July 13 (Bloomberg) -- Airbus parent European Aeronautic, Defence & Space Co. said almost one-third of its orderbook may be at risk of deferral or cancellation as spiraling oil prices wipe out airline earnings.

Airbus's revenue is also being hurt by the weakness of the dollar, the denomination for plane sales, and the U.S. currency may scupper plans to sell a U.K. factory to bring down costs, senior EADS executives said at a press briefing.

Airbus has a record 3,663 planes in its backlog, worth 350 billion euros ($557 billion) at list prices. The Toulouse, France-based unit contributes two-thirds of EADS's sales and is already struggling with production glitches to the A380 superjumbo and A400M military transport aircraft, as well as the delayed introduction of its new A350 widebody model.

``We know that airlines are having financial difficulties due to oil prices,'' EADS Chief Executive Officer Louis Gallois said in the briefing prior to this week's Farnborough International Air Show. ``We have to be very careful and to have different scenarios, but we do not have to panic for the time being.''

EADS, which is based in Paris and Munich, fell 11 percent to 10.74 euros on July 11 after crude reached a record $147.27 a barrel in New York. That gives the company a market value of 8.74 billion euros, down 51 percent so far this year.

Assessing Risks

Airbus said it is assessing risks to the order book on a weekly basis as oil eats into airline earnings. Chief salesman John Leahy has a worst-case scenario that envisages the loss of 27 percent of the backlog, Tom Enders, the planemaker's CEO, told journalists at the all-day briefing.

The airline industry may lose as much as $6.1 billion this year, based on crude at $135 a barrel, hurt by the cost of kerosene and slowing economic growth, the International Air Transport Association said on June 2.

Still, Gallois and Enders said Airbus has significant overbooking in coming years, supporting production in the case of likely dropouts.

``I think Airbus is being very realistic,'' said Doug McVitie, managing director of Arran Aerospace, a Dinan, France-based consulting company. ``If the next 12 months of orders were canceled that would be a problem. But the orderbook is large and spread over several years.''

Savings Plan

EADS will detail plans to intensify its Power8 cost- cutting program by the end of this year, Gallois said. Airbus in February said it was seeking 10,000 job cuts to help shave 2.1 billion euros from annual expenses by 2010. That plan was based on a euro rate of $1.35. With the rate reaching $1.57 July 11, EADS needs further measures, the CEO said, adding that he'll ask other EADS units to contribute. The company also makes helicopters, satellites, rocket launchers and missiles.

EADS has also suffered as the dollar's weakness cuts the value of Airbus sales, which come entirely in the U.S. currency, when converted into the European denomination.

The dollar last week dropped to within a cent of its all- time low against the euro, and the exchange rate has already caused EADS to scrap the sale of plants in Nordenham, Varel and Augsburg in Germany and Saint Nazaire and Meaulte in France.

The dollar's weakness compared with the U.K. pound is also now threatening the sale of Airbus's site at Filton, England, to Redditch-based aerospace parts-maker GKN Plc, Enders said.

EADS is requiring buyers to subcontract for future Airbus work in dollars to help offset its exposure to exchange rates. That leaves European buyers vulnerable as they must pay their workers in local currencies.

`Significant Hurdles'

``We still have significant hurdles to overcome,'' the executive said. ``The final stretch is usually the most difficult and I wouldn't guarantee that there is a deal to come.''

EADS's stock is likely to remain under pressure from the ``weakening of the dollar and the increase of the oil price, and additional signals that the financial market crisis in the U.S. isn't over yet,'' Chief Financial Officer Peter Ring said.

Some EADS executives are also embroiled in a French investigation into whether 17 managers and corporate shareholders Lagardere SCA and Daimler AG sold stock based on internal information about the A380's production problems.

Gallois, who didn't sell shares, said the probe ``is putting pressure on the company and managers concerned.'' Enders said he considers the investigation ``a show trial'' and ``bad theater.''

Paris prosecutors have so far brought preliminary charges against former EADS co-CEO Noel Forgeard and former Chief Operating Officer Jean-Paul Gut, and ex-Airbus chief Gustav Humbert and ex-CFO Andreas Sperl.

To contact the reporter on this story: Andrea Rothman in Toulouse, France at aerothman@bloomberg.net.

Last Updated: July 13, 2008 13:34 EDT