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Thu, Jun 22, 2006

ILFC Hints It May Cancel A380 Orders

Others Say They'll Stick It Out

That scratching sound you hear coming from Toulouse may very well be Airbus sales managers scrambling to hold onto a $3 billion order for the manufacturer's upcoming A380 superjumbo jet.

In the wake of last week's reported delay in the A380 program -- and a potential scandal involving stock sales by management at parent company EADS -- aircraft leasing company International Lease Finance Corp is hinting it may cancel its mega-euro order for 10 of the mega-sized jets.

"We could cancel, and are considering canceling, all or some of our A380 order," ILFC Chief Executive Steven Udvar-Hazy (right) told Bloomberg News. "We are not happy and on safe ground to cancel the order."

Udvar-Hazy added a large factor in its decision is the expected 12-14 month delay in receiving the leasing company's first plane.

Despite the ILFC chief's strong words, however, at least analyst believes that in the end, the lessor will keep its orders for the A380.

"Hazy won't cancel," said Scott Hamilton, an aviation analyst for Seattle, WA-based Leeham. "Though I bet he renegotiates the A380 price way down."

As you may recall, Udvar-Havy's comments earlier this year about Airbus' upcoming A350 medium-size airliner also led to the European consortium to rethink its plan for the Boeing 787-competitor.

UPS, Emirates Remain Committed To Program

However, it's not all doom and gloom for Airbus... as it has received assurances from two of its biggest A380 customers that they will stick by the company, and the plane.

Arab carrier Emirates... Airbus's largest customer for the A380... says it will not cancel its orders for 45 of the mammoth planes, despite what others may be doing.

"We are not considering canceling our A380 order even though we have the ability to do so," said Maurice Flanagan, vice chairman of the Dubai-based carrier. "We don't think further delays are likely."

And freight hauler UPS says it is also committed to its 10 A380s... and furthermore, that it will not seek additional compensation from Airbus as it has received assurances that its freighter variants of the A380 will not be delayed.

The wiring delay only affects the passenger-carrying models of the A380.

FMI: www.airbus.com

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