FedEx cancels Airbus order

Marketplace Staff Nov 7, 2006

KAI RYSSDAL: It was a tough day for the gang over at Airbus. The company’s been having problems with it’s gigantic new plane, the A380. Deliveries are running two years behind schedule. We say deliveries, advisedly. Because no planes have acutally been delivered yet. A couple of airlines have made noises about cancelling their orders. But the trouble today came from a company that carries packages, not people. FedEx canceled its order for 10 A380s. The deal was worth $2.3 billion. And to pour a little salt in the wound, Fedex then handed the contract to archrival Boeing. Marketplace’s Dan Grech has the story.

DAN GRECH: Airbus’ new A380 boasts some of the most sophisticated technology ever employed in a commercial airplane. So sophisticated, in fact, that Airbus has trouble installing the wiring for it. The French airplane maker was two years behind on its FedEx order.

Today Fedex got tired of waiting:DAVID LEARMOUNT: It’s not just slightly bad news. It is a disaster.That’s David Learmount with Flight International magazine.

LEARMOUNT: Airbus is in a mess as a business at the moment. Morale is very low. And for something like this to happen, which was a prize order at the time it won it from FedEx, is disaster.

FedEx transferred its order to the smaller Boeing 777. List price for 15 Boeing planes: $3.6 billion. Kieran Daily edits Air Transport Intelligence:

KIERAN DAILY: The catastrophe for Airbus is that in this very strong market, they are themselves in the weakest state they’ve ever been.GRECH: We know that Airbus is in trouble, but is Airbus in trouble?

DAILY: These are very resilient corporations. Because at any one time there can be an awful lot of money coming in, they have the possibility of riding out the bad times.

These bad times could get worse. Airbus had 159 orders for its new A380, including 10 from UPS. A UPS spokesman said today it hasn’t decided whether to change that order.

I’m Dan Grech for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.