LOSS LEADER:

Major Airbus A380 customer sending in the auditors (Reuters, October 27, 2006)

The biggest buyer of the world's largest airliner, Emirates, said Friday that it would send its own audit team to Airbus before entering talks to address the A380 superjumbo's two-year delay and the fact the plane is 5.5 tons overweight.

"We have not yet engaged with Airbus as regards not only the delay but the fact it is overweight," the president of Emirates, Tim Clark, said. [...]

Clark said that he planned to lease seven Boeing 777 planes and would hold onto them for 10 to 15 years, giving himself some insurance should there be any further delay to the A380 schedule.

Airlines angered by the delay have demanded late-delivery fees from Airbus to cover the cost of leasing other aircraft while they wait and some have threatened to cancel their orders.

Clark said that cancellation was one of many options open in the negotiations but stressed that Emirates still needed the A380.

"It will still be a hugely potent profit generator for us," he said. "They are an integral part of the Emirates expansion plan."

Emirates decided against getting two of the freighter version of the A380 and has also balked at taking delivery of the Airbus A340- 600 HGW (for high gross weight) model.

Clark said Emirates was interested in Boeing's new 747-8 Intercontinental model, the latest variant of the jumbo, which is due for passenger service in 2010.

Further blow for Airbus as Virgin delays A380 order (NICK BEVENS, 10/28/06, The Scotsman)

In a further blow to the troubled aircraft maker - owned by European group EADS - Virgin, which had ordered six of the new "super-jumbos" for delivery in 2009, now wants to delay their arrival till 2013.

There had been speculation that Virgin would ditch the A380 altogether, but the firm now wants the aircraft to prove itself in commercial service for several years before it puts its own into operation. Virgin is instead planning to extend its leases on a number of Boeing 747-400 jumbo jets to cover the delay. [...]

EADS now says it will have to sell 420 aircraft - more than half the total it hopes to sell in the entire service life of the A380 - to break even, rather than the 270 it originally estimated.

There can't still be folks so credulous as to believe they'll ever make a profit on this lemon. It's a jobs program, not an airplane company.

Posted by Orrin Judd at October 28, 2006 2:04 PM