EADS Says A380 Jet to Be Delayed a Year

In a statement issued after its second board meeting in four days, EADS said the latest delays will cut an extra 2.8 billion euros ($3.6 billion) off operating profit and announced a restructuring plan to cut costs and boost productivity at Airbus.

In June, Airbus had already slashed its delivery targets to nine planes from 25 in 2007; to 28 from 35 in 2008; and to 40 from 45 in 2009. EADS further reduced those forecasts Tuesday, pledging 13 deliveries in 2008 and 25 in 2009.

The defense group confirmed that it now expects to make a loss on some of the Airbus A380 sales contracts, warning of a 600 million euros ($760 million) charge this year to cover those losses. The A380 program will not generate positive operating earnings until 2010, EADS predicted.

The ripple effect of the fresh A380 delay is likely to hurt the group's industrial shareholders and to benefit U.S. rival Boeing Co., which is developing a 400- to 500-seat version of its 747 jumbo to compete with the A380.

German automaker DaimlerChrysler AG - which owns 22.5 percent of EADS - said it will review its own operating profit guidance as a result of the Airbus problems. Shares of Boeing rose $1.81, or 2.3 percent, to close at $81.78 on the New York Stock Exchange.

EADS also announced the launch of a new cost-cutting program to counter the impact of A380 delays as well as the weaker dollar and growing competition from Boeing. EADS gave few details of the plan but said it aims to generate annual cost savings of 2 billion euros ($2.6 billion) from 2010.

Management oversight of Airbus is also being tightened up at EADS - expected soon to buy the 20 percent of the aircraft maker that it does not already own from Britain's BAE Systems PLC. BAE shareholders vote Wednesday on a management recommendation to go ahead with the 2.75 billion euro ($3.5 billion) sale.

Shares in European Aeronautic Defence and Space Co., which had fallen recently in anticipation of the A380 delays, closed 1.1 percent higher at 22.65 euros ($28.85) in Paris before the company's statement, but after those issued by Emirates and Lufthansa.


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