Airbus A380 said to be safe to fly

After months of production delays and turmoil at parent company EADS, A380, the world's largest airliner, gets approved for commercial flights.
December 12 2006: 12:12 PM EST

NEW YORK (Reuters) -- The world's largest airliner, the Airbus A380 superjumbo, was declared Tuesday safe to fly commercial services, capping six years of development marred by delays in deliveries to airlines.

The European Aviation Safety Agency (EASA) and U.S. Federal Aviation Administration (FAA) gave their approval in a ceremony at the European planemaker's Toulouse headquarters.

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The CEO for Singapore Airlines talks about delays for the Airbus A380.
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"It's a great day for aviation.... The size of this aircraft is indicative of just how big dreams can be," FAA Administrator Marion Blakey said, shortly before the transatlantic safety agencies handed over "type certificates" for the plane.

With its brand-new paperwork, the 555-seat, double-decker aircraft comes of age as a mammoth addition to the world's airliner fleet despite production delays hampering deliveries. The discovery of wiring installation problems in Europe's biggest industrial project plunged Airbus parent EADS (Charts) into financial and management turmoil over the summer, slicing a quarter off the Franco-German aerospace group's market value.

Delays lead to cancelled orders
EADS continued to be haunted by the crisis on Tuesday as French police raided its offices and those of shareholder Lagardere (Charts) in a probe into alleged insider dealing.

Airbus had been due to deliver the first A380 superjumbo to Singapore Airlines this month, but the wiring installation problems pushed the delivery back to October 2007. The insider share-trading probe was launched after complaints that top managers sold shares shortly before the industrial faults were discovered. All have denied wrongdoing.

Lufthansa chooses Boeing over Airbus
Although the aircraft has passed months of flight tests in extreme conditions and impressed aviation enthusiasts the world over, successive delays and profit warnings mean deliveries are now on average two years behind schedule.

Angry airlines want penalties from Airbus. Some had launched a marketing blitz connected to the new plane, which is designed to offer luxury frills that can be customized for each airline. U.S. parcel service FedEx (Charts) became the first A380 customer to cancel an order last month, switching from the freight version of the plane to Boeing's 777. Thai Airways International said earlier this month that it would cancel its order for six A380s if talks on compensation for delayed delivery failed.

No plans to abandon superfreighter
Airbus has sold a total of 149 A380s after deducting the 10 originally ordered by FedEx. The aircraft was conceived as the A3XX in 1997, and the project was formally launched as the A380 in December 2000.

Industry sources say it cost an estimated 12 billion euros ($15.89 billion) to develop. Critics say Airbus bet on the wrong plane as Boeing (up $0.39 to $90.17, Charts) turned its back on the ultralarge market to focus on building a mid-sized twinjet for long-haul travel - the fuel-efficient 787 Dreamliner, which has notched up sales of more than 450 planes.

After a false start and doubts over funding, Airbus hit back with the development launch of a rival aircraft, the A350 XWB. That plane will cost another 10 billion euros to develop and will enter service in 2013, five years behind the 787.

Airbus bets its future on A350
Yet, Airbus says it was right to build the A380 because of rising passenger numbers and pressures on airport capacity. It predicts a market for 1,600 such planes over 20 years.

"It is an indispensable member of our portfolio," Airbus President and EADS co-Chief Executive Louis Gallois said.

The FedEx order cancellation, coupled with a decision by U.S. lessor ILFC to switch freighters to the passenger version, has left question marks over the viability of the freighter version of the A380.

UPS (Charts), which is now the only freight customer, has said it is considering its options. Airbus sales chief John Leahy said last week Airbus would build the freighter if UPS wanted it.

EADS co-Chief Executive Tom Enders said there was no need to scrap the superfreighter and there was demand for 500 cargo planes of that size in the next 20 years.