Airbus Raises Break-Even Point on Troubled A380 Superjumbo

Airbus now needs to sell around 420 of its A380 superjumbos to recoup the delayed program's runaway costs, the European aircraft maker's parent company EADS said Thursday.

The new figure, announced by EADS Chief Financial Officer Andreas Sperl in a presentation to analysts and investors in Hamburg, Germany, raises the A380 program's break-even point from 270 sales - the number given last year.

Airbus, a wholly owned EADS subsidiary, has so far won 159 orders for its 555-seater A380. Earlier this month, the Toulouse, France-based aircraft maker doubled the program's production delay to two years and said the holdup would wipe euro4.8 billion (US$6 billion) from EADS profit over four years.

Airbus still expects to sell over 750 of its double-decker superjumbos over the long term, according to Sperl's presentation, which was posted on the EADS Web site. But EADS cut its forecast internal rate of return for the program to 13 percent from 19 percent.

Louis Gallois, who became the fourth Airbus CEO in 16 months when he took over from Christian Streiff on Oct. 9, has warned of painful job losses and pledged to stick to his predecessor's cost-cutting targets - designed to generate euro2 billion (US$2.5 billion) in annual savings by 2010.

But Airbus has yet to spell out how it plans to achieve the cuts, amid mounting political pressure on the company to keep layoffs and plant closures to a minimum among European suppliers as well as its own operations.

In a separate presentation Thursday, senior Airbus finance official Harald Wilhelm said the company plans to centralize procurement and source more components from lower-wage countries, without giving details.

Wilhelm's presentation stressed that Airbus is "ready to address difficult social and political issues." The cost-cutting program, dubbed "Power 8," will start to bear fruit from 2008, it also said.

Shares of European Aeronautic Defence and Space Co. edged 0.2 percent lower to euro21.14 (US$26.52) in Paris.

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