Page last updated at 17:47 GMT, Monday, 26 May 2008 18:47 UK

EADS warns that orders will slow

An Airbus A380 in Santiago
The A380 model has been beset by delays

European aerospace giant EADS has warned that orders are likely to slow as the aviation sector is hit by rising fuel costs and the weaker US dollar.

EADS chief executive Louis Gallois added that limited access to credit was another problem for airlines.

During the firm's annual shareholder meeting, the firm also underlined continued uncertainty over the delivery of its flagship A380 superjumbo.

Deliveries are running almost two years late because of production problems.

Mr Gallois said he expected the latest delays to the A380 to be between three and five months.

Earlier in May, the firm said that 12 of the aircraft would be delivered in 2008 rather than the 13 previously forecast and in 2009, 21 units would be delivered rather than the 25 originally expected.

But while he said that the firm was "ramping up" production he said it was not going fast enough.

Besides production problems, EADS' plane making arm Airbus is suffering from the general gloom of record high oil prices and a consumer slowdown that is squeezing airlines.

Air France KLM has recently warned that it would not reach its intended profit target, while American Airlines has outlined plans to reduce its routes, increase fares and cut jobs, in a bid to save costs.

Among these challenges facing EADS is the declining value of the dollar - the currency its earnings are priced in - while most of its costs are in euros.


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