the loss of 10,000 jobs following an earlier crisis over problems with production of the A380, delays in deliveries and boardroom changes.
Singapore Airlines (C6U.SI - news) was the launch customer for the A380 but got its first plane only in October, a year and a half late after delays caused by production problems.
Last month it took delivery of its fourth A380, with its other aircraft deployed on its London and Sydney routes.
Arch US rival Boeing (NYSE: BA - news) had been able to capitalise on the earlier A380 problems as it launched its own next-generation B787 Dreamliner but this project too has been hit by delays caused by the immense complexity of the design and construction process.
At the weekend, Boeing insisted that after these problems, there would be no further delay.
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