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Airbus A380 suffers fresh blow with planned UPS freighter cancellation

Airbus A380 suffers fresh blow with planned UPS freighter cancellation

The Airbus superjumbo program suffered a major new setback Friday as UPS Inc. said it would cancel its order for 10 A380s, leaving the aircraft maker with an empty order book for the cargo version of its much-delayed flagship.
The move comes just a week after UPS, the world's largest shipping carrier, said it had agreed with Airbus to postpone its first freighter delivery until 2012 _ three years later than originally promised.
In a statement, Atlanta-based UPS said it had decided to cancel after Airbus halted work on the freighter, the A380F, to focus on meeting delivery commitments for the passenger plane.
"UPS had intended to complete an internal study of whether it could wait until 2012 for the aircraft, but now understands Airbus is diverting employees from the A380 freighter program to work on the passenger version of the plane," the company said.
"We lost confidence in their ability to meet those schedules," UPS spokesman Mark Giuffre said.
The cancellation by UPS, four months after rival FedEx Corp. also scrapped its 10-plane order, leaves Airbus with no orders for the superjumbo freighter _ dealing a new blow to its A380 program, whose two-year delay has euro5 billion (US$6.6 billion) off profit forecasts for 2006-2010.
"We respect the client's decision," Airbus spokeswoman Barbara Kracht said in response to the cancellation. "UPS is and remains a valuable and strong customer and business partner for Airbus."
The A380 program as a whole "is progressing well and in line with the new timetable, with the first delivery to the first customer in October 2007," she said, referring to launch customer Singapore Airlines _ set to become the first carrier to take paying passengers in the double-decker plane.
UPS declined to comment on whether the company was likely to order other aircraft from Airbus or turn to Chicago-based Boeing Co. to fill the gap left by the cancellations. "We're looking at our next steps," Giuffre said.
Chris Lozier, an analyst for Chicago-based Morningstar, said the cancellation is a crippling blow for the entire Airbus cargo program and a boon for Boeing.
"It almost spells the demise for that cargo business, because the alternative to the 380 is the (Boeing) 747," he said. "You would expect UPS to be at the negotiating table with Boeing right now, if not weeks ago, working out details for the 747."
Merrill Lynch analyst Ronald Epstein said the cancellation may shift market share from Airbus to its rival in the more lucrative widebody market, with demand increasing for Boeing 777s as well as the 747s. "We do believe, however, that Airbus' A330 may also be an alternative freighter option which could realize an increase share of the market," he said in a note to investors.
Boeing declined to say whether it was in talks for the UPS contract.
"While UPS is a long-standing and valued customer of ours, we do not and cannot comment on any discussions we might be having with customers," said Jim Proulx, a spokesman for Boeing's commercial airplane division in Seattle.
Atlanta-based UPS said the final cancellation decision will be formally presented to Airbus on the first date specified under an agreement reached last week that gives either party the right to terminate the order.
UPS, also known as United Parcel Service, had ordered its first 10 A380 aircraft in January 2005 for use on U.S.-Asia routes. The deal included an option to buy 10 more planes.
Shares of Airbus parent European Aeronautic Defence and Space Co. had already been tumbling on the freighter program freeze, announced late Thursday. The stock ended the day down 4 percent at euro23.63 (US$31.23) in Paris trading.
The A380 setback came as French unions called for a one-day strike next Tuesday to protest 10,000 planned job cuts and the sale or closure of six Airbus plants under the "Power8" restructuring plan unveiled by Chief Executive Louis Gallois Wednesday.
German Airbus workers may join the strike, union officials said, along with staff at other EADS facilities in both countries.
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AP Business Writers Harry Weber in Atlanta and Dave Carpenter in Chicago contributed to this report.


Updated : 2021-10-26 23:35 GMT+08:00