Airbus parent EADS pounded over A380 delays

MELBOURNE/PARIS, Oct 4 (Reuters) The world's airlines were forced to review growth plans and investors hammered the shares of Airbus parent EADS today after the European planemaker announced more delays to its A380 superjumbo.

With fresh delays of a year, the world's largest airliner is now running two years behind its delivery schedule as engineers struggle to control a jinx in the wiring installation.

EADS shares plunged as much as 11.7 per cent and touched 20 euros for the first time since previous wiring snags plunged thecompany into financial and management turmoil in the summer.

By 1018 GMT, they were down 6.4 per cent at 21.15 euros, trimming EADS's market value by over a billion euros.

Debt rating agency Standard&Poor's warned it might cut its rating on EADS on the back of a profit warning and the delays.

''As the delay will disrupt the expansion strategies of a number of major airlines, the group's competitive position on wide-body aircraft could be adversely affected,'' it said.

Australia's Qantas Airways Ltd. said it was reviewing its capacity needs because of the delivery gap.

''How are we going to mount the capacity in the short-term? What does it mean in the long-term? Where do we go from here? It's all part of the review,'' Qantas executive general manager John Borghetti told Reuters.

And as airlines issued the strongest signals yet that they might cancel orders, investors fretted whether the latest bad news from Europe's rival to Boeing would be the last.

EADS is predicting a profit shortfall of 2.8 billion euros over four years on top of 2 billion euros disclosed in June and is embarking on sweeping reforms of its industrial processes spread across 16 plants in France, Germany, Britain and Spain.

The profit warning includes provision for extra penalties to airlines to compensate them for late delivery, but no more.

''This doesnt take into account any cancellations of the A380 which are still weighing on the company,'' said Ixis Securities analyst Pierre-Antony Vastra.

''The third but maybe not the last,'' said Societe Generale of the latest set of problems, noting EADS still faced potential charges over a redesign of its crucial A350 model, while there are persistent doubts over its A400M military airlifter.

AIRLINE, UNION ANGER Virgin Atlantic Airways and Dubai airline Emirates, the top customer with an order for 43 superjumbos worth 13 billion dollars at list prices, put purchases on review.

Loss-making Malaysian Airline System said it was ''very disappointed'' and called for a clear delivery plan.

Singapore Airlines, which is among the airlines with the most to lose in branding because it has the right to fly the headline-grabbing first commercial flight, also hit out.

''The delays are disappointing; all the more so because the flight test and certification programme is proceeding well, and the delays are down to production issues,'' it said.

It will not get an A380 until October next year instead of end-2006, which was already 6 months behind the first schedule.

The promised industrial shake-up at EADS, which aims to save two billion euros a year, sent tremors through Airbus's 55,000-strong workforce with unions preparing for a showdown with managers at Airbus headquarters in Toulouse today.

Any severe French job cuts would risk politicial uproar ahead of presidential elections in April and May next year.

Prime Minister Dominique de Villepin waded in to a row over maintenance job cuts at sister firm Sogerma in the summer and unemployment of 9 percent is a chronic sore in French politics.

''We've had enough now,'' said Xavier Petrachi, a CGT union official at Airbus in Toulouse. ''This plan is just to satisfy the shareholders, who are getting out anyway and abandoning the staff.

So we are calling on the governments to step in.'' The French government owns 15 per cent of EADS. DaimlerChrysler, the German car firm, and French media group Lagardere are reducing their stakes by 7.5 percentage points each to 22.5 per cent and 7.5 per cent respectively.

Daimler said it would review its own profit forecasts in light of the EADS problems.

French Finance Minister Thierry Breton said late on Tuesday he stood by EADS and called its recovery plan ''credible''.

REUTERS MS KN1830