UAE’s Etihad Airways rules out cancelling A380

“We have no intention of cancelling the A380 order,” Etihad Chief Executive Officer James Hogan told reporters in the United Arab Emirates capital, Abu Dhabi.

Shares in Airbus parent company EADS were up 1.24 percent at 0928 GMT on Thursday, having fallen about 16 percent this year following wiring problems which have severely delayed production of the A380, the world’s biggest airliner.

United Parcel Service Inc. earlier this month said it planned to cancel its order for 10 of the freighter version of the A380 superjumbo because of delays in the delivery of the aircraft. The deal would have been worth as much as $3 billion at list prices.

Hogan said Etihad, owned by the government of Abu Dhabi, was still in talks with Airbus about a delivery date for the four A380 passenger planes. Etihad’s rival, Dubai-based Emirates, is the largest customer for the A380, which is two years behind schedule.

Next year, Etihad will start considering further orders, including Airbus’s planned A350 and Boeing Co.’s 787 ”Dreamliner” as the carrier benefits from record oil revenue earned by its government owner.

The airline operates a fleet of 25 aircraft.

Middle East demand for air passenger services surged 18.1 percent last year in terms of passenger-kilometres, the fastest pace of any region in the world, according to the International Air Transport Association.

Carriers such as Emirates, Etihad and Qatar Airways are benefiting from oil revenue to buy aircraft, and use their Gulf location as a hub as well as trying to attract more tourists to their home cities.

“We would review and examine the A350, as well as the Boeing 787, but we will not begin this work until 2008,” Hogan said late on Wednesday in comments embargoed until Thursday.

Etihad expects revenue this year to rise 60 percent to $1.25 billion as its expands its fleet, adds destinations and carries more passengers and cargo, Hogan said.

The three-and-a-half-year-old carrier generated $780 million of revenue last year, handling 2.83 million passengers, Hogan said. This year, it expects to carry 4.5 million passengers after adding eight aircraft and seven destinations during the rest of 2007, Hogan said.

The additional destinations include Sydney, Dublin, Milan and Shanghai, as well as extra flights to Indian cities such as Mumbai, New Delhi, Trivandrum and Kochi, Hogan said.

The airline also aims to boost average seat occupancy -- the load factor -- to 65 percent from 59.1 percent last year, Hogan said.

To finance the aircraft acquisitions, Etihad will borrow at least $1.2 billion this year from banks and the Abu Dhabi government

“As a new airline, we are also looking at a range of financing,” Hogan said.

Etihad will take delivery of four A330s and two A340s during the next six months, he said.

The airline’s lenders include Citigroup, Abu Dhabi Commercial Bank and National Bank of Abu Dhabi, Hogan said.