Virgin defers A380 by four years

The past two years have been dark times for the A380 project

Virgin Atlantic is to defer its order for the new Airbus A380 by four years.

The airline had ordered six of the new superjumbos for delivery in 2009, but now wants to delay their arrival until 2013.

The project has been dogged by repeated delays, which have cost senior managers their jobs and led to big customers threatening to renegotiate orders.

There had been speculation that Virgin would ditch the A380, but the firm says it still has confidence in the plane.

Virgin is now arguing that it wants the aircraft to prove itself in commercial service for several years before it puts its own A380s into operation.

The airline is now extending its leases on a number of Boeing 747-400 jumbo jets to cover the delay.

BBC business correspondent Hugh Pym said the decision followed what one source described as "tough negotiations on price and other issues".

A380 ORDERS SO FAR Emirates: 43 aircraft Lufthansa: 15 Qantas: 12 Air France: 10 Singapore Airlines: 10 Fedex: 10 International Lease Finance: 10 UPS: 10 Thai Airways: 6 Virgin Atlantic: 6 Korean Air Lines: 5 Etihad Airways: 4 Qatar Airways: 2 China Southern Airlines: 5 Kingfisher Airlines: 5 Malaysia Airlines: 6 Source: Airbus See EADS share price Analysis: Airbus problems

In June this year, Airbus had told Virgin that it might face a six-month delay in delivery, thanks to the wiring and other problems which have emerged.

Originally Virgin had wanted the aircraft this year.

Renegotiations

The problems with the A380 have forced Airbus - owned by European group EADS - to issue three warnings of delays in the past two years.

The most recent was in October, when the firm, which has orders for 159 aircraft so far, told its customers they could face delays of up to two years.

Airbus is now expecting to deliver the first aircraft to Singapore Airlines in October 2007, almost two years behind the original schedule.

As a result of the repeated hold-ups, most of Airbus's A380 customers are deep in negotiations in the hope of improving the terms on which they are buying the aircraft.

Shortly after Airbus's October announcement, Emirates - the single biggest customer with 43 planes - warned that it might cancel some of its order.

The delays also mean the project is costing Airbus vastly more than originally expected.

EADS now says it will have to sell 420 aircraft - more than half the total it hopes to sell in the entire service life of the A380 - to break even, rather than the 270 it originally estimated.