UPS cancels A380 in new blow for Airbus

PARIS/BOSTON (Reuters) - Troubled Airbus suffered its second hammerblow in a week on Friday when the last cargo customer deserted the freight version of its delayed A380 superjumbo, days after the planemaker announced 10,000 job cuts.

United Parcel Service Inc. (UPS.N) said it planned to cancel an order for 10 Airbus A380 freighters, worth approximately $3 billion at list prices, joining its rival FedEx (FDX.N) which canceled an identical order last year.

The U.S. express firms were among buyers angered by delays of up to two years in A380 deliveries, and had been the sole takers of a superfreighter version on which Airbus had pinned hopes of challenging the Boeing 747 in global airborne trade.

UPS said it was concerned that Airbus, a unit of EADS (EAD.PA), could not fill its orders in a timely manner.

UPS had already said it was delaying taking deliveries of its 10 aircraft beyond 2010 and reached agreement with Airbus last week to wait for the results of a review.

All that changed when EADS and Airbus said on Thursday the planemaker would temporarily stop working on the cargo version of the world's largest airliner in Toulouse, France.

"UPS had intended to complete an internal study of whether it could wait until 2012 for the aircraft, but now understands Airbus is diverting employees from the A380 freighter program to work on the passenger version of the plane," it said.

"Based on our previous discussions, we had felt that 2012 was a reasonable estimate of when Airbus could supply this plane," UPS president David Abney said in a statement. "We no longer are confident that Airbus can adhere to that schedule."

Airbus said it respected the decision and remained confident of delivering the first passenger plane in October.

EADS shares fell 4 percent to 23.62 euros.

The highly unusual public spat ended a dire week for Airbus, which warned on Wednesday its survival was at stake as it cut jobs and put plants up for sale, triggering union walkouts.

The leader of one of France's biggest unions said he feared there would be forced lay-offs in the Airbus restructuring plan, despite assurances from the company and the French government.

"I hear the (French) prime minister say that we have assurances there will be no forced lay-offs," CGT secretary-general Bernard Thibault told France 2 television.

"What is certain ... is that at the contracting firms the consequence will be forced lay-offs," he said.

"We know what the next stage is -- outsourcing, contracting and then moving work to low-cost countries," Thibault said.

Unions have pledged to make the job cuts, and 1,500 lay-offs at technology form Alcatel Lucent (ALU.N),, an issue in French presidential elections in April and May.

Airbus says it could reconsider whether to impose forced redundancies if its fortunes have not improved in 12-18 months.

It will sell parts or all of six of its 16 sites in France, Germany, Britain and Spain after sacrificing 5 billion euros in future profits due to delays to the A380 superjumbo.

It has also been hit by a weak dollar and the erratic development of its next model, the mid-sized A350 which it needs to compete with Boeing's (BA.N) fast-selling 787 Dreamliner.

DIALOGUE

In Germany, workers in three plants being sold in full or in part refused to work for a third day, but said they would resume from late Sunday. French unions called a strike for Tuesday.

The head of Airbus in Germany, Gerhard Puttfarcken, told the ZDF morning program that the firm was open to dialogue.

"We are at the start of the process, and it has been designed in a way to leave room for dialogue," he said.

Industry sources told Reuters on Friday that there were expressions of interest for the three German sites Varel, Laupheim and Nordenham from companies and financial firms.

On a more positive note, Germany said it did not expect delays to deliveries of the future A400M military airlifter despite the industrial crisis at Airbus.

The first 60 A400M aircraft ordered by the German army are due to be delivered and ready for use in 2010. The aircraft is seen as an integral part of European Union ambitions to develop the bloc's capacity as a global military player.

(Additional reporting by Jean-Michel Belot, Sabine Blumel, Paule Bonjean, Kerstin Doerr)