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. Last Updated: 07/27/2016

Airbus Faces Penalties Over A380 Delay

HONG KONG -- Airbus, the world's biggest maker of commercial aircraft, faces compensation demands from Singapore Airlines and Qantas because of a six-month delay in delivering its new A380 aircraft.

Singapore Airlines, scheduled to be the first carrier to fly the A380, may seek penalty payments after the first delivery was pushed back to the fourth quarter of 2006, CEO Chew Choon Seng said Wednesday in Kyoto, Japan. Qantas, Australia's biggest airline, said it would seek compensation, with delivery postponed to April 2007. Air France-KLM and Emirates also said they expected delays, although they made no comment on penalties against Airbus.

The delays, blamed on complications in fitting out the world's largest commercial plane, are a blow for Airbus, which is counting on the 555-seat A380 to maintain its sales lead over Boeing. Airbus has 144 firm orders for the A380, worth $40.3 billion at list prices of $280 million each.

"It could be more of an issue at Airbus" than at Singapore Airlines, said Chris Sanda, a Singapore-based analyst at DBS Vickers Securities, who said the carrier's stock was "fully valued." "The dynamics of the airline business won't be drastically changed because of the delay in the A380."

The A380, which will weigh as much as 569 tons when fully loaded, made its first test flight on April 27 from Toulouse, France.

Singapore Airlines, with 10 firm orders for the A380 and options for 15 more planes, was told by Airbus COO John Leahy that delivery would be late because it had underestimated the engineering complexities of the aircraft.

The airline will fly the A380 on either its Singapore-London or its Singapore-Sydney service, keeping its options open because it does not have a firm date for receiving the first aircraft, Chew said on May 11.

"If there were late deliveries, then that's between the airline and the manufacturer," Leahy said on Wednesday in a telephone interview. "All I can say is that if there was an inexcusable delay, then that is a matter for compensation."

Leahy said airlines scheduled to get the A380 after Singapore might also receive planes late. He declined to give specifics about the amounts that might be paid, adding that contracts varied from one airline to the next.

"It's very interesting to have chief executives of major airlines sit down with you privately and say, yes, they understand you might get delayed, but this plane is such a game-changer for them that it's built into their economic forecasts," said Leahy, who returned Wednesday from an airline industry conference in Japan. "They're just disappointed."

Emirates, the biggest Arab airline, which with 43 A380s on order is the single biggest customer for the plane, said that Airbus would delay the delivery of the first aircraft due in October 2006. A spokeswoman for the airline did not give any more details in a telephone interview.

Air France said it too had been told by Airbus that there will be delays. Air France had been scheduled to get its first A380 in April 2007, which it intends to use for service from Paris to New York and Montreal, said an airline spokeswoman who declined to be quoted by name. The spokeswoman said she did not know how many planes would come late and could not comment on penalties.