UPS Ditches Airbus Order

The cargo version of the A380 won't arrive soon enough.
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Updated from 9:53 a.m. EST

UPS

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will cancel its order for the cargo version of the Airbus A380 because the airplanes won't arrive soon enough.

The world's largest package carrier had been the only customer for the troubled jet's cargo version. Originally, 10 planes were scheduled to arrive between 2009 and 2012, with options for 10 more.

A week ago, UPS received a revised delivery schedule from Airbus that delayed the first plane until 2012.

"Based on our previous discussions, we had felt that 2012 was a reasonable estimate of when Airbus could supply this plane," UPS Chief Operating Officer David Abney said Friday in a prepared statement. "We no longer are confident that Airbus can adhere to that schedule."

UPS said its final cancellation decision will be formally presented to Airbus on the first date specified under an agreement, reached last week, that gives either party the right to terminate the arrangement.

UPS had intended to complete an internal study of whether it could wait until 2012 for the aircraft. UPS said it "now understands Airbus is diverting employees from the A380 freighter program to work on the passenger version of the plane."

Airbus said Thursday that it had suspended work on the freighter to focus on the passenger A380, which it intends to deliver despite high costs, long delays and limited customer demand. It said work on the freighter will resume in the future.

UPS's abandonment of the aircraft was inevitable once

FedEx

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bailed out last year, said aviation consultant Scott Hamilton, who publishes an online newsletter about aircraft makers.

Hamilton said the move benefits Airbus, which could save as much as $1 billion by not having to design, build and certify the freighter at a time when it needs capital.

"Now they can devote the resources that would be devoted to cargo planes to the passenger model, and they may divert some of those resources to the A350, which is a far more important airplane," he said.

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