Airbus Bust, Boeing Boost
Wednesday, November 8, 2006
Airbus suffered a major setback yesterday when FedEx Corp. canceled its order for 10 A380 super-jumbo jet freighters, adding to the problems faced by the European aircraft maker and its signature program.
FedEx said it would instead buy 15 freighters from Airbus's rival, Boeing Co. Terms of the Boeing deal were not disclosed. The 777 lists for about $235 million.
FedEx chief executive Frederick W. Smith said the switch was necessary to make sure the company would have enough planes to keep pace with the growing demand for delivery services.
"The availability and delivery-timing of this aircraft, coupled with its attractive payload range and economics, make this choice the best decision for FedEx," Smith said in a written statement.
The cancellation could not have come at a worse time for Airbus. The aircraft maker, which is battling Boeing for dominance in the commercial airplane market, has had substantial setbacks in the production of the super-jumbo, the largest commercial jetliner ever made.
Wiring problems have pushed back delivery of the A380 by two years and led to the departure of several top executives. The plane lists for about $300 million.
The company had taken 134 orders for passenger versions of the jet, which can seat as many 550 people, and 25 for freighter versions.
Airbus said in a written statement that it "regrets today's decision made by FedEx, but we understand the airline's need to urgently address capacity growth." An Airbus spokeswoman declined to comment further.
The A380's problems have led to talk in the aviation business that some airlines may pull their orders.
Virgin Atlantic Airways deferred delivery of its first A380s until 2013, and Emirates Airlines, the biggest A380 customer with 45 orders, said it would send a team of auditors to Airbus's home base in France to determine whether the planes would be delivered on their new schedule, according to news reports.
It is not known how FedEx's decision will affect United Parcel Service Inc.'s order for 10 A380 freighters. International Lease and Finance Corp., one of the word's biggest airplane leasing companies, has ordered five A380 freighters.
A UPS spokesman did not return a phone call seeking comment. Representatives of International Lease and Finance could not be reached.