ATW

International Lease Finance Corp. signaled yesterday that it may cancel its order for 10 A380s and could do so without penalty because of the program's delays.Chairman and CEO Steven Udvar-Hazy told Bloomberg News that ILFC "could cancel and are considering canceling" an order valued at $3 billion. "We are not happy and on safe ground to cancel the order," he said.

Airbus announced further delays in the A380 program last week, saying backups in aircraft wiring installations would push deliveries back 6-7 months (ATWOnline, June 14). That marked the second delay in the program, and Udvar-Hazy said ILFC's 10 aircraft now will be delayed by 12-14 months. He claimed the order contract allows the leasing company to cancel without penalty if A380s are delivered more than six months late.

Airbus spokesperson Mary Anne Greczyn said that "any particulars on penalties are confidential to individual contracts" and the manufacturer cannot comment further on specific orders. "Our customers have a right to voice concerns over the current situation, and frankly, we expect them to," she said. "Though none of our customers are speaking in a vacuum. Airbus is listening, and we are doing and will continue to do all we can to minimize the discomfort for all parties involved."

Udvar-Hazy caused a stir in March when he publicly advocated that Airbus redesign the A350 (ATWOnline, March 30), of which ILFC ordered 12. Airbus has said it is considering a redesign and will unveil any changes by the Farnborough Airshow that begins July 17. The ILFC CEO told Bloomberg yesterday that unless Airbus is able to "fix" the design problems by the show, "we've got serious problems about taking the A350."

Airbus and parent EADS have been trying to temper a growing crisis since announcing the latest A380 delay last week. The French General Assembly's regular session yesterday erupted into in an angry shouting match and was suspended abruptly when Airbus's troubles were debated. The French government has a 15% stake in EADS, whose executives, particularly co-CEO Noel Forgeard, have come under intense pressure to explain the delays and the timing of their public disclosure.

by Aaron Karp

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