In the weeks leading up to Tuesday's ruling by Hamburg's upper administrative court, Airbus argued that a major extension of its existing runway is necessary for the testing of the cargo version of its ambitious new A380 super jumbo jet program, which is expected to hit the market in 2006.

Airbus officials fear the decision could harm the company's future in Germany and comes at a sensitive time for the program, which is expected to increase company revenues by €6 billion annually.

Both Airbus and representatives of the Hamburg government said they regretted the decision, but residents and environmental activists said they were relieved by the ruling.

A spokesperson for the European company said Wednesday the runway expansion was "urgently needed" in order for Hamburg to hold its position as a major base for the cargo plane (photo) and other further developments of the A380 line.

Airbus CEO Gerhard Puttfarcken said a ruling against Airbus in the case could bring "considerable" negative consequences for the aviation industry in Hamburg and Germany. The company said it would now pursue legal and political avenues to reverse the injunction.

Hamburg's mayor, Ole van Beust of the conservative Christian Democratic Union, also criticized the decision.

"Now we're reviewing what we can do to actually make it possible for the freight version of the A380 to be assembled in Hamburg," he said.

Court: expansion unjustified

Ten Hamburg residents whose properties were threatened with expropriation as a result of the expansion sued in court to stop the project. This week, the court issued a second injunction stating the runway could not be extended by the additional 589 meters (644 yards) Airbus had hoped for at its plant in the Finkenwerder neighborhood. Tuesday's ruling was the second in the case and followed a lower court injunction against the construction project on June 28.

Airbus has said it needs the additional runway space for its A380 cargo jets, which are heavier than the passenger version when loaded with freight and require 277 meters additional runway space for take off and landing. The jet could take off and land on the company's current 2,678 meter runway, but the company said a total length of 3,267 meters would be needed to demonstrate the plane at two-thirds of its freight capacity for customers.

However, the court expressed doubts about the decision made by local authorities to issue construction permits for the project, saying the authorities had failed to properly weigh the reasoning for the runway expansion against the damage expropriating the people of their property would cause. In addition, the court stated, they had failed to explain what concrete steps would be needed to further lengthen the runway.

The court indicated the existence of ample evidence that the importance of the cargo A380 wouldn't be significant enough to justify stripping the locals of their property. However, the court's preliminary ruling did not question the validity of the overall A380 project, which will for the first time put Airbus into direct competition with Boeing's 747 jumbo jet.

A380 a boon to German industry

For the construction of the A380 line, Airbus has said it will add 2,000 new jobs in Hamburg. An additional 2,000 positions will be created in the region at companies that provide parts for the massive jet. Currently, Airbus employs more than 8,000 at its Hamburg assembly plant.

Hamburg officials fear the decision could lead Airbus to focus more on its second major manufacturing base in Toulouse, France, which is already responsible for the assembly of its current line of long-haul jets.

A final ruling in the case is not expected for several years.