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Airbus to battle Boeing with revamp

Analysts say if Airbus goes to an all-new design, the planemaker, its suppliers and European governments would face far higher development costs.

india Updated: May 18, 2006 11:39 IST

Airbus, under pressure from airlines for a bolder new model, on Wednesday signalled possible sweeping changes to its mid-sized planes to better battle its surging rival Boeing Co.

Criticised by would-be buyers for not making its mooted A350 an all-new design, Chief Executive Gustav Humbert is under pressure to revamp the design to win back sales versus Boeing's large two-engined 777 and mid-sized 787 due in 2008.

Humbert said A350 design changes were still being looked at and reiterated all would be revealed in the next two months.

"The message to our competitor (Boeing) is clear: the game is not over yet, it will just start in the summer," Humbert told reporters at the Berlin air show.

Analysts say if Airbus goes to an all-new design, the planemaker, its suppliers and European governments would face far higher development costs and customers would likely have to wait an extra two years, until 2012.

Humbert's predecessor, Noel Forgeard who is now co-chief executive of parent firm EADS, told Reuters that Airbus might offer a range of new planes seating 250 to 375 passengers.

Such a move would shake up the Airbus product line-up, he acknowledged, since it would eat into demand for some of the current A330 and A340 models.

"It's one of the scenarios. That kind of thing implies big money, big investments. It has to go through the Airbus shareholder committee and the EADS board," Forgeard said in an interview.

He said the A330 model would likely become used mostly as a freighter and as a mid-air military refuelling plane as the new A350 becomes its main mid-sized airliner.

Forgeard indicated the four-engined, 295-seat A340-300 model might also be rendered obsolete.

"The A340 family today is mostly the A340-500s and -600s. The plan is to continue with those models," he said, referring to stretched and longer-range versions of the four-engined A340 series.

Airbus originally argued that the A350 would not overlap with the A330 and larger A340, but changes called for by airlines and aircraft lessors appear to have set the project on a collision course with Airbus's current models.

Customers have more than 200 of the A330 and A340 models on back order.

"In the scenario I mentioned, where we might go to 375 seats with one family of twins, part of the market of the A340-600 would be absorbed by this model. But it does not mean we would not keep the A340-600," Forgeard said.

Some analysts have criticised Airbus for a lack of product strategy amid oft-changed designs mooted for the A350 that have allowed rival Boeing to catch a jump on the European firm.

Boeing's mid-sized 787 due in 2008 has sold well and its larger long-range sibling, the 777, which entered service in 1995, outsold similar Airbus models 10-to-1 last year.

Both makers are coming off a record year in orders in 2005 and Humbert said Airbus expects to deliver close to 430 planes in 2006, up 13 per cent from 378.

It has booked 100 orders for the proposed A350 as the design now stands and Humbert told reporters Airbus hoped for more orders from the Arab Gulf and Asia where Emirates and Singapore Airlines are shopping for new planes.

Boeing's 787, which makes greater use of new lightweight materials, has 350 firm orders.

"Singapore (Airlines) were ready to make a decision at the beginning of May and delayed their decision," Humbert said. "I think one of the reasons is that we told them we would work on the A350, otherwise there wouldn't have been any necessity. So I think what we are doing inside Airbus is getting attraction from our customers and we are starting to get momentum."

Shares in Franco-German-Spanish EADS steadied on Wednesday after sharp falls on Tuesday linked to uncertainty over its outlook. Towards the close, they were up 0.4 pe rcent at 27.84 euros, shrugging off a 3 per cent fall in French blue-chips.