EADS to allow Airbus to build A350 XWB (787 competitor)

[K1052]

Airbus Wins Approval to Offer A350, Challenge Boeing (Update1)

By Andrea Rothman and Fred Pals

Dec. 1 (Bloomberg) -- Airbus SAS, the world's biggest maker of commercial aircraft, won approval from its parent company to develop the 300-seat A350 XWB airliner to challenge Boeing Co.'s 787- and 777-model planes, its chief executive officer indicated.

``You can see I'm smiling,'' said Louis Gallois, CEO of Airbus and co-CEO of parent European Aeronautic, Defence & Space Co., today as he emerged from an all-day board meeting in Amsterdam.

Gallois said in an interview that EADS won't make an announcement until later today. He said a decision was made at the meeting and that his smile could be taken as an indication of the outcome. Gallois has said previously he favored the A350 launch.

The A350 XWB is Toulouse, France-based Airbus's sixth attempt to create a competitor for the 787, which has won more than 430 orders and may help Boeing retake the lead in building large airliners. Airbus is struggling to complete development of the 555- seat A380 model, which is two years late and forecast to generate operating losses of 4.8 billion euros ($6.1 billion) by 2010.

``They didn't have a choice, they had to launch the plane, as aircraft of this size represent some 40 to 45 percent of the market in the future,'' said Yan Derocles, an analyst at Oddo Securities in Paris who has a ``reduce'' recommendation on EADS shares.

Shares of EADS rose 66 cents, or 3 percent, to 22.87 euros in Paris. The stock has fallen 28 percent this year compared with a 27 percent gain for Chicago-based Boeing.

The market for large commercial aircraft is worth about $60 billion annually. The A350 XWB won't be ready for commercial service until at least 2012, four years after the new 787 enters airlines' fleets.

To contact the reporter on this story: Andrea Rothman in Toulouse, France, at aerothman@bloomberg.net ; Fred Pals in Amsterdam at fpals@bloomberg.net .

Last Updated: December 1, 2006 12:27 EST

http://www.bloomberg.com/apps/news?pid=20601085&sid=afBZURWV_m.Y&refer=europe

Given the cool response from airlines to this concept, the massive headstart Boeing has in fusilage composites, and the 787 selling like hotcakes methinks Airbus is going to have a little problem clawing back their market share in this area.

 

[Genx87]

That 4 years is going to hurt them imo.
Boeings biggest problem from what I can tell is manufacturing capacity. They wont have enough to fill the orders.

 

[K1052]

Originally posted by: Genx87
That 4 years is going to hurt them imo.
Boeings biggest problem from what I can tell is manufacturing capacity. They wont have enough to fill the orders.

There was a story on that too recently. Boeing has decided to slowly increase production rather than risk causing a glut of planes to hit the market and hurting profits.

 

[techs]

Airbus is unfairly competing. The can develop planes at no risk to the company due to government financing.

 

[Specop 007]

Originally posted by: techs
Airbus is unfairly competing. The can develop planes at no risk to the company due to government financing.

And so far thats been working just peachy for them hasn't it? :laugh:

 

[K1052]

Originally posted by: techs
Airbus is unfairly competing. The can develop planes at no risk to the company due to government financing.

When Boeing complains, Airbus points to Boeing's military contracts. They do this in spite of the fact that EADS holds its own military contracts too. The company is almost explictily underwritten by the French, German, and British Governments.

That?s one reason I like to see a normal, publicly held US company kick the tar out of them.

 

[techs]

Originally posted by: Specop 007

Originally posted by: techs
Airbus is unfairly competing. The can develop planes at no risk to the company due to government financing.

And so far thats been working just peachy for them hasn't it? :laugh:

Yeah, really. I wish I could screw up so royally and not have to worry about my business going under.

 

[tvarad]

The irony here is that the original Airbus bet against the 787 viz. the A380 will probably never make money. I remember Airbus execs crowing about how right they were and how wrong the Boeing people.

I guess the European taxpayer will have to work extra hard to make up for the A380 losses AND pay for the A350XWB.

 

[tvarad]

Boeing still has one ace up it's sleeve: the successor to the 737. It's competitor is the A320 which is Airbus's cash cow, on which it is making money via volumes (it recently increased the production rate to keep up with demand and to offset A380 losses). My guess is that Boeing will wait till the A350XWB development is well on it's way (a year or two from now) and announce the 737 successor to deliver the coup de grace.

Airbus will have no option but to compete. It'll be interesting to see how they'll do so.

 

[halik]

Originally posted by: techs
Airbus is unfairly competing. The can develop planes at no risk to the company due to government financing.

It's not gov't financing, they're just risk-free loans. Basically if they can't make the money, they don't have to pay them back. Otherwise they do.

Boeing is unfairly competing as well, they get free R&D from military contracts.

 

[tvarad]

halik:

"t's not gov't financing, they're just risk-free loans. Basically if they can't make the money, they don't have to pay them back. Otherwise they do."

Now there's a financing plan that I like. I wish my mortgage and car-finance companies worked the same way.

 

[slash196]

I just want to see if this 787 is all it's cracked up to be. For example, more leg room? I'm 6'4", if I could afford one I'd buy a 787 myself

 

[K1052]

Originally posted by: tvarad
Boeing still has one ace up it's sleeve: the successor to the 737. It's competitor is the A320 which is Airbus's cash cow, on which it is making money via volumes (it recently increased the production rate to keep up with demand and to offset A380 losses). My guess is that Boeing will wait till the A350XWB development is well on it's way (a year or two from now) and announce the 737 successor to deliver the coup de grace.

Airbus will have no option but to compete. It'll be interesting to see how they'll do so.

I'm guessing they plan to scale the 787 technology into a 737 sized plane, along with other cost saving refinements. Couple that with a aircraft type that is flown more than any other (certified pilots) and Airbus is looking at a another big problem.

 

[tvarad]

Me:
".... announce the 737 successor to deliver the coup de grace."

K1054
".... Couple that with a aircraft type that is flown more than any other (certified pilots) and Airbus is looking at a another big problem."

I forgot. They always have Joe. Q. Europeantaxpayer to fall back on (thwacking myself on the forehead).