FedEx cancels A380 orders, citing delays

[Syed A Ridhwan 0]

 

I wonder why no one posted this. It's quite a big news for us aviation enthusiast, I believe. Heard of this news yesterday morning on the radio while on my way to work. Here's a report from IHT.

 

FedEx cancels A380 orders, citing delays

 

PARIS: FedEx Corp. canceled its order for 10 Airbus A380 freighters on Tuesday and ordered Boeing planes instead, dealing a new blow to the European aircraft maker whose flagship double-decker jet has been hit by costly delays.

 

The U.S.-based delivery company announced an order for 15 Boeing Co. 777 freighters worth US$3.5 billion at catalog prices, blaming the A380 holdups for its decision — the first cancellation for the program, now two years behind schedule.

 

Shares of Airbus parent European Aeronautic Defence and Space Co. dipped sharply to end 3.1 percent lower at €20.66 (US$26.24) in Paris. Boeing's stock rose 3.9 percent to US$83.60 (€65.82) in New York.

 

FedEx Chairman and CEO Frederick W. Smith said the switch to the 777 was a "necessary and prudent" move in the face of fast-growing global demand for air cargo and express 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. The company is scheduled to take delivery of all 15 Boeing jets in 2009-2011 and has options on an additional 15.

 

The A380 cancellations leave just 15 superjumbo freighter orders on the Airbus books — from United Parcel Service Inc. and International Lease Finance Corp. — and a further 142 orders for the plane's passenger version.

 

"Airbus regrets the decision made by FedEx," spokeswoman Barbara Kracht said, "but we understand their need to urgently address their capacity growth."

 

EADS, the parent company of Airbus that is scheduled to publish third-quarter results on Wednesday, is already facing a financial crunch as it struggles to line up funding for the mid-sized A350 jet program — Airbus' belated answer to Boeing's twin-engined, fuel-efficient 787.

 

Airbus announced plans Monday to slash the number of suppliers it uses to 500 from the current 3,000, as part of a previously announced cost-cutting drive to generate €2 billion (US$2.5 billion) in annual savings by 2010. Thousands of job cuts are also expected.

 

The Toulouse, France-based jetmaker shocked investors and customers in June by announcing a second six-month delay to the A380 program — then doubled the holdup again in October. EADS warned that the overall two-year delay will wipe an estimated €4.8 billion (US$6 billion) off profits over the next four years.

 

In response, Virgin Atlantic Airways deferred delivery of the first of its A380s until 2013 and Emirates, the program's biggest customer with 45 planes on order, announced it was sending an audit team to France to make sure Airbus was able to stick to the latest delivery schedule. But Australia's Qantas Airways Ltd. increased its A380 order to 20 planes from 12.

 

Airbus has been negotiating confidential compensation deals with airlines as it fought — successfully, until now — to keep its A380 customers on board.

 

"I think they're running out of what they can give, and I think patience is running out on the customer side," said Chris Lozier, an analyst with U.S.-based Morningstar.

 

The boost to Boeing's stock has more to do with the A380's "dire straits" than with the 777 order, Lozier said.

 

The Boeing freighter — launched in mid-2005 with an order from Air France — carries a smaller payload than the A380. But FedEx said the switch would not adversely affect its operations.

 

"There are different capacities, but we believe that we have created advantages in more nonstop, point-to-point transoceanic routes that have shorter flight times but improved service offerings to FedEx customers," company spokesman Maury Lane said.

 

AP Business Writers Allison Linn in Seattle and Woody Baird in Memphis contributed to this report.

 

It's a big blow to Airbus. I won't be surprise if other airlines follow suit. I think MH should consider to cancel the order of A380 and get 773 instead.

Edited November 9, 2006 by Syed A Ridhwan

[Tamizi Hj Tamby 1]

wowowowow....FedEx is cancelling the A380 order??? What a big suprise,so to speak.

 

MH to cancel the A380 order? I don't think so The MH management had stated that they will go on with the order.But it's my POV,Who know's what will happen?

 

Thanks for the news update,Ridhwan.

[Azuddin 1]

there someting to agree and disagree about MH to cancel the A380

 

I agree because the 773ER is a already a success aircraft and the A380 is still in test until today, which not yet guaranteed.

 

I disagree because MH have to pay Airbus a big amount if cancel the order.

 

It's hard to decide.

[Andrew Ong 1]

Here is another quote from Boeing :

 

SEATTLE, Nov. 07, 2006 -- The Boeing Company [NYSE:BA] announced today that FedEx Express, a unit of FedEx Corp., has ordered 15 Boeing 777 Freighters and that the Memphis, Tenn.-based freight carrier has taken options on an additional 15 of the airplanes. Delivery of the aircraft will begin in 2009.

 

"We're looking forward to working with FedEx on this new chapter in our relationship. The 777F will have unmatched capacity for a twin-engine freighter and is a perfect complement to the existing FedEx fleet of aircraft," said Ray Conner, Boeing Commercial Airplanes vice president of Sales for the Americas.

 

The 777F, the world's longest-range twin-engine freighter, is based on the 777-200LR Worldliner (Longer Range) passenger airplane. Over the life of the 777 program, 44 customers worldwide have placed 866 orders for all versions of the 777. Since its launch in 2005, the 777 Freighter program has won orders for 38 aircraft from five customers.

 

 

And here how a FedEx 777F will look like :

[Kee Hooi Yen 0]

Send it for KUL & PEN route please

Edited November 9, 2006 by Kee Hooi Yen

[Azuddin 1]

Beautiful.

