Airbus encounters A350 wing drilling problems

FARNBOROUGH, England Wed Jul 11, 2012 6:27pm EDT

1 of 12. A model of an Airbus A350 passenger plane is displayed at a news conference in Hong Kong, March 7, 2011.

Credit: Reuters/Bobby Yip

FARNBOROUGH, England (Reuters) - Airbus has encountered problems in drilling holes in the wings on its new A350 passenger jet, helping to drive shares in parent EADS down on Wednesday as analysts reported signals that the glitches were taking longer than expected to resolve.

An Airbus spokeswoman quoted Didier Evrard, the head of the A350 programme, as saying on Wednesday there had been a delay of about four weeks in sorting out software for the robot at Broughton, Wales, that will drill the wings for the A350.

"The A350 final assembly is progressing well, but there are some problems in drilling holes in the wing (to fasten the skins to the structure), which is taking longer than expected," UBS analysts said in a research note.

"It is not possible to quantify the impact of these delays but we believe them to be well within our base assumption of a 1 year delay and a 1 billion euro (1.25 euros per share) overrun".

Airbus's chief operating officer reiterated the schedule for the A350 can be achieved but remains tight.

"I would say that with the A350 we have made great progress. We delivered (sections of the first test aircraft) as promised to the final assembly line. The overall timing of our commitment is still doable, but challenging," Gunter Butschek told Reuters in an interview at the Farnborough Airshow.

However some analysts expressed concerns that the wing drilling problems could lead to financial charges, whose timing could depend on whether they had yet been quantified.

Shares in Airbus parent EADS fell 4.7 percent after rising 16.9 percent so far this year.

"EADS stock has mainly been falling today because of concerns that there may be a charge in the second quarter," said Nick Cunningham, aerospace analyst at UK-based Agency Partners.

An EADS spokesman confirmed that analyst briefings had taken place during this week's Farnborough Airshow.

NERVOUS INVESTORS

The A350 is a carbon-composite passenger jet being developed to compete with Boeing's 787 Dreamliner, the first airliner built mainly with such lightweight alternative materials.

The Dreamliner ran into a series of delays lasting a total of three years including one related to the wing development.

The first A350 was originally due to be delivered in mid-2013 before the schedule was moved to mid-2014.

Airbus CEO Fabrice Bregier said on Tuesday the assembly process had started for the A350, but there were some areas that needed working out.

"This is normal. We will progressively move next year to first flight," he said at the Farnborough Airshow.

Airbus said it continued to watch the A350 closely.

"In all-new development programs there is always a risk. We are continuously monitoring the program as we progress," chief spokesman Stefan Schaffrath said.

Bloomberg meanwhile quoted Airbus sales chief John Leahy as saying it would be a "stretch" to reach its target for 30 A380 superjumbo orders this year.

Several analysts said they had already factored in a lower forecast of 26-27 orders for the world's largest passenger jet following problems with wing cracks, but analysts said investors were feeling skittish as the recent order boom slows down, evidenced by a dearth of significant surprises at Farnborough.

"To us this is the latest example of general investor nervousness, with particular emphasis being given to negative aerospace comments or developments ... with positive news (big 737 MAX orders, continued resilient global airline traffic, lower oil price etc) having less of an impact," said RBC Capital Markets analyst Rob Stallard in a note.

(Editing by Mark Potter)

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Comments (2)
SteveMD2 wrote:
tegh boeeing successes are great news. Boeing is America’s largest financial exporter

One of the few big businesses where they are helping us re the trade deficit.

While the 1 % whjo control most big corporations are shipping jobs overseas by the millions.

Back in 2007, I visited my daughter in Ohio. the industrial heartland of America would well be described as a desert with empty large mfg buildings.

Jul 11, 2012 3:07pm EDT  --  Report as abuse
bill1942 wrote:
They cannot drill their wings correctly. Their wings crack. Their instruments give false readings. People die. Airbus builds crappy planes!

Jul 11, 2012 7:30pm EDT  --  Report as abuse
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