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Thu, Oct 05, 2006 - Page 10 News List

Airbus delays could be boost for Boeing

AP , SEATTLE

The inside of an Airbus A380 under construction is shown at the International Aerospace Exhibition at Berlin's Schoenefeld airport on May 17. Company officials said on Tuesday that delivery of the superjumbo will be delayed another year because of problems with the wiring. Some industry watchers said the delay could boost Boeing's chances of winning orders from frustrated Airbus customers.

PHOTO: AFP

It is unlikely that many airlines will cancel their orders for Airbus' A380, but the latest delay for the superjumbo could give rival Boeing Co a boost as it tries to win a launch customer for a larger version of its 747, industry analysts say.

Airbus SAS' majority owner, European Aeronautic Defence and Space Co, announced on Tuesday that it does not expect to deliver its first A380 until the second half of next year -- delaying the plane by another year, and prompting some airlines to consider canceling orders.

"I think this could be the tipping point -- not necessarily for those customers that have already ordered the A380, but for those who are about to order some large aircraft," said J.B. Groh, an analyst with investment firm D.A. Davidson & Co.

WIRING WOES

After a series of delays, the A380 is now two years behind its original schedule. Airbus CEO Christian Streiff said the latest snag was caused by problems with installing some 482.7km of wiring on each plane.

Despite any frustration over the delays, some analysts said A380 customers have good reason to stick with their orders, because the cost of those planes drops with every concession and fine Airbus is forced to pay.

"By the time the airlines get through extracting all the penalties and concessions out of Airbus for all of the delays ... they're going to have the cheapest damn widebody in the world. They'd be crazy to let that deal get away from them," said Scott Hamilton, a Seattle-area aviation industry analyst.

John Walsh, president of the consulting firm Walsh Aviation, also noted that some airlines have committed to flying the A380 into airports that have spent a lot of money building gates and lounges and configuring runways and taxiways to fit the enormous plane.

FEW TAKERS

It has been almost a year since Boeing announced it would begin offering customers a stretch version of the four-engine 747.

To date, the company has won 30 orders for the cargo version of the 747-8 but no major orders for the passenger version -- only one for a single plane from a customer that asked not to be identified.

Boeing is designing the 747-8 to seat about 450 passengers, but the plane could be configured to hold as many as 500 people.

The A380 will carry 555 passengers in a standard three-class configuration.

One of Boeing's advantages in the battle for jumbo jet customers is that the 747-8 is a derivative of a plane it has been building for four decades, Hamilton said, which means it could have an easier time than Airbus convincing customers it can deliver on its promises.

WAITING TIME

Nevertheless, airlines could not get any new 747 passenger planes until after late 2009, when Boeing is scheduled to deliver its first cargo 747-8s, said Tim Bader, spokesman for Boeing's 747 program.

"Airbus at least has the benefit that Boeing doesn't have a competitive product that can be a substitute for the A380 in the next two years," Hamilton said.

Some analysts suggested the A380 delays might give Boeing a freer hand to offer discounts on the 747-8, while others said Boeing is more likely to hold its ground on price, since it knows airlines will have to wait for the A380.

Richard Aboulafia, an analyst with the aviation consulting firm Teal Group, said the biggest potential benefit for Boeing is that problems with the A380 program could slow development of the mid-sized A350.

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