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UPS follows FedEx in canceling A380 freighter orders

In November of last year, DailyTech reported that FedEx cancelled its order for 10 A380-800F freighters and instead went with 15 Boeing 777s. The cancellation notice left UPS as the sole customer for Airbus' A380-800F.

Today, we learn that UPS has also decided to back out and abandon the A380-800F. "Based on our previous discussions, we had felt that 2012 was a reasonable estimate of when Airbus could supply this plane," said UPS president David Abney. "We no longer are confident that Airbus can adhere to that schedule."

UPS had 10 planes on order with the option to purchase 10 additional planes from Airbus, but it looks as though Boeing's 747 may be the next best alternative for the shipping company. "It almost spells the demise for that cargo business, because the alternative to the 380 is the (Boeing) 747," said Chris Lozier, an analyst for Morningstar. "You would expect UPS to be at the negotiating table with Boeing right now, if not weeks ago, working out details for the 747."

The news comes just a week after Airbus announced that it was cutting 10,000 jobs. In addition, French unions plan to strike next week in response to the job cuts and German Airbus workers may also join in.

Airbus' A380 program has been plagued with number setbacks, most notably due to problems wiring the large aircraft.

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RE: Subsidies
By nanokompressor on 3/3/2007 3:09:15 AM , Rating: 2
Absolutely. Airbus was so heavily subsidized by government funding it might as well have been government owned. Their incentives were so skewed in that I would compare it to a social institution instead of a capitalist one. As you've mentioned many of their decision making was based on what was politically sound instead of one based on efficient allocation of resources. The unions also did not make things any better and really have themselves to blame for their members being axed out of their jobs. The market forced them to wake up and realize their position in the world whether they liked it or not.

RE: Subsidies
By alifbaa on 3/3/2007 12:02:37 PM , Rating: 2
It is, in fact, government owned. Not only is it funded by governments, but it is owned by them as well. That is changing in some country's however. I a little fuzzy on the specifics, but I know France and Germany have been divesting themselves of EADS lately. France sold a large portion of its stock to a very politically connected person at a pittance after buying another large portion from another politically connected person at a tremendous premium only a few years ago. There was a big scandal about it over there. I'm not sure, but I don't think England owns any of EADS, and Spain owns all most all of its portion.

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