updated 1/16/2007 3:53:01 PM ET 2007-01-16T20:53:01

Airbus, which this time last year defied expectations that it had fallen behind Boeing Co. by unveiling a glut of new orders, looks unlikely to pull off the same coup when it announces 2006 figures on Wednesday.

After setting an industry record with 1,111 orders in 2005, Airbus is poised to lose its five-year leadership after a sales slump that left the European aircraft maker with just 635 orders to Boeing's 823 at the start of last month. Boeing added 227 more orders in December to reach 1,050 for the year.

In terms of deliveries, however, Airbus remains the market leader for a fourth straight year. The European aircraft maker had already delivered 399 planes by end of November — one more than the full-year tally announced by Boeing — and recently reiterated its forecast of 425 deliveries or more.

The deliveries performance, which always lags behind orders, is of little consolation to Airbus as it seeks to claw back sales in the lucrative market for mid-sized airliners, currently dominated by its U.S. rival.

Airbus warned last month that its share of overall airliner orders placed in 2006 would be about 36 percent by catalog value — down from 45 percent a year earlier and 54 percent in 2004.

Airbus is being punished for its delay in developing a credible alternative to Boeing's fuel-efficient 787, due to begin commercial flights next year.

The tardiness of the Airbus response — parent company EADS launched the A350 XWB program last month for 2013 entry into service — is just one consequence of problems with its double-decker A380, a flagship European industrial project that industry watchers say is unlikely to turn a profit for the better part of a decade, if at all.

The superjumbo's two-year delay has also led to order cancelations and a ??4.8 billion (US$6.2 billion) profit warning. Airbus has yet to agree on compensation with airlines including Dubai-based Emirates, the biggest A380 customer with 43 planes on order, which has said it stands to lose hundreds of millions of revenue dollars (euros) because of the setback.

"Airbus is anxious to ensure that the program is seen to be alive and well, and I am sure we will come to a compromise, which Airbus will take as a massive write-off," Emirates President Tim Clark said in an interview published Tuesday on the Web site of Flight International magazine.

Beyond Wednesday's order and delivery figures, investors are keenly awaiting details of the promised "Power8" restructuring program.

"Implementing Power8 is very important in the current weak-dollar environment," said Pierre-Antony Vastra, an analyst with Ixis Securities. The Paris-based brokerage expects Airbus to announce about 430 deliveries for 2006.

The dollar's weakness against the euro has hurt profitability at Airbus — which pays most of its costs in euros but bills customers in dollars — and its exposure is set to worsen as currency hedges expire in coming years.

Louis Gallois, the co-CEO of European Aeronautic Defence and Space Co. who also took over from departing Airbus chief Christian Streiff in October, has vowed to press ahead with his predecessor's "Power8" turnaround plan.

Despite impending elections in France, Gallois has pledged to spell out early this year how the politically sensitive shake-up will be organized. The agreed-on targets include a 20 percent overall productivity increase, a 25 percent cut in the time taken to develop new planes, cumulative savings of $6.5 billion by 2010 and $2.6 billion annually thereafter.

Unions have been told that assembly lines for the next generation of single-aisle A320 planes may be concentrated on one site, rather than split between France and Germany as they are currently, according to French press reports.

Streiff had suggested before his resignation that the $15 billion A350 program could be based in Toulouse, and Gallois confirmed soon afterward that the planned shake-up would lead to "painful" job cuts.

Airbus is also likely to raise pressure on suppliers to outsource more of their own work to lower-wage economies and put up funding for the planes they help to build.

Suppliers are being asked to fund up to $2.3 billion of the A350's $15 billion development cost, Gallois said last month.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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