Troubled Airbus jet could be bargain for airlines

The biggest financial crisis in Airbus’ 36-year history could be a boon to commercial airlines.

After breaking its delivery dates three times on its super-jumbo A380 jet, Airbus sales executives are courting customers all over again to keep them from dumping the new model.

Even though the plane is overweight and wrought with production snafus, some industry insiders say airlines should think twice before sending the superjumbo packing.

If they’re patient and don’t urgently need the airplanes, airlines could end up getting "the deal of the century," one analyst said.

“Airbus has to go to every customer hat in hand, get down on their knees and say, What can I do to make it right?’’ said Edmund Greenslet, publisher of Airline Monitor, a trade publication. “One way to make it right is to make it cheaper.”

In the meantime, A380 customers, many of whom already received 30 to 40 percent discounts for being the first to sign up for the 555-seat "cruise ship of the skies," are demanding financial compensation for three rounds of delivery delays since June 2005.

In just 19 months, the giant, double-decker passenger plane has gone from being Europe’s crowning engineering achievement to what some view as a white elephant that is two years behind schedule and expected to cost the company billions in lost profits.

“My advice to airlines would be don’t bail out. Stay on board and use your leverage to get all the bells and whistles you want for free,’’ Greenslet said.

Aviation consultant Scott Hamilton agrees, saying airlines would be crazy to cancel A380 orders today.

“By the time the airlines get through raking Airbus over the coals, we wouldn’t be the least bit surprised if the launch-order A380 pricing wound up being in the $100 million range,’’ Hamilton wrote in a recent report to clients. “Getting the A380 for this little amount would be the deal of the century.’’

The A380 has a list price of $300 million, although airlines rarely pay the list price for new aircraft.

While deep discounts are expected on the A380, not all airlines can afford to wait it out, noted Forecast International aerospace analyst Raymond Jaworowski.

FedEx Corp., one of Airbus’s most loyal customers, this week canceled its order for 10 of the A380 freighter models because of the delivery delays. It turned to rival Boeing Co. for 15 Boeing 777s because they could be delivered more quickly. The 777 has a list price of  $178 million to $240 million, depending on the version.

Airbus’ 15 remaining freighter orders — 10 from United Parcel Service Inc. and five from International Lease Finance Corp. — still need to be “reconfirmed’’ and are in the “cancellation zone,’’ according to executives from Airbus' parent, European Aeronautic Defense and Space Co.

UPS and ILFC reportedly are holding onto their orders while they weigh their options with Airbus, which has blamed wiring difficulties for its production delays.

MORE FROM AVIATION

Aviation Section Front

Continental charged in Concorde crash Airline pilots brace for more downsizing Airlines hedge against soaring fuel costs Airlines to pay $504M in price-fixing scam Delta, Northwest pilots agree on joint contract United Airlines cutting 950 pilot jobs Japan Airlines plans biofuel test flight Boeing finishes powering up 787 Continental and United settle for an alliance Passengers sue to stop Delta-Northwest merger Aviation Section Front   Add Aviation headlines to your news reader: