Airbus Delays A380 -- Again

As part of a bid to lower production costs and to streamline its work flow, European aircraft manufacturer Airbus announced on Tuesday, October 3 that its superjumbo A380 would be delayed ten months longer, which will put the project 22 months behind schedule.

The A380's success is based almost solely on the interest of Emirates Airlines out of Dubai, which has ordered 45 of the planes. Should that order be cancelled due to delays the effects on the company will be catastrophic.

Both Emirates and Virgin Atlantic, which has an order for six A380s, said they were reviewing their options but considered the postponement serious. The parent company of Airbus, European Aeronautic Defence and Space, supports the budget initiative by Airbus CEO Christian Streiff who has been at the helm three months.

Steiff's eight-point plan to lower costs, preserve cash reserves, and speed both the introduction and production of new models will purportedly lower overhead for Airbus by 30 percent. Still, European Aeronautic Defence and Space lowered their projected profits through 2010 by $2.8 billion in response to the announcement.

Airbus faces stiff competition from Chicago-based Boeing with its 787 Dreamliner. The A380, when it is finally rolled out, will seat 555 passengers, making the plane with its double decks the largest passenger jet in the world. Early problems with production involved issues with the plane's 300 miles of customized wiring.

During a press conference in Paris Streiff said his plan was "not a quick turnaround program" and stood by the delayed A380, which he described as a "truly great airplane," predicting that the finished product will more than meet the expectations of customers.

Airbus has no U.S. customers for the plane and reports that no orders have been cancelled as a result of the announced delay. Still, aerospace analyst Richard Aboulafia of the Teal Group pointed to the fact that Airbus is "dangerously dependent on one customer"" and characterized the announcement as "serious."