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Fri 19 Oct 2007 04:00 AM

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Trouble for Boeing as Airbus takes off

Better late than never, I suppose.

Better late than never, I suppose. This week, under the full glare of the international media spotlight, Airbus' new A380 ‘superjumbo' will undertake its first commercial flight - and in so doing it will disprove those who feared we might never see this white elephant fly. Airbus finally delivered the first 555-seater aircraft to Singapore Airlines last week, following delays to the programme that plunged it into losses and led to a massive restructuring plan. The fiasco has also led to allegations of insider trading against managers at parent company EADS, which caused its shares to lose a quarter of their value in June 2006. The delay has cost Airbus upwards of US$8.5bn, and to meet its revised production schedule, Airbus must now hand over 13 completed planes in 2008, then four every month in 2009 and 2010.

However, now that it has finally ushered the superjumbo onto the world's runways Airbus is bullish with regards to the aircraft's potential. According to COO John Leahy, Airbus could sell more than 800 of its A380 superjumbos over the next two decades, and the manufacturer also expects to build a freighter version of the plane. Leahy expressed relief that carriers have stuck by the European manufacturer, and Middle East airlines are, naturally, hovering around the top of the list when it comes to A380 orders. Emirates Airline has placed the single largest order and other Gulf carriers including Etihad and Qatar Airways are still on the waiting list, despite the 18-month delay.

As a result Airbus appears to be headed for clearer skies - and it has not escaped industry-watchers' notice that competitor Boeing's fortunes have simultaneously hit a patch of turbulence. On September 5, Boeing formally pushed back the first test flight of its new 787 Dreamliner to mid-November or mid-December due to complications with final assembly and finalising flight-control software. Weeks later, the US manufacturer has now revealed that it is delaying initial deliveries of the Dreamliner by six months due to continued challenges in completing assembly of the first aircraft. The first Dreamliner flight is now anticipated around the end of the first quarter of 2008 - and all this despite Boeing chairman and CEO Jim McNerney, Jr publicly assuring concerned parties as recently as four weeks ago that the manufacturer would be able to deliver the first 787 next May to Japan's All Nippon Airways. Scepticism among industry observers came naturally after the first postponement; it proved to be well-founded.

Boeing, however, should not lose too much heart. The order numbers are healthy, and as long as there are no further delays the manufacturer should not slip into the same thorn bush that has bloodied Airbus. Another setback, on the other hand, would be disastrous for the US manufacturer's bottom line - and as any good Airbus exec will be able to tell you, stock prices can go down as well as up.

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