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Airbus faces first order cancellation

07/11/2006

Troubled European aircraft manufacturer Airbus has suffered its first order cancellation.

Rather than buying ten Airbus A380 aircraft, US courier service FedEx is instead to purchase 15 Boeing 777 freighters from the rival aircraft manufacturer.

"Airbus regrets the decision made by FedEx, but we understand their need to urgently address their capacity growth," Barbara Kracht, an Airbus spokeswoman, commented.

Today's development follows news earlier today from Airbus that it plans on reducing the number of its suppliers in a bid to cut costs

The announcement comes in the wake of last month's statement by Airbus' parent company, EADS, that production of its A380 super-jumbo would be delayed by another year, wiping a further €4.8 billion (£3.2 million) off forthcoming group profits in the latest of a series of setbacks.

Responding to a report on French television yesterday, a spokesman for Airbus confirmed that the planemaker was planning to reduce the number of suppliers it uses from 3,000 to 500 as part of a move to reduce its costs.

"I can confirm the number of suppliers that will be cut, but for the time being I do not have any information on who will be cut and how the cuts will be made," the spokesman said.

According to reports, the move is part of a wider move by Airbus to reduce its annual costs by €350 million (£235 million) by 2010.

The move follows the decision by European defence and aerospace group EADS to appoint Eurocopter's Fabrice Bregier as Airbus' chief operating officer last week, in addition to employing its own finance director Hans-Peter Ring to oversee the financial operations of its troubled plane manufacturing unit.

Airbus has undergone a significant management overhaul since announcing a fresh six-month delay to its A380 project in June as a result of prosecution problems.

Just a month later, then chief executive Noel Forgeard, who also headed EADS, was forced to resign after it emerged that he sold shares in the company worth millions of euros shortly before the delay was announced.

Louis Gallois was appointed as Airbus' new chief executive last month after Foregeard's replacement Christian Streiff resigned just weeks into the job after failing to secure support from the company's board to restructure its operations in the wake of its troubles.

Gallois has said that urgent action is needed to cut costs at Airbus if it is to launch its next new plane, the long-range A350.

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