HUGE MISTAKE OR HUGE SUCCESS? AIRBUS ALL IN ON NEED FOR A380 - BUT BOEING STILL DOUBTFUL

It was an unlikely gathering of aviation rivals from opposite sides of the Atlantic. At the Four Seasons Hotel in Munich, Germany, officials from Airbus and The Boeing Co. had wrapped up two days of meetings with an extravagant dinner. But...


But whether the A380 will be the biggest jewel in the Airbus crown remains to be seen.

Some have long argued that Airbus had no choice but to develop a big plane to complete its product line and match Boeing.

"The problem is the monopoly of the 747, which is a fantastic advantage. They have a product. We have none." Those were comments, made in 1995 after the Munich meeting with Boeing, by Louis Gallois, who at the time was chairman of Aerospatiale, one of the companies that made up the Airbus consortium.

After being named to take over Airbus last year when the French and German company's chief executive abruptly resigned, Gallois is now chief executive of European Aeronautic Defense and Space Co., which owns Airbus.

The Airbus and Boeing talks about a 500-seat jumbo jet, which had started in January 1993, had been so sensitive that lawyers for both sides were usually present at any meeting to make sure that there was no improper transfer of information. After Boeing withdrew, Airbus later accused its rival of deliberately drawing out the discussions to stall the Airbus effort at developing a large airplane to compete against the 747.

Now, critics say Airbus made the wrong bet on the A380.

"The A380 was a big mistake then and it is a big mistake now," said Richard Aboulafia of the Teal Group, an industry consulting firm.

"It is something they have to recover from and they are doing their best to recover," he said of Airbus, which in June 2006 disclosed that its prize plane, already late, would be delayed by another year because of significant wiring issues. The French and Germans had not used uniform software tools, and when it came time to begin assembling the big jets at a new factory in Toulouse, the complex wiring bundles that ran the length of the plane did not fit.

The projected $12 billion development cost of the A380 is believed to have ballooned to at least $18 billion. Airbus has gone through five chief executives in the past two years and is slashing 10,000 jobs as part of a restructuring plan to get financially healthy.

As a result of its focus on developing the A380, Aboulafia said, Airbus took its eye off the far bigger market for smaller but long-range widebody jets, and Boeing has leapfrogged Airbus with its 787.

The 787 has been the fastest-selling jetliner ever. Boeing has more than 700 orders for the 250- to 300-seater, which will be the first large commercial jetliner with an airframe made of carbon-fiber composite. Airbus is responding with the slightly bigger A350 XWB (extra wide body), but that plane won't enter service until 2013.

"Airbus is scrambling to catch up, but because of the A380 it has been a slow, slow road," Aboulafia said.

The 787 was supposed to be ready for airlines next May, but Boeing announced two weeks ago a six-month delay. Boeing has had problems getting the first plane finished, and first flight has been pushed back to late March.

"This is the market that matters," Aboulafia said of the 787 and A350, as well as the bigger 777. "It is all about range, not capacity."

Airbus has won only 165 firm orders for the A380 from 14 customers, not including a recent commitment by British Airways to buy a dozen. But 47 of those orders are from one airline, Emirates.

Leahy believes the series of delays - the plane is about two years late getting to customers - hurt sales. British Airways was the first new customer for the A380 in about two years. Sales will pick up now that the A380 is entering airline service, said Leahy, who recently predicted Airbus will sell more than 800 over the life of the plane.

Boeing has sold 1,506 of its 747s, starting with Pan Am's order in the late 1960s.

Passengers the final judge

Rather than develop an all-new jumbo, Boeing is taking the cheaper derivative route and will stretch its 747 to carry about 50 to 60 more passengers. The 747-8 will have an improved wing and other changes to make it more efficient, including the same fuel-efficient engines as the 787.

The freighter version of the 747-8 will be ready for service in 2009, and the passenger version, known as the Intercontinental, in 2010.

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