Airbus reveals sharp drop in first-half orders

Airbus yesterday revealed a sharp drop in aircraft orders for the first half, compounding the damage inflicted by the recent management turmoil at its Franco-German parent EADS.

The drop in gross new orders for commercial aircraft from a record 276 last year to 117 in the first six months of 2006 leaves the Toulouse-based manufacturer trailing far behind rival Boeing. Last week Boeing announced a jump in gross orders from 439 to 487 in the first half.

The setback comes as the rivals prepare for the key Farnborough Airshow in the UK.

While analysts said Airbus's order levels for the first half were significantly below expectations, they warned against extrapolating a strong declining trend for the rest of the year.

"If they end the year with this rate of orders, it will be a huge disappointment," said one. "But Airbus has a history of holding back order announcements for the airshow."

The analyst, who refused to be named, said he was expecting at least 200 orders to be announced by Airbus next week, against an unusually high level of 320 orders unveiled at last year's trade fair.

Airbus acknowledged that the level of orders was disappointing and admitted the controversy surrounding delays to its flagship A380 superjumbo project and the subsequent crisis at EADS appeared to have affected sales.

"It has been a particularly difficult year since the problems around the A380 and the management upheaval. It is hardly surprising orders have taken a bit of a knock," a spokesperson said.

Customer confidence in Airbus appears to have been badly hit by production delays on the A380, the world's largest passenger jet, as well as design problems on the now-jettisoned A350.

Problems in meeting the A380 delivery schedule prompted a profits warning from Airbus parent EADS last month and sparked a crisis only resolved last week. Noël Forgeard, EADS co-chief executive and chairman of Airbus, as well as the aircraft maker's own boss Gustav Humbert, left the company.

Yesterday, Safran, the aero-engine and communications group, said the A380 problems could cut revenues this year by about €100 million, although this would be recovered in 2007.