Airbus appears to be nearing a decision to tell airlines the specifics of its plans to develop an all-new commercial jetliner, possibly to be called the A370, as it seeks to blunt The Boeing Co.'s growing market dominance with the twin-engine 777 and the soon-to-be 787 Dreamliner.
Exactly what Airbus will do is not clear, but speculation about the A370 was the buzz in Paris the last two days during the annual meeting of the International Air Transport Association.
Airbus isn't talking, at least to reporters, but among the 260 airline members of IATA are several that want Airbus to spell out its plans - soon. They have already ordered the A350, an airplane that Airbus is now widely expected to abandon in favor of an all-new design.
Qatar Airways has committed to buy 60 A350s. It is the biggest customer for the plane.
Akbar Al Baker, Qatar's chief executive, told the Seattle P-I at the IATA meeting that Airbus will brief his