Airbus loses 10-jet UPS order
Published 9:00 pm Friday, March 2, 2007
PARIS – Airbus was left with an empty order book for the cargo version of its much-delayed superjumbo plane after UPS Inc. said Friday it would cancel an order for 10 A380s.
The move comes just a week after UPS, the world’s largest shipping carrier, and Airbus announced a revised agreement that gave either party the right to terminate the order.
In a statement, Atlanta-based UPS said it decided to cancel after it learned Airbus was diverting employees from the freighter program to work on its passenger plane program. UPS originally expected delivery of its first freighter in 2009 until Airbus ran into wiring problems last year.
“Based on our previous discussions, we had felt that 2012 was a reasonable estimate of when Airbus could supply this plane,” said David Abney, chief operating officer for UPS, in a statement.
“We no longer are confident that Airbus can adhere to that schedule.”
The announcement by UPS comes four months after rival FedEx Corp. also scrapped its 10-plane order, and leaves Airbus with no orders for the superjumbo freighter – dealing a new blow to its A380 program, whose two-year delay cut $6.6 billion off profit forecasts for 2006-2010. Airbus still has orders for passenger versions of the A380.
“We respect the client’s decision,” Airbus spokeswoman Barbara Kracht said. “UPS is and remains a valuable and strong customer and business partner for Airbus.”
The A380 program as a whole “is progressing well and in line with the new timetable, with the first delivery to the first customer in October 2007,” she said, referring to launch customer Singapore Airlines – set to become the first carrier to take paying passengers in the double-decker plane.
UPS declined to comment on whether the company was likely to order other aircraft from Airbus or turn to Chicago-based Boeing Co. to fill the gap left by the cancellations. “We’re looking at our next steps,” Giuffre said.
Chris Lozier, an analyst for Chicago-based Morningstar, said the cancellation is a crippling blow for the entire Airbus cargo program and a boon for the Boeing 747 assembled in Everett.
“It almost spells the demise for that cargo business, because the alternative to the 380 is the 747,” he said. “You would expect UPS to be at the negotiating table with Boeing right now, if not weeks ago, working out details for the 747.”
Howard Rubel of Jefferies and Co. said in a note to investors that the cancellation “effectively gives Boeing complete ownership of the very large freighter market for the foreseeable future.”
Boeing declined to say whether it was in talks for the UPS contract.
“While UPS is a longstanding and valued customer of ours, we do not and cannot comment on any discussions we might be having with customers,” said Jim Proulx, a spokesman for Boeing’s commercial airplane division in Seattle.
