French blow hits European Airbus

The Airbus superjumbo programme suffered a major new setback today as air freight company UPS said it would cancel its order for 10 A380s, leaving the aircraft maker with an empty order book for the cargo version of its much-delayed flagship.

The move comes just a week after UPS, the world’s largest shipping carrier, said it had agreed with Airbus to postpone its first freighter delivery until 2012, three years later than originally promised.

In a statement, Atlanta-based UPS said it had decided to cancel after Airbus halted work on the freighter, the A380F, to focus on meeting delivery commitments for the passenger plane.

“UPS had intended to complete an internal study of whether it could wait until 2012 for the aircraft, but now understands Airbus is diverting employees from the A380 freighter programme to work on the passenger version of the plane,” the company said.

“We lost confidence in their ability to meet those schedules,” UPS spokesman Mark Giuffre said.

The cancellation by UPS, four months after rival FedEx Corp. also scrapped its 10-plane order, leaves Airbus with no orders for the superjumbo freighter - dealing a new blow to its A380 program, whose two-year delay has wiped £3.36bn (€5bn) off profit forecasts for 2006-2010.

“We respect the client’s decision,” Airbus spokeswoman Barbara Kracht said in response to the cancellation.

“UPS is and remains a valuable and strong customer and business partner for Airbus.”

"The A380 programme as a whole is progressing well and in line with the new timetable, with the first delivery to the first customer in October 2007,” she said, referring to launch customer Singapore Airlines, set to become the first carrier to take paying passengers in the double-decker plane.

UPS declined to comment on whether the company was likely to order other aircraft from Airbus or turn to Chicago-based Boeing Co. to fill the gap left by the cancellations.

“We’re looking at our next steps,” Giuffre said.

Boeing did not have any immediate comment Friday.

Atlanta-based UPS said the final cancellation decision will be formally presented to Airbus on the first date specified under an agreement reached last week that gives either party the right to terminate the order.

UPS, also known as United Parcel Service, had ordered its first 10 A380 aircraft in January 2005 for use on US-Asia routes. The deal included an option to buy 10 more planes.

Shares of Airbus parent European Aeronautic Defence and Space Co had already tumbled earlier in the day on the freighter programme freeze, announced late Thursday. The stock slid further after the UPS announcement, falling as much as 6.1 percent in late-afternoon Paris trading.

The A380 setback came as French unions called for a one-day strike next Tuesday to protest 10,000 planned job cuts and the sale or closure of six Airbus plants under the Power8 restructuring plan unveiled by Chief Executive Louis Gallois on Wednesday.

German Airbus workers may join the strike, union officials said, along with staff at other EADS facilities in both countries.