 

Hopefully herpa would release it, or i have to get back to my custom lab.

[Andrew Ong 1]

Beautiful.

 

Hopefully herpa would release it, or i have to get back to my custom lab.

 

You have a custom lab?

 

[Azuddin 1]

You have a custom lab?

 

yes i do, but haven't run for over a year. expensive customizing supply down here in malaysia.

[Ahmad Sharilamin 0]

 

-EADS has also reported a quarterly loss, mainly due to the A380 delay....

 

-The other A380 freighter orders (UPS , ILC) are also up in the air...

 

-Penalty payments due to the A350 delayed launched are also expected to reach € 800 mil in the first quarter...

 

 

 

Airbus forces EADS profits into a steep dive

 

 

· Aerospace group reports €239m loss for the quarter

· Superjumbo problems hit harder than expected

David Gow in Brussels

 

Thursday November 9, 2006

 

The Guardian

 

 

EADS laid bare the dire financial impact of delays to the Airbus A380 superjumbo yesterday when it reported a shock loss of €239m (£160m) for the third quarter.

 

Operating income at Airbus, now wholly owned by EADS, plunged from a healthy €410m to a loss of €350m -exacerbated by the euro's growing strength against the dollar.

 

So far this year the A380, the world's biggest plane, has cost EADS €1bn in charges because of a two-year delay in its delivery timetable. FedEx this week cancelled an order for 10 freighter versions of the superjumbo.

 

 

In the first nine months EADS saw earnings fall by a third from €2.1bn to €1.4bn, largely thanks to a €743m decline at Airbus. Airbus sales were up 16% at €18.6bn and insiders said the results would have been impressive but for the A380 problems.

 

The aerospace group, which is slashing €2bn a year in costs to offset the impact of the weaker dollar, had warned that the superjumbo delays would depress earnings by €4.8bn over the four years to 2010 but the immediate impact proved worse than analysts had expected.

 

Hans Peter Ring, chief financial officer at EADS and Airbus, added to the gloom by admitting that other orders for the A380 freighter - 10 from UPS and five from the leasing company ILFC - "are in the cancellation zone" and needed to be reconfirmed. The passenger version still has 142 orders, but it must sell 420 to break even.

 

Mr Ring, who refused to give a full-year forecast, said the A380 delays could add an extra €100m in charges while penalty payments for airlines that ordered the A350 wide-body jet could stretch to €800m in the final quarter. EADS also has to account in the fourth quarter for purchasing BAE System's 20% stake in Airbus.

 

"EADS financials remain sound based on good performance of the Airbus delivery programme and the helicopter, defence and space businesses," said Tom Enders and Louis Gallois, co-chief executives. "Nevertheless, the struggle to reverse the A380 problems imposes a severe burden on our financial performance." They said full-year sales would be "well above" €37bn based on a record 430 Airbus deliveries and strong performance in other divisions.

 

The group, which this week cut its component suppliers from 3,000 to 800, is widely expected to axe thousands of jobs and close or sell off several Airbus plants in mainland Europe, particularly in Germany, in order to restore profit levels. This has prompted German ministers to orchestrate moves by state banks and private investors to acquire a 7.5% stake in EADS being sold by DaimlerChrysler.

 

Shares in the group rose 2% on market rumours that Dubai, home of Emirates, the A380's biggest customer with 43 orders, could take a holding.

 

 

[Pieter C. 5]

I wonder why no one posted this. It's quite a big news for us aviation enthusiast, I believe.

 

Look at this and, especially, post 112:

 

http://www.malaysianwings.com/forum/index....3612&st=100

 

[Seth K 3]

Next on the List....UPS and ILFC** Another truck of beer to the Boing Field

 

** Base on assumption

 

but UPS one still doubtful, the freighter of A380 won't make any good impact on freighter world.

Edited November 9, 2006 by Seth K

[Mohd Idham 0]

I wonder why no one posted this.

 

Why, you wait others to post...???

 

Well, you are MW member also, sharing the latest news is a must...

[Syed A Ridhwan 0]

Look at this and, especially, post 112:

 

http://www.malaysianwings.com/forum/index....3612&st=100

 

 

Whoops! Must have overlooked it! Sorry Can delete this thread if you want.

 

[Pieter C. 5]

EADS Sees Need For Airbus A380 Freighter

 

December 5, 2006

EADS co-Chief Executive Tom Enders said there was no need to scrap the freighter version of the Airbus A380 superjumbo even though it now only has one customer.

 

There is demand for 500 cargo planes of that size in the next 20 years, Enders told journalists in comments embargoed until Tuesday.

 

Airbus said on Monday that International Lease Finance Corporation, the world's largest aircraft leasing firm, had switched its order for five freighter versions of the A380 to passenger models.

 

This came after package delivery firm FedEx scrapped its order for 10 A380 freighters last month and switched to Boeing 777s, leaving FedEx rival UPS as the only customer for the A380 freighter, with 10 orders.

 

Enders described 2006 as an "annus horribilis" for EADS after production problems with the A380 led to two-year delays to the program and a EUR4.8 billion (USD$6.4 billion) shortfall in future profits. The woes also attracted the attention of the governments of the Franco-German company.

 

But Enders said he expected the German government's plan for a German consortium to take part of carmaker DaimlerChrysler's 22.5 percent stake in EADS to succeed. Daimler wants to reduce it to 15 percent.

 

He reiterated that European planemaker Airbus would deliver 430 aircraft this year, with a further rise in deliveries expected next year.

 

(Reuters)