Aerospace company European Aeronautic Defence and Space (EADS) has given the go ahead for its Airbus subsidiary to produce the long-range A350 aircraft to compete with rival Boeing.
A meeting of the supervisory board on Friday approved 10 billion euros ($13 billion) in development costs for the extra wide-bodied aircraft, which can accommodate 270-350 passengers.
The first A350 is due to be delivered in 2013, five years after competitor Boeing's 787 Dreamliner hits the market.
The fate of the long-haul A350XWB had been in the balance because of a dispute over state subsidies for the concern, which has been in turmoil after failing to meet delivery dates for its prestigious A380 jumbo.
A statement released after the board meeting in Amsterdam said: "The A350XWB will be financed mainly out of the concern's capital flow."
Contributions would come from the recently introduced Power8 restructuring programme for Airbus as well as partners involved in the development and construction of the aircraft.
Development costs would be spread over 2007-2014, with the bulk of the money flowing from 2010-13, EADS said. State subsidies could flow at a later date if this becomes politically feasible, aviation experts said.
Airbus first proposed the idea of the A350 as a replacement for the ageing A330/A34 models two years ago.
Three different passenger models and a transport version are planned for the new aircraft. Airbus anticipates a demand for 5,700 planes in this range over the coming 20 years.