Airbus Reportedly Intending to up Spending on New A350

Airbus plans to increase spending on a proposed long-range jet made of lightweight carbon by 20 percent to $12 billion, said two people with direct knowledge of the proposal.

A new design for the A350 plane will be presented to Airbus parent company European Aeronautic, Defence & Space on Tuesday, said the sources, who declined to be identified before an announcement.

The A350 is Airbus' sixth attempt to create a competitor for Boeing's 787, which has won 402 orders.

"They really don't have a choice about doing it, if they want to be competitive with Boeing over the long term," said Phil Finnegan, an analyst at Teal Group, a consulting company in Fairfax, Va. "The big issue is, do they have the engineering talent to deal with the launch of the A350 as they're dealing with the problems of the A380?"

Airbus has struggled to develop its A380 superjumbo, now two years behind schedule and forecast to generate operating losses of $6.1 billion by 2010.

In July, Airbus said the A350 would cost $10 billion. The new concept would be made 50 percent from carbon fiber to reduce weight and save on fuel, airlines' biggest expense after labor, the sources said.

Boeing's plane, known as the Dreamliner, is 50 percent carbon fiber by weight, and 20 percent more fuel efficient than planes it replaces, according to Boeing.

The new A350 XWB wouldn't enter service until at least 2013, a year later than previously planned and five years after the 787 is expected to fly. Making a fuselage from carbon-fiber composites will also make the plane more costly to develop, the sources said.

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