By Robert Wall
HAMBURG, GERMANY--Airbus is studying whether to upgrade its new
A330neo jetliner to blunt the range advantage of a rival plane
built by Boeing Co.
The step is the latest in the move, countermove chess match
between the two biggest plane makers as they jostle for sales in
the highly lucrative market for widebody airplanes. Boeing has
traditionally dominated the high-end of the long-range plane
market.
John Leahy, Airbus's chief operating officer for customers, on
Tuesday said the enhancement to the plane that is also called the
A330-900 would allow airlines to carry more fuel to allow the plane
to fly farther or carry more load at the current range. The effort
is still in the design stage, he said, with no decision made on
pursuing the upgrade.
Mr. Leahy said the upgrade of the A330-900 would help reduce a
range advantage Boeing's 787-9 Dreamliner currently has on the
European plane maker's product. Airbus estimates the Boeing plane
as offering 1,473 miles (2,370 kilometers) of greater range,
although Mr. Leahy said the A330 is far less costly.
The A330-900 is due to enter service at the end of next
year.
Airbus designers are assessing whether they can upgrade the A330
to carry more weight with minimal design changes, Mr. Leahy said.
The company wants to avoid major structural changes, such as adding
a much larger landing gear, which can make changes costly. The
Rolls-Royce Holdings PLC engine to power the plane should be able
to handle the higher weight, he said.
Airbus and Boeing are trying to prioritize modifications to
existing planes to enhance their competitiveness while avoiding
costly new development programs, which also carry high execution
risks. "Our incremental development strategy is taking shape," said
Fabrice Brégier, chief executive of Airbus's plane-making unit.
As part of the continuous back and forth on product
developments, Airbus also continues to study whether it should
launch a bigger version of its largest twin-engine, long-haul
plane, the A350-1000, to take on the Boeing's 777X. The
Chicago-based plane maker's jetliner, which is still in
development, seats more than 400 people or around 40 more than the
model Airbus currently sells.
But a dearth of orders for Boeing's big plane since an initial
flurry of deals has Airbus wondering whether there is sufficient
market potential left to build a more direct competitor. Developing
a larger A350 would cost several billion dollars, Mr. Leahy
said.
"We are convinced we can do the job, but we are not convinced we
should launch it," Mr. Brégier said, because of questions about the
market's size. The company also wants to avoid a new plane
cannibalizing orders for its other models.
The product competition also is playing out at the lower end of
the plane market, where Boeing is assessing changes to its 737 Max
single-aisle product lineup to more forcefully compete against
Airbus's A320neo narrowbodies, which have won a greater share of
orders. Boeing has yet to announce exactly how the single-aisle
family may change.
The efforts by both plane makers to refine their products to win
orders comes as the pace of deals has slowed.
Airbus booked more than 1,000 plane orders in each of the past
three years but has secured only 92 net orders in the first four
months of 2016, feeding investor concern that the boom times for
plane makers are over. Rival Boeing, the world's largest plane
maker by deliveries, has secured 265 net orders this year through
May 24.
Mr. Brégier said its target of order intake at Airbus to be
roughly on par with planes delivered this year was "achievable."
Airbus has committed to shipping a company record of 650 airliners
in 2016. The plane-purchase market remained strong, he said.
One of Airbus's biggest deals announced this year, the sale of
118 jetliners to Iran including 12 A380 superjumbos, is yet to be
completed. Mr. Brégier said the company was making progress
securing the financing and export licenses for the deal, but that
more work needed to be done. He remained optimistic the deal would
be completed this year.
Airbus has been hit by a lack of support from export credit
agencies from the U.K., Germany and France since April after it
submitted flawed documents that failed to disclose the use of some
intermediaries. The issue is under review by the U.K. Serious Fraud
Office.
Mr. Brégier said he was hopeful export credit would be restored
this year. The strong commercial aircraft-financing market is
mitigating any adverse impact on the plane maker, he said.
Airbus's backlog of planes ordered but not yet delivered is
above 6,700 aircraft. That backlog underpins Airbus's plan to boost
production, especially of its popular A320 single-aisle plane.
Airbus is ramping up output to 60 narrow body planes a month in
2019 from the mid-40s today. Mr. Leahy said there was scope to go
even higher, although others at Airbus are urging caution.
Mr. Leahy played down the threat from the newcomer to the
single-aisle market, Canada's Bombardier Inc. which recently won a
landmark order for its CSeries aircraft from Delta Air Lines Inc.
The U.S. carrier in April said it would take 75 of the planes with
options for 50 more, a breakout order for Bombardier that had
struggled to gain wide market acceptance from well-known
airlines.
The pricing the Canadian plane maker offered the U.S. carrier is
unsustainable, Mr. Leahy said.
Bombardier announced a $500 million provision alongside the
Delta deal. It said the provision took into account the sales price
and the production costs. Bombardier said such provisions are
typical meeting early orders for a new jet.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
May 31, 2016 08:51 ET (12:51 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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