UPS threatens to terminate A380 order, sets new schedule for delivery

United Parcel Service Inc., the world’s largest package-delivery company, and planemaker Airbus SAS agreed that either company can cancel an order this year for 10 A380 freighters after repeated production delays. The company has stated that it renegotiated a contract with Airbus to delay and possibly cancel an order for 10 freighter versions of the European plane. UPS will now decide unilaterally whether to retain the $2.8 billion order after getting new delivery dates from Airbus. However, the details of the newly signed contract have not been made public yet and both the companies have declined to disclose new delivery date set by the firms. According to the original co0ntract signed, UPS had ordered its first 10 A380F jets in January 2005 for using them on U.S.-Asia routes. The deal has also clauses regarding an option to buy 10 more planes. Deliveries originally were scheduled to start in 2009 and run through 2012. On the other hand, Airbus has been compelled to delay deliveries of the new plane by up to two years, primarily because of problems with installing wiring systems. However, Airbus has already lost a contract of A380 order from rival package delivery group FedEx. The company cancelled its order for ten of the freight versions in favor of Boeing’s long-range 777 model. UPS has already been carefully assessing various options after Airbus announced production delays late last year. Airbus has suffered drastically from costly production setbacks and this week delayed an expected announcement of its ambitious restructuring plan involving extensive job cuts.