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Dubai’s Emirates demands compensation for Airbus 380 delay

Filed on December 25, 2006

DUBAI - Dubai-based carrier Emirates, the single largest client for Airbus’s delayed A380 superjumbo aircraft, has demanded compensation from the European manufacturer, its president said in comments published Monday.

‘We expect compensation because we have sustained enormous financial damages because of these delays. Compensation is now our right,’ Sheikh Ahmed ben Sayed Al Maktoum told the government daily Al Bayane in Dubai, without specifying the amount.

His comments marked the first time an Emirates business official has publicly demanded compensation for the delivery delay of the 43 A380 aircraft it has ordered.

Repeated production problems have set Airbus two years behind schedule and the company has informed Emirates, which ordered nearly one-third of the A380 aircraft under production, that the first delivery will not be made before August 2008 instead of October 2007.

The delivery date of the first A380, the double-decker plane which is designed to carry between 555 and 840 passengers on distances of up to 15,000 kilometres (9,300 miles), has been delayed three times since September 2005.

‘After the first delay, we had the option of canceling our order but we did not do it because the consequences would have been worse,’ Sheikh Ahmed said.

‘The problem is that there is no alternative. It was difficult to consider canceling the order and buying new planes on the market, because the delivery would have coincided with the A380s’ arrival. The margin of maneuver was very limited.’

Emirates is spending billions of dollars on expanding its fleet of 92 aircraft. In November 2005, it announced an order for 42 Boeing-777s at a total cost of 9.7 billion dollars.

Sheikh Ahmed said the airline has had to sign contracts to rent six Boeing to offset the A380 delay, but this ‘minimally covers our initial plan’ for expansion.

The state-owned carrier has said on its website that its fleet expansion will allow it to double the number of services it operates and destinations it serves, as well as enabling it to operate non-stop on long-haul routes.

Emirates, which in 2004-5 posted a 49 percent increase in net profits to 708 million dollars, has a current order of 123 aircraft, with a total value of some 33 billion dollars.

The government of Dubai has also been constructing a new terminal in the emirate’s international airport to accommodate the superjumbo. Two boarding gates in the old terminal were also modified to cater for the A380.

The announcement of production problems in June sparked a crisis at Airbus and its parent company EADS, or the European Aeronautic Defence and Space company, forcing management changes and damaging the standing of the latter in financial markets.

EADS owns 80 percent of Airbus, with the remainder held by British defence group BAE Systems.

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