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Asian Airlines consider options after A380 delays announced

Asian Airlines consider options after A380 delays announced

Singapore Airlines, Australia's Qantas Airways and Malaysia Airlines said yesterday the latest delay in the delivery of the Airbus A380 superjumbo was disappointing and that they were assessing their options in dealing with postponement.
Singapore Airlines Ltd. was originally scheduled to be the first customer to receive the A380 in December after a previous one-year delay due to wiring problems.
Now the Southeast Asian city-state's flag carrier said it expects its first superjumbo delivery in the fourth quarter of 2007 after Airbus on Tuesday pushed back the delivery date for the third time.
Deliveries of subsequent aircraft are scheduled for 2008 and beyond.
"The delays are disappointing; all the more so because the flight test and certification program is proceeding well, and the delays are down to production issues," the carrier said. "Singapore Airlines is assessing the impact that the delays ... will have on forward capacity growth, and assessing options to mitigate the situation."
The statement said new capacity will be added to the carrier's fleet with the first of 19 Boeing 777-300ER aircraft to be delivered next month. Six such aircraft will be delivered by the end of the year.
Singapore Airlines said Airbus, based in Toulouse, France, would compensate it for the latest delay, but said the terms of the compensation were confidential.
The airline has 10 A380s on firm order and options for a further nine. The A380's largest customer is Dubai-based Emirates Airline, with 45 aircraft on order worth over US$13 billion at list prices.
The delays caused frustration among many carriers that had been counting on using jumbos on their most heavily traveled air routes.
More compensation for Qantas
Qantas' Chief Financial Officer Peter Gregg said yesterday the carrier now expects to have four of the 555-seat aircraft by August 2008 and a further seven by mid-2009.
The airline's executive general manager John Borghetti told Dow Jones Newswires that while contingencies to maintain capacity were in place to cover the initial delays, "we're also taking a step back and reviewing the whole lot in terms of what we do."
Qantas has already received compensation of A$104 million (US$77.6 million) from Airbus for the earlier delays and Borghetti confirmed it would pursue Airbus for further compensation under the terms of the contract.
Malaysia Airlines, which has ordered six jets, expressed disappointment with the delay and said it was "currently awaiting a clear delivery plan from Airbus."
"We will also consider and assess all available alternatives and options," it said.
Earlier yesterday, the 8,000-strong Malaysian Airline System Employees Union reiterated its call for the money-losing carrier to scrap the planned purchase, with the union secretary saying the airline does not need new planes and warning such huge double-decker aircraft will strain its finances and also manpower following recent layoffs.
Boeing to benefit?
Industry analysts said, however, that is was unlikely that many airlines will cancel their orders for Airbus' A380, but that the delay could give rival Boeing Co. a boost as it tries to win a launch customer for a larger version of its 747.
"I think this could be the tipping point - not necessarily for those customers that have already ordered the A380, but for those who are about to order some large aircraft," said J.B. Groh, an analyst with investment firm D.A. Davidson & Co.
Despite any frustration over the delays, some analysts said A380 customers have good reason to stick with their orders, because the cost of those planes drops with every concession and fine Airbus is forced to pay.
"By the time the airlines get through extracting all the penalties and concessions out of Airbus for all of the delays ... they're going to have the cheapest damn widebody in the world. They'd be crazy to let that deal get away from them," said Scott Hamilton, a Seattle-area aviation industry analyst.
It has been almost a year since Boeing announced it would begin offering customers a stretch version of the four-engine 747. To date, the company has won 30 orders for the cargo version of the 747-8 but no major orders for the passenger version - only one for a single plane from a customer that asked not to be identified.
Richard Aboulafia, an analyst with the aviation consulting firm Teal Group, said the biggest potential benefit for Boeing is that problems with the A380 program could slow development of the mid-sized A350.
"I think the real market change is just pushing off the prospects of a new 777 and 787 competitor," Aboulafia said. "That's where the action is."