March 3, 2007 in Business

UPS cancels Airbus deal

Associated Press The Spokesman-Review
Associated Press photo

Chinese look on as an Airbus A380 flies overhead before landing at Beijing airport last year. UPS Inc., the world’s largest shipping carrier, said Friday it will cancel its order for 10 Airbus A380 freighters, following delivery delays. The decision will leave the European aircraft manufacturer with no firm orders for its jumbo freighter.
(Full-size photo)

PARIS — The Airbus superjumbo program suffered a major new setback Friday as UPS Inc. said it would cancel its order for 10 A380s, leaving the aircraft maker with an empty order book for the cargo version of its much-delayed flagship.

The move comes just a week after UPS, the world’s largest shipping carrier, and Airbus announced a revised agreement that gave either party the right to terminate the order.

In a statement, Atlanta-based UPS said it decided to cancel after it learned Airbus was diverting employees from the freighter program to work on its passenger plane program.

UPS said the final cancellation decision will be formally presented to Airbus on the first date specified under last week’s agreement.

“We lost confidence in their ability to meet those schedules,” UPS spokesman Mark Giuffre said of the A380F agreement with Airbus.

The announcement by UPS comes four months after rival FedEx Corp. also scrapped its 10-plane order, and leaves Airbus with no orders for the superjumbo freighter — dealing a new blow to its A380 program, whose two-year delay has 5 billion euros ($6.6 billion) off profit forecasts for 2006-2010.

“We respect the client’s decision,” Airbus spokeswoman Barbara Kracht said in response to the cancellation. “UPS is and remains a valuable and strong customer and business partner for Airbus.”

The A380 program as a whole “is progressing well and in line with the new timetable, with the first delivery to the first customer in October 2007,” she said, referring to launch customer Singapore Airlines — set to become the first carrier to take paying passengers in the double-decker plane.

UPS declined to comment on whether the company was likely to order other aircraft from Airbus or turn to Chicago-based Boeing Co. to fill the gap left by the cancellations. “We’re looking at our next steps,” Giuffre said.

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