India's Kingfisher won compensation from Airbus over A380 delay

[S V Choong 4]

空巴延交超級巨無霸 賠印航鉅款

2006/10/06, 週五

 

 

歐洲空中巴士未能如期付運A380型客機給印度翠鳥航空，賠償10億盧布(2,200萬美元)。

 

 

印度大型釀酒集團UB旗下翠鳥航空，2005年向空巴訂購五架"超級巨無霸"，是全球16家航空公司購入A380客機的唯一印資。近日，空巴向印資證實需要押後一年至2011年，才能付運首家客機。翠鳥航空表示仍末悉賠款是否以現金支付。

 

 

空巴母公司歐洲航空防務和航天公司(EADS)，寄予厚望容納555座位的雙層"超級巨無霸"，會擊退美國波音747客機，可惜再三推遲付運令集團聲譽受損，訂單流失給對手。

 

 

空巴延交客機觸發賠償潮，馬航、新航等亞洲客戶也提出索償。據悉，新航追討3億新元賠款。

 

Sorry guys, I can't seemed to find the English version. So I am doing a quick translation covering some of the most important points.

 

06 OCT 2006

 

Airbus will make compensation of 1 billion Rupee (22 million) to India's Kingfisher Airlines over the delays in delivering the super giant Airbus A380-800.

 

In 2005, Kingfisher's parent company UB Group, an India's beer brewing company, ordered 5x A380-800. Kingfisher is also the only Indian airline to operate the Super giant out of the 16 airlines who placed orders for the A380. Airbus had recently announced that Kingfisher is likely to receive their first A380 in 2011, a delay of one year from the original agreed date. Kingfisher, however, has not told the news whether the sum of compensation will be paid for by cash or by other means.

 

Airbus' parent company European Aerospace Defence and Space company (EADS) had placed high hope that the 555 seater A380 will eventually replace the US made Boeing 747, however the latest series of delay had been a major disappointment and is set to lose orders to their rival, The Boeing Company.

 

The latest delay had sparked a series of compensation from Malaysia Airlines and Singapore Airlines in Asia. According to an insider source, Singapore Airlines is seeking SGD $300 million in compensation.

Edited October 7, 2006 by S V Choong

[Seth K 3]

By judging thru the amount of compensation...........hmmm, the question is, does A380 program worth every penny?

Edited October 7, 2006 by Seth K

[Chan CS 0]

Mind I ask a question? Isn't that once there is delay, the Airbus will pay compensation to every airline? Isn't that stated in the contract?

[Pieter C. 5]

Another airline seeking compensation:

 

October 9, 2006

Virgin Atlantic will seek more than more than GBP20 million (USD$37.4 million) in compensation from Airbus for delays in deliveries of the A380 superjumbo, a source familiar with the situation said on Monday.

 

Virgin, half owned by billionaire Richard Branson, was seeking compensation for expected delays in deliveries of the six A380s it has ordered, the source said, confirming UK newspaper reports.

 

Virgin's board meets on October 12 to review its options on the A380. The airline said last week the delays had "serious implications".

 

(Reuters)

 

[Tony 1]

Mind I ask a question? Isn't that once there is delay, the Airbus will pay compensation to every airline? Isn't that stated in the contract?

Imagine having spent millions of dollars on a car, and you've planned where to drive the car to, what to do with it, installed aircon in your garage to preserve the car etc etc. Now the manufacturer rings you up and say "Sorry, it's delayed". Will you not ask for compensation?

 

I believe it's stated in the contract (compensation). Maybe airlines are asking for more or maybe they want to negotiate the amount compensated?

[Sandeep G 1]

I have a feeling that Airbus may be a solid contributor towards MAS' earnings this year hehehe, although, the compensation is recievied in lump sum or as a discount on the aircraft they have ordered???? What are the tax implications of such "compensation".....

 

Any corporate tax lawyers amongst us care to explain?

[Tony 1]

I have a feeling that Airbus may be a solid contributor towards MAS' earnings this year hehehe, although, the compensation is recievied in lump sum or as a discount on the aircraft they have ordered???? What are the tax implications of such "compensation".....

