Airbus jumbo 'likely' to face delays

Airbus was likely to face further delivery delays with the A380 superjumbo, BAE Systems chief executive Mike Turner warned yesterday.

Mr Turner said there were also "concerns" about the development costs of the Airbus A400M military transport aircraft, due to enter service with the French airforce in 2009.

BAE Systems decided last week to recommend the sale of its 20 per cent stake in Airbus to EADS for €2.75 billion in spite of its initial disappointment at the apparently low valuation of the holding set by Rothschild, the investment bank.

Christian Streiff, Airbus chief executive, is reviewing progress on the A400M project, which has been dogged by rumours. Airbus and EADS have denied it is facing delays.

Mr Turner said there was a "big risk" in the A400M programme, which had been taken as a fixed-price design, development and production contract.

The announcement of embarrassing delays in the A380 programme in June forced EADS to issue a €2 billion profits warning, triggering a sharp decline in its share price.

Mr Turner, who is a member of the Airbus shareholder committee, said: "I would be surprised if there are no more delays."

Further modifications would probably be needed in areas such as in-flight entertainment, air-conditioning and toilets.

Mr Turner, who must persuade BAE investors to back the deal at an extraordinary shareholders meeting on October 4th, said: "I am very, very happy with the price we have got."

He said: "Whether we would have got more previously or later, who knows? We are happy with the number of €2.75 billion. Thank you very much."

BAE, Europe's biggest defence group, is selling its stake to concentrate on its core defence business and help fund further acquisitions, particularly in the US.- (Financial Times service)