UPS cancels A380 in new blow for Airbus

By Tim Hepher and Scott Malone

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.