The bad news for Airbus is that the bad news keeps getting worse.

AIRBUS SUPERJUMBO JET NOW NEARLY TWO YEARS LATE
PARIS October 3, 2006 (AFP)

EADS ANNOUNCES BILLION-EURO LOSSES

October 3, 2006 (DW) - EADS, the parent company of the troubled Airbus concern, said on Tuesday delays in the production of the A380 super-jumbo would lead to a cumulative operating loss of 2.8 billion euros ($3.6 billion) until 2010.

... "Cost overruns and late delivery payments will result in irrecoverable expenses and a corresponding 2.8 billion euro reduction in previously expected cumulative EBIT (earnings before interest and tax before goodwill impairment and exceptional items) over the 2006 to 2010 peiod," EADS said in a statement.

... The plane that was supposed to give Airbus a leg up on its competitor Boeing has turned out instead to have put the company in a deep hole.

S&P MAY CUT EADS' DEBT RATING ON PROFIT WARNING

NEW YORK October 3, 2006 (Reuters) - Standard & Poor's on Tuesday said it may cut its rating on France-based EADS after the Airbus parent pushed back its troubled A380 superjumbo by another year and issued a new profit warning. ... The delay will cause a substantial downward revision to the group's forecast earnings and free cash flow, likely weakening key credit quality measures, S&P said.

THOUSANDS OF JOBS TO GO IN AIRBUS COST-CUTTING
October 4, 2006 (Telegraph)

FRANCE AND GERMANY ROW OVER AIRBUS JOB LOSSES
October 4, 2006 (Guardian)

VIRGIN ATLANTIC TO REVIEW A380 SUPERJUMBO ORDER

LONDON October 4, 2006 (AFX) - Virgin Atlantic said yesterday's announcement that Airbus will further delay deliveries of the A380 superjumbo has 'serious implications' for the airline's order of six planes and will review its options next week.

QANTAS, OTHER ASIAN AIRLINES REVIEW OPTIONS AFTER AIRBUS DELAY
SYDNEY October 4,2006 (MarketWatch)

AIRBUS IN A HUGE MESS
October 5, 2006 (Herald Sun)

But poor management and iffy deliveries are not the half of it. Airbus needs money. No planes, no money. Unlike real companies that are capitalized in the market, Airbus has been subsidized from EU piggybanks with favorably negotiated loans. Called loans to lull the World Trade Organization (WTO), these monies may amount to as much as $25 billion in hidden subsidies. The massive subsidy necessary to keep Airbus crawling along until it can finally deliver an airplane is sure to bring it before the WTO were the law will be on the side of Boeing.

AIRBUS: A380 DELAYS AND CUSTOMER ENDURANCE

October 4, 2006 (Stratfor) - The A380 is an airliner built by committee, which has created massive problems. The desire to spread major elements of production equitably across four countries -- France, Germany, Spain and the United Kingdom -- built major inefficiencies into the system. For example the Germans, who seem to have a certain amount of electrical-engineering savvy, let the French take responsibility for the 300 miles of wiring in each A380. Moreover, entire trucks, boats and airplanes had to be designed and constructed to transport the enormous components across national boundaries.

Airbus has already moved far into unknown business territory. Its A380 is chronically late for businesses that have built their long-range plans around its arrival. ... These matters [scil., announced delays and allegations of insider trading] were made worse that month by the complete cancellation of the A350, the airliner designed to break into the mid-size market completely dominated by the Boeing Co. Then came the announcements of more delays in early October, followed by BAE Systems' formal divestiture of its entire EADS portfolio.

Despite massive infrastructure investments in the United Kingdom for manufacturing components for the A380, the British have decided that their money [at half the expected valuation] is better off elsewhere. This should always be considered a strong warning sign. So should the fact that Airbus still has a delivery counter on the front page of its A380 Web site, diligently keeping track of 159 total orders, zero total deliveries and zero airplanes in operation.

As the current political situation stands, the world could collapse around France and President Jacques Chirac would still ensure that the A380 gets built and that Air France buys the 10 it has ordered. It is not just Airbus that has money at stake. ... The European taxpayer has much on the line. And the extremely favorable loans were predicated on delivery; so as long as delivery is delayed, Airbus has no big loan payments to make.

But a WTO battle is looming. ...

Best-case scenario: The WTO negotiations are strung along. Once the hammer falls, EADS' shareholders endure this pain until the A380 starts to be delivered and money starts to flow. But even with the current 159 orders, Airbus is only now reaching the break-even point. In the meantime, Airbus must find a way to placate its customers. Ironically, the only way it can really do this is arrange (or allow its customers to arrange) for short-term use of Boeing 747 aircraft. Still, the 747 capacity is far short of the necessary 555-853 seats. As it is, Airbus is extremely likely to lose a fifth of its customers. That more losses aren't imminent is a testament to the capability that the A380 brings to the table.

Worst case: If Nicholas Sarkozy, one of the frontrunners in French politics, takes power in France after Chirac in 2007, he could very well decide that Airbus is not worth the fight -- something of which any traditional French politician simply cannot conceive. It would be a brutal domestic battle, but Sarkozy does not have the same love for Airbus that Chirac does. He could win, and if he did, the A380 would be in very real danger of never leaving the ground again.

PFFT (What is this?): It's the management, stupid! 4 | Rayonnement français 0

the loss might be compensate by the fact (according to head of magazine "Air et Cosmos") that A380 will not have any challenger for the next 4 or 5 years.

and i don't think sarkozy will do anything against air bus, it would make him too impopular (and france is not the only country that would suffer from this stop)

M. LOL,

Airbus would have no challenger for 4-5 years if it manages to deliver its airplanes before its customers quit the A380.

Four to five years is not much of a competitive lead when one considers the 35-year dominance of the Boeing 747, which the A380 supplants.

We were also surprised to read Stratfor's assessment that the A380 might be abandoned. It is no small piece of work -- it is in a class by itself in both market and performance. But the A380 would not be the first big new thing that failed because of poor business management. Killing the A380 would immediately reduce Airbus to something more manageable, more suited to its bumbling bipolar management.

The precipitate fall of Airbus is not for lack of an innovative or quality product. Airbus has fallen on management that is clearly not up to its task. And that is a problem even bottomless EU piggybanks cannot improve.

DGB