The Airbus A380 superjumbo project is running 1.45bn euros (£1bn; $1.9bn) over budget, the company's majority owner EADS has admitted.
"That is indeed a lot, that is indeed hefty," EADS co-chief executive Rainer Hertrich told journalists in Munich.
Total costs for the double-decker aircraft are now estimated to be more than 12bn euros, the company said.
Due to enter service in 2006, the A380 will replace the Boeing 747 jumbo as the world's biggest passenger aircraft.
But despite the increase in costs, the jet is on schedule and its inaugural flight should take place next year, the company said.
It is then expected to start carrying passengers in 2006, with an estimated four planes being produced every month by 2008.
Typical capacity: 555
Max capacity: 840
Cruising speed: 0.85 mach
The 555-seater plane could revolutionise the airline industry and could lead to a doubling in Airbus' profits, some experts say.
The A380 has wider seats, more legroom and 50% more floor space than the Boeing 747. It also has a 15,100km (8,150 nautical miles) flight range.
The assembly of the giant plane is taking place at a £240m factory in Toulouse, France.
Sections of the aircraft have been manufactured in the UK, Germany, Spain and France before being transported to Toulouse for assembly.