Airbus says the future 350-seat carbon-composite A350-1000 passenger jet will be significantly more efficient than Boeing's 777 but has so far been unable to make a significant dent in the 777's hold on a lucrative corner of the jet market.

Airbus says the future 350-seat carbon-composite A350-1000 passenger jet will be significantly more efficient than Boeing's 777 but has so far been unable to make a significant dent in the 777's hold on a lucrative corner of the jet market. Photo: Airbus

Airbus has encountered problems in drilling holes in the wings on its new A350 passenger jet, helping to drive shares in parent EADS down on Wednesday as analysts reported signals that the glitches were taking longer than expected to resolve.

An Airbus spokeswoman quoted Didier Evrard, the head of the A350 programme, as saying on Wednesday there had been a delay of about four weeks in sorting out software for the robot at Broughton, Wales, that will drill the wings for the A350.

"The A350 final assembly is progressing well, but there are some problems in drilling holes in the wing (to fasten the skins to the structure), which is taking longer than expected," UBS analysts said in a research note.

"It is not possible to quantify the impact of these delays but we believe them to be well within our base assumption of a 1 year delay and a 1 billion euro (1.25 euros per share) overrun".

Airbus's chief operating officer reiterated the schedule for the A350 can be achieved but remains tight.

"I would say that with the A350 we have made great progress. We delivered (sections of the first test aircraft) as promised to the final assembly line. The overall timing of our commitment is still doable, but challenging," Gunter Butschek said in an interview at the Farnborough Airshow.

However some analysts expressed concerns that the wing drilling problems could lead to financial charges, whose timing could depend on whether they had yet been quantified.

Shares in Airbus parent EADS fell 4.7 per cent after rising 16.9 per cent so far this year.

"EADS stock has mainly been falling today because of concerns that there may be a charge in the second quarter," said Nick Cunningham, aerospace analyst at UK-based Agency Partners.

An EADS spokesman confirmed that analyst briefings had taken place during this week's Farnborough Airshow.

NERVOUS INVESTORS

The A350 is a carbon-composite passenger jet being developed to compete with Boeing's 787 Dreamliner, the first airliner built mainly with such lightweight alternative materials.

The Dreamliner ran into a series of delays lasting a total of three years including one related to the wing development.

The first A350 was originally due to be delivered in mid-2013 before the schedule was moved to mid-2014.

Airbus CEO Fabrice Bregier said on Tuesday the assembly process had started for the A350, but there were some areas that needed working out.

"This is normal. We will progressively move next year to first flight," he said at the Farnborough Airshow.

Airbus said it continued to watch the A350 closely.

"In all-new development programs there is always a risk. We are continuously monitoring the program as we progress," chief spokesman Stefan Schaffrath said.

Bloomberg meanwhile quoted Airbus sales chief John Leahy as saying it would be a "stretch" to reach its target for 30 A380 superjumbo orders this year.

Several analysts said they had already factored in a lower forecast of 26-27 orders for the world's largest passenger jet following problems with wing cracks, but analysts said investors were feeling skittish as the recent order boom slows down, evidenced by a dearth of significant surprises at Farnborough.

"To us this is the latest example of general investor nervousness, with particular emphasis being given to negative aerospace comments or developments ... with positive news (big 737 MAX orders, continued resilient global airline traffic, lower oil price etc) having less of an impact," said RBC Capital Markets analyst Rob Stallard in a note.

Earlier this week Airbus unveiled its first customer for the beefed up version of its A350-1000 as Hong Kong-based airline Cathay Pacific said it planned to place an order worth up to $US4.2 billion at list prices.

Since announcing bigger Rolls-Royce engines and pushing back the development of the jet by two years at last year's air show in Paris, Airbus has failed to win any customers for the revamped version of the carbon-composite plane.

Airbus says the future 350-seat passenger jet will be much more efficient than Boeing's 777 but has so far been unable to make a significant dent in the 777's hold on a lucrative corner of the jet market, just below 400 seats.

Cathay on Tuesday broke the drought, saying it plans to order 10 A350-1000 jets and convert 16 of the 36 A350-900 jets it already has on order to the new model, the two firms said.

The $US320 million jet is due to enter service in mid-2017. Cathay's planes are due to arrive in 2018. The A350-900s that it has on order are scheduled for delivery in 2016.

The A350-1000s are worth $US3.2 billion at list prices, while the upgrades are worth a further $US1 billion.

Reuters