Posted on 06/14/2006 7:22:31 PM PDT by Paleo Conservative
BAE Systems was caught in the fall-out today after last night’s warning from Airbus that deliveries of its new A380 superjumbo had been put back.
Shares in EADS, which owns 80% of Airbus, lost around a third of their value in Paris today, while BAE was affected as investors feared it may end up with less money from the planned sale of its 20% stake in Airbus.
BAE shares were at the top of the FTSE 100 Index fallers board today with a drop of more than 3%, wiping almost £400m (€585.8m) from its market value. Engine-maker Rolls-Royce, which will benefit from contracts throughout the plane’s life, was another casualty with its shares down 2%.
In a statement last night, Airbus pledged to deliver the first 555-seat aircraft by the end of the year but added that production bottlenecks would cut deliveries of the world’s biggest passenger jet by two-thirds to nine in 2007.
EADS blamed problems in the definition, manufacturing and installation of electrical systems and wiring harnesses. It forecast potential delivery delays of six to seven months and estimated the problems could cost the company €500m a year in lost earnings between 2007 and 2010.
Virgin Atlantic, Qantas Airways and Emirates are among A380 customers, with Singapore Airlines due to receive its first delivery later this year.
Qantas, which has ordered 12 of the new planes, will hold talks with Airbus over the next two weeks to discuss the delay. It is among airlines that may seek compensation and possible short-term replacement aircraft.
BAE is in the process of negotiating a price for its 20% stake after exercising its option to sell the stake to Franco-German EADS last week.
If representatives for the two sides do not come up with an agreed figure, an independent investment bank will be asked to adjudicate.
The company said it did not expect the delivery delays to impact on the valuation process, which a spokeswoman said would be based on the “medium and long-term viability of the Airbus business”.
BAE announced its intention in April to sell its share of the Airbus business, which could be worth around £3bn (€4.4bn). The company said it believed the time was right to sell as it looks to pursue a transatlantic defence and aerospace strategy.
Around 13,000 workers are employed building wings for the Airbus, mainly at Broughton in North Wales and Filton, in Bristol.
If you want on or off my aerospace ping list, please contact me by Freep mail.
Buy American (if you call Boeing really American made any more)
Ah, the A-380--so graceful--like a manatee with wings.
One would almost think that EADS knew that they had to release some bad news about the 380 and chose this time to help drive down the price of the BAE shares.
schu
Here's a link to an article in the Independent that says BAE is alleging that. I couldn't post that article due to copyright restrictions on Free Republic.
BAE launches attack on EADS over Airbus superjumbo warningThe Independent UK
By Michael Harrison, Business Editor
Published: 15 June 2006
Paint the bloody thing safety yellow, and it's twenty school buses with wings.
My only questions are how long before the first cancellation and who's going to be the sensible soul to be at the head of the stampede to follow.
Anybody else recall the Edsel?
This deal's developing the same symptoms.
Pigs do fly!
I think the a380 passenger sales are based on anticipated parts sales. It HAS to have been TOO good deals to push this beamoth as a passenger plane.
If orders are canceled do officials get to keep the bribes?
Boeing rubbed salt in Airbus's wounds, meanwhile, by announcing a $4.5bn (£2.4bn) order from Singapore for up to 20 of its latest 787 Dreamliner jets. This brings orders for the plane to 383 from 29 customers - putting it far ahead in the market of the Airbus A350, which is having to be extensively redesigned.
I do a lot of flying. I can't wait to fly in a 787.
The new boeing 747 will take about 90% of all planned Airbus 380 planned builds.
With yellow, "School bus" Nagin wouldn't stoop to having his voters evac'd in them, next hurricane.
What's the range of an A380? Can it go from NOLA to Elbonia, non-stop?
The Brits and the Franks, the only reason they stop fighting each other is to fight the Germans. ;-)
schu
I was just watching a National Geographic special on the A380 project. What a total disaster.
The german factory where they were going to build the freighter version of the A380 spent two years in delays fighting german environmental activists who claimed the longer runway and three new buildings were going to hurt the nearby river and cause too much damage to (GET THIS!!) the way the wind moves through the nearby city.
They only have one factory building built, the runway still hasn't been lengthened, and two empty shells of iron work that were going to be the other factory buildings sit there not being able to be completed. Airbust has told these people about all the jobs gained and economic gains for the city, but its still all locked up in the courts.
Airbust is now saying they might have to move the whole operation to somewhere else.
China.
If there is an operation they would consider moving to China, it would be the A350.
Airbust knows now that Boeing was right and the 787 are the type of planes the airlines are going to want now and in the future.
China will be the largest potential buyer of commercial aircraft over the next couple decades. Airbust will be in total panic to resurrect itself. They will sell out a major portion of their operations to the Chicoms to stay alive and have factories building planes there to push sales there.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.