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Saturday, December 11, 2004 - Page updated at 12:00 A.M.
Airbus targets the 7E7 niche with new plane design
By David Bowermaster
Dubbed the A350, the new plane is expected to enter service in 2010, said Airbus two years after the 7E7. It will be available in two variants, one holding 245 passengers and the other holding 285.
The same General Electric engines that will power the 7E7 will also be available on the A350, limiting Boeing's ability to tout the fuel efficiency of the 7E7 over its Airbus alternatives.
The 2010 target for the A350 announced yesterday would be a faster time to market than previously anticipated. Until recently, most industry observers believed Airbus would not have the time or money to counter the 7E7 until 2012 or beyond.
The European plane maker is in the midst of spending $10.7 billion to launch the 555-seat A380, which is due to enter service in 2006.
When Boeing's board of directors cleared the 7E7 for takeoff a year ago, most aerospace experts predicted Boeing would dominate the market for 200- to 300-seat jets for four years or more.
"That was the corner of the market that it appeared [Boeing] could play in alone profitably for a few years," said Michael Allen, chief operating officer of Back Aviation Solutions. "It appears Airbus is not interested in facilitating that opportunity."
Boeing has 52 firm orders for 7E7s and commitments for another 34. Boeing Chairman Harry Stonecipher has said the company expects to have 200 7E7 orders by the end of 2004.
Randy Baseler, senior vice president of marketing at Boeing, acknowledged that some potential 7E7 customers have been waiting to see what Airbus would offer as an alternative, but he said yesterday's announcement would make selling 7E7s easier.
"We see this as a good day because Airbus finally has said what they're going to do," Baseler said. Rather than talk in generalities as it has for the past six months, Baseler said, Airbus has put A350 details on paper that will make it easier for Boeing to tell customers how the 7E7 will be different.
Airbus' two largest shareholders, European Aeronautic Defence & Space and BAE Systems, yesterday authorized Airbus to formally offer the A350 to airlines.
"Airbus has listened to its customers, who were interested in the medium-size category with greater range to complement their current Airbus widebody families," said Noël Forgeard, the chief executive of Airbus.
Airbus currently offers two planes that are nearly identical in size to the A350: the A330-200, and the A330-300.
The A350-800 will be able to carry 245 passengers a distance of 8,600 nautical miles. The A330-200 currently can carry 253 passengers 6,450 nautical miles.
"It's always hard when you're trying to sell something that's a comparable product," said Allen, who believes the A350 will eventually replace the A330. "The natural tendency for anybody is to push the thing that is the newest."
Though a new member of the Airbus product family, the A350 will not be an entirely new plane.
The A350 fuselage will be virtually identical to the A330 fuselage, though it will likely incorporate lightweight composite materials and aluminum alloys developed for the A380.
It will also feature an all-composite wing built of carbon fiber-reinforced plastic.
Boeing said that because Airbus is not designing the A350 from scratch, it will not be able to maximize the fuel-efficiency improvements of the new GE engines. Nor will it be able to significantly improve the passenger's in-flight experience.
"A year ago all the rhetoric from Airbus about the 7E7 was how they didn't need to do anything to respond," said Baseler. "This is an A330 derivative that will fall short of the 7E7."
How Airbus pays for A350 development now becomes a critical question.
The U.S. government has filed a World Trade Organization complaint against Airbus over the company's below-market-rate loans from European governments to fund new airplane programs.
Airbus has said it expects to spend around 4 billion euros, or $5.3 billion, to develop the A350. And Forgeard has indicated Airbus will indeed seek government loans to cover a portion of the cost.
Richard Mills, a spokesman for U.S. Trade Representative Robert Zoellick, declined to comment on the Airbus announcement specifically. But Mills implied that U.S. officials would be unhappy if Airbus sought new government support.
"We've made our position quite clear: We want to see an end to subsidies," Mills said. "Efforts to provide subsidies to a new Airbus plane, if undertaken, would undermine efforts to reach a solution."
Information from The Associated Press is included in this report. David Bowermaster: 206-464-2724 or email@example.com
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