Storm clouds gather over aviation

Clouds of uncertainty are gathering over the aviation sector, with aircraft maker Airbus having warned that airlines face further delays in receiving its new A380 superjumbo. The EADS-owned group says more time and resources than expected were required to increase production, which will result in fewer deliveries than planned during 2008 and 2009.

Deliveries of the A380 are already running almost two years behind expectations, due to electronics problems. Airbus blames the latest delays on problems involved with moving from the initial production phase, which was responsible for the first 25 aircraft made, to a more intensive production line – no detail relating to the financial implications of the announcement were disclosed. The aerospace giant said: ‘The extent of the additional costs will be influenced by the actual production and delivery scenario.’

Meanwhile, shares in airlines quoted in London have encountered serious turbulence with investors’ nerves rattled by the rocketing oil price and the threat to profits from slowing economic growth. In a profit warning back in March, low-cost carrier Easyjet, trading off a 52-week high of 663p and near its 52-week low at 287.75p, warned escalating oil prices would add £45 million to its fuel bill and significantly impact its profits, whilst British Airways trades at just 228.5p, a substantial drop from a 52-week peak of 501.5p. At the sector’s smaller end, business-only carrier Silverjet followed peers in suspending operations recently.