 

Any corporate tax lawyers amongst us care to explain?

Far as I'm aware, paid in lump sum. QF accounted 1.4M in its recent annual report.

 

Tax-wise, no idea.

[Sandeep G 1]

yup, I already see analysts rethinking MHs forecast earnings! looks to be higher

 

But, aside from compensation, they have been doing moderately well in the way of pulling monthly profits, so final year shouldn't be too shabby or far off their estimates in the BTP.

[Pieter C. 5]

Some other Kingfisher 'news' from a KL standpoint:

 

New Indian Business Partner

 

On October 1, KL entered into an interline agreement and a multilateral Special Prorate Agreement (SPA) with Kingfisher Airlines from India (2-letter code IT), joining our earlier Indian SPA partners Jet Airways, Indian Airlines and Air Sahara.

Kingfisher is one of the new airlines operating domestic routes in this emerging market and aims to become a major player. Our new partner offers good service for a good price.

Or as they say it: Kingfisher doesn’t just offer a means of transportation—they sell a travel experience.

The sectors covered in the multilateral SPA can be issued on KL, AF, KQ and NW ticket stock.

 

Kingfisher Airlines is part of the Kingfisher Beer company, one of the largest breweries in India.

 

 

[Sandeep G 1]

From Heineken to Kingfisher, between Continental Europe and the Sub-Continent, your Beer and your travel is covered!

Edited October 12, 2006 by Sandeep G

[Min Chun 0]

Airbus starts to loss before gain/earn..

Edited October 12, 2006 by Min Chun

[Sandeep G 1]

Airbus starts to loss before gain/earn..

 

To be fair, the project was always very ambitious and maybe in hindsight, they could have done things better but that's the case for almost anything in life. So maybe there earnings will dwindle, but in the long run, they won't sit back and let all their years of hard work go to waste.. we might be seeing the beginnings of one of the worlds greatest corporate turnarounds... or collapses... we wait and see!

[Pieter C. 5]

More Kingfisher news, not in a positive way:

 

Kingfisher Airlines posted a INR1.07 billion ($23.9 million) loss for the first six months of its fiscal year ended Sept. 30, The Economic Times reported. CEO Vijay Mallya said Indian LCCs are undercutting the market by offering low fares from which even the LCCs cannot earn profits. He has complained formally to India's Directorate General of Civil Aviation, writing in a letter to the agency that the fares are "not sustainable" and that "cash losses will only keep mounting."

 

Get your act together i.s.o. complain to the DGCA...why did he order 380's in the 1st place ???

[Seth K 3]

More Kingfisher news, not in a positive way:

 

Kingfisher Airlines posted a INR1.07 billion ($23.9 million) loss for the first six months of its fiscal year ended Sept. 30, The Economic Times reported. CEO Vijay Mallya said Indian LCCs are undercutting the market by offering low fares from which even the LCCs cannot earn profits. He has complained formally to India's Directorate General of Civil Aviation, writing in a letter to the agency that the fares are "not sustainable" and that "cash losses will only keep mounting."

 

Get your act together i.s.o. complain to the DGCA...why did he order 380's in the 1st place ???

Agree with you Pieter, no one thought Kingfisher will order A380! 22M compensation have to return back.......I think Kingfisher need to start from bottom. I heard the breakeven for A380 is 450+, can Airbus make that far?

Edited December 1, 2006 by Seth K

[Tony 1]

Agree with you Pieter, no one thought Kingfisher will order A380! 22M compensation have to return back.......I think Kingfisher need to start from bottom. I heard the breakeven for A380 is 450+, can Airbus make that far?

Agree. Kingfisher should have opted for something smaller - but can cover the range of its network.

 

Breakeven for A380 is indeed 450+, it's got less than 200 orders at the moment. It won't reach the breakeven point NOW, but in the years to come - it's just a matter of HOW MANY years...

[KK Lee 5]

 

From the experience of A380, may be airline should order more A350 from Airbus and expect compensation from Airbus. A easy way for airline to generate profit.

 

[Sandeep G 1]

Vijay has big green eyes! And India as has been posted before is an overly saturated market - hence why carriers like AirAsia have yet to venture into this "massive" market.