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US Airways dumps $3.2 billion Airbus order, goes with Boeing

Boeing Co. (NYSE:BA) continues to pile up business in the wake of Airbus' A350 woes. Today the Times of London reported that U.S. Airways Group (NYSE:LLC) is canceling its order for 20 of the A350s in favor of 20-30 of Boeing's new 787 Dreamliners. The Airbus order had been valued at $3.7 billion, while the Boeing purchase is estimated at $3.2-$4.9 billion.

Just yesterday, Virgin Airlines announced they intend to purchase as many as 43 Dreamliners, $8 billion worth, to replace their Airbus fleet.

This despite Airbus dropping the price of its A350 by 50% in a desperate attempt to stop the bleeding. Boeing is thought to be knocking about a third off the price of its Dreamliner.

What Airbus can't match is delivery date. With a two-year delays blamed on wiring and other problems with the new A380, the A350s aren't expected to go into operation until 2013-14, while the first Dreamliner is expected to enter service in May of 2008.

For Airbus, the gremlins can't seem to stop

Just when you think Airbus is about to finally assert itself -- perhaps right itself is the more appropriate phrase -- against Boeing Co. (NYSE:BA) in the commercial aviation sector, up pops another gremlin.

On Tuesday, word surfaced that Airbus' co-owners Germany and France were again at odds, this time over the size of expected job cuts at the world's second major commercial jet manufacturer.

France and Germany jointly control Airbus through ownership of its parent company EADS. EADS' shares closed Tuesday in Europe at €25.95, up 11 cents. Boeing's shares closed Tuesday at $91.03 up 9 cents.

French Prime Minister Dominique de Villepin said Tuesday he had talked with German Chancellor Angela Merkel about Airbus's difficulties and confirmed that the company is seeking to slash 10,000 jobs as part of its restructuring plan. German politicians suspect Toulouse-based Airbus's French management of forcing German workers to bear a disproportionate share of the cuts. Arnaud Lagardere, the head of a French coalition, does not deny that his country is trying to protect France-based jobs.

Continue reading For Airbus, the gremlins can't seem to stop

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Last updated: May 25, 2012: 06:40 PM

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