Rolls-Royce has refused to rule out job cuts after suspending work on the Trent 900 engine for the troubled Airbus A380 in the wake of a string of serious delays to the beleaguered superjumbo project.

The news emerged as Airbus was forced to "categorically" deny speculation in the French press that chief executive Christian Streiff may leave to replace Jean-Martin Folz, the retiring chief executive of Peugeot.

It has been suggested that M Streiff, who has only been in the Airbus job for three months, felt isolated when his first blueprints to restructure Airbus were dismissed by the board of parent company EADS.

Airbus said earlier this week that the A380 is now expected to be two years late, with the first deliveries delayed to the end of next year after serious problems emerged in wiring the massive aircarft.

A Rolls-Royce spokesman told Times Online that Trent 900 production will be suspended for around 12 months. Employees were informed of the decision yesterday, he added.

The company expects to deliver 28 of the £10 million engines this year and none next year. Rolls-Royce said it would be reviewing whether any job cuts would be necessary when further clarification on the A380 programme was given by Airbus.

Rolls-Royce, which is contracted to provide engines to around half the A380s on order, does not expect any change in its financial guidance for this year. The civilian engines unit that builds the Trent 900 accounts for around a fifth of group sales.

Though Rolls says the Airbus engine makes up only a small part of the civilian engines business, the project could have contributed £500 million in sales next year if Airbus had stuck to its original timetable. Shares in the group were down 1 per cent in morning deals in London.

Also today, Kingfisher, the Indian airline, said it had agreed a $22 million (£11.7m) compensation deal with Airbus, for delays to its five ordered A380s.

This week M Streiff announced he was launching an Airbus revival strategy called Power 8, which will involve a 30 per cent cut in costs, primarily from job losses. M Streiff refused to be drawn on exactly how many of the company's 55,000 employees might go, but the cuts are likely to fall among temporary and contract staff.

Airbus is also reassessing its production centres, with M Streiff understood to be keen to strip out the cost of shipping aircraft parts around Europe. At present, different sections of each jet are built in regional plants and then shipped to Toulouse for final assembly. This model may be changed so that each plant produces one full aircraft. The cost savings are expected to be €2 billion (£1.35bn) a year from 2010.

The production centre assessment will be completed in about four months' time and will be key to determining the future of the UK division at Broughton in North Wales. The plant makes wings for Airbus that are transported to Toulouse by a tortuous route that includes barges and specially modified lorries.

The Times also reported this morning that a shareholder represented by the Munich-based Rotter law firm has filed a lawsuit in Frankfurt against EADS relating to the timing of its announcement on further delays to the Airbus A380.

The law firm claims that "it was already clear on February 25 that there would be delivery delays of up to 18 months," and that EADS knew that its results would be negatively affected.

It also emerged today that German Chancellor Angela Merkel and French President Jacques Chirac are likely to discuss EADS when they meet next week in Paris.

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