Further misery for Airbus as Fedex cancels

Published on Wednesday 8 November 2006 01:52

FEDERAL Express yesterday cancelled its order for Airbus aircraft, and switched its order to rival Boeing instead, heaping more misery on the troubled European aircraft maker.

Fedex said it had cancelled its order for ten Airbus A380-800F superjumbos because of delivery delays. Instead it has ordered 15 Boeing 777 freighters - to be delivered between 2009 and 2011 - and has an option to take a further 15.

Airbus said it regretted the decision but understood Fedex's "need to urgently address capacity issues". Shares in Airbus owner EADS closed more than 3 per cent lower on the French stock exchange on the news.

"The availability and delivery timing of this aircraft, coupled with its attractive payload range and economics, make this choice the best decision for Fedex," Fedex chairman and chief executive Frederick W Smith said of the decision to swap to Boeing.

Airbus's superjumbo project has been dogged by repeated delays, which have cost senior managers their jobs and led to big customers threatening to renegotiate orders.

The problems have forced Airbus to issue three warnings of delays in the past two years.

The most recent was in October, when the firm, which has orders for 159 aircraft so far, told its customers they could face delays of up to two years. Shortly after Airbus's October announcement, Emirates - the single biggest customer with 43 planes - warned that it might cancel some of its order.

Airbus is now expecting to deliver the first aircraft to Singapore Airlines in October 2007, almost two years behind the original schedule.

As a result of the repeated hold-ups, most of Airbus's A380 customers are deep in negotiations to improve the terms on which they are buying the aircraft.

Last month, Virgin Atlantic deferred its order for four years to 2013. The British carrier is now arguing that it wants the aircraft to prove itself in commercial service for several years before it puts its own A380s into operation.