March 19 (Bloomberg) -- Malaysian Airline System Bhd. said it's still in talks with Airbus SAS over an order for six A380 superjumbos after a newspaper reported the airline is likely to cancel the purchase.

Malaysian Air, the country's biggest carrier, and its parent, Penerbangan Malaysia Bhd., have ``yet to come to any conclusion,'' the airline said in a statement today. The order is worth as much as $1.8 billion, based on list prices.

Airbus, the world's largest maker of commercial aircraft, is about two years late introducing the 555-seat A380, and the Business Times said today Malaysian Air will probably scrap the order. Some analysts say the company, which agreed to buy the A380s in December 2003, may no longer need the planes.

``If you look at their strategy for 2008, they are looking at China, India'' and Southeast Asia, said Christopher Eng, an analyst at OSK Research Sdn. in Kuala Lumpur, who has a ``buy'' rating on Malaysian Air stock. ``For that, you don't need the Airbus A380.''

Malaysian Air, which returned to profit in the fourth quarter of 2006 after cutting routes and jobs, had been scheduled to receive the first plane this year. Airbus announced the third delay in deliveries to customers of the model in 16 months in October.

Shares of Malaysian Air dropped as much as 1.8 percent to 5.55 ringgit and traded at that price at 12:21 p.m. in Kuala Lumpur. The stock has climbed 19 percent this year.

Compensation

The A380 superjumbo has a range of 8,000 nautical miles (14,820 kilometers) and costs between $282 million and $302 million each, based on catalog prices. Airlines typically negotiate discounts and Airbus has agreed to compensate Singapore Airlines Ltd. for delays in the delivery.

Malaysian Air said in January it was in discussions with Airbus over possible compensation and it may cancel the order.

``They're going to have to weigh a number of factors,'' said Raymond Yap, an analyst at CIMB Bhd. in Kuala Lumpur with an ``outperform'' rating on Malaysian Air. They include any discount on the order, demand for long-haul travel between Malaysia and Europe and competition from Middle East airlines, he said.

Tony Philips, a spokesman in Singapore for Airbus, declined to comment on what he called ``ongoing commercial discussions.''

European Aeronautic, Defence & Space Co., Airbus's owner, said in January that the unit will post a loss for 2006 because of penalty payments to customers, asset writedowns and the cost of a reorganization.

Penerbangan is a subsidiary of Khazanah Nasional Bhd., the investment arm of the Malaysian government.

To contact the reporters on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.netAngus Whitley in Kuala Lumpur at awhitley1@bloomberg.net

Last Updated: March 19, 2007 01:52 EDT