China Southern Airlines may get hefty compensation from Airbus

Airbus may have to pay 250 million U.S. dollars in compensation to China Southern Airlines for the late delivery of its A380 passenger planes.

It will be the biggest single compensation payout for an Airbus A380 customer, the Beijing News said on Wednesday, citing undisclosed sources close to the deal.

China Southern Airlines company secretary Su Liang did not confirm the amount of the compensation, saying that the indemnity was a "business secret" stipulated in the purchase contract.

Airbus informed its global customers last Tuesday that the delivery date for the first A380 aircraft would be postponed to next October. The company said it would deliver another 13 in 2008 and 25 in 2009.

This timetable means that China Southern Airlines, which hoped to cash in on the 2008 Beijing Olympics traffic boom, will not be able to get its hands on its five A380 airplanes until 2009.

The flip side of the postponement, said analyst Li Lei at China International Trust & Investment Corp., was the hefty indemnity.

Australia-based Qantas Airways, another victim of the postponement, has taken initial compensation of 77 million U.S. dollars. Singapore Airlines is looking for an indemnity of around 189 million U.S. dollars, according to insiders.

Source: Xinhua