Bloomberg News

Airbus A380 Cracks to Cost ‘Quite Some Money,’ Won’t Hurt Orders

February 15, 2012

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Feb. 15 (Bloomberg) -- Airbus SAS predicted it will sell 30 A380 superjumbos this year, more than in 2011, even after the double-decker planes developed wing cracks that its chief executive officer said will cost “quite some money” to fix.

The 69 A380s operated by airlines including Qantas Airways Ltd. and Emirates are safe to fly, Airbus CEO Tom Enders reiterated today. The planemaker is hurrying to fix aircraft and manufacturing processes as its sales and marketing departments line up new customers, he said at the Singapore Airshow.

Qantas and Singapore Airlines Ltd. are among carriers that had to repair A380s after fissures were found in parts used to support wings. Europe’s air safety regulator ordered that all A380s be inspected for cracks after a certain number of flights. Airbus says the cracks come from faulty manufacturing processes and materials that are being re-engineered.

“We made the mistake and we are making repairs very fast,” Enders told journalists at a briefing. “It will cost quite some money. We can’t disclose definite numbers. It’s unfortunate that this happened.”

Airbus predicted it will sell more A380s this year than last, when it took orders for 19 of the planes from customers including Japan’s Skymark Airlines Inc. and Cologne, Germany- based Deutsche Lufthansa AG.

Sales Push

“I think we will have 30,” John Leahy, chief operating officer for commercial issues, said in an interview today in Singapore. “I want my people to go out and replenish the order book.”

Airbus has won orders for 253 A380s from 19 customers. That compares with more than 1,500 Boeing Co. 747 jumbo jets, which debuted in the late 1960s and dominated the market for very large commercial aircraft for decades.

Airbus won orders for 32 of the double-deckers in 2010, including 30 from Emirates, which has ordered 90 A380s, making it by far the biggest customer.

The planemaker delivered 26 A380s last year and aims to hand over about 30 this year, Enders said, as it pushes the production rate from two a month toward three a month.

Airbus will bear the cost of inspecting all A380s in service and repairing them. Airlines may also seek compensation for leasing planes to compensate for A380s that are temporarily out of service for inspections or repairs.

The faults may cost the planemaker’s parent, European Aeronautic, Defence & Space Co., as much as 100 million euros ($132 million), Spiegel magazine reported this month, citing people it didn’t identify, including Airbus officials. Airbus and EADS have declined to comment on that figure, saying they’ll give an update March 8 with EADS’s annual results.

--With assistance from Jasmine Wang, Anand Menon and Haslinda Amin in Singapore and Karolina Miziolek in Hong Kong. Editors: David Risser, Benedikt Kammel

To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net; Andrea Rothman in Toulouse at aerothman@bloomberg.net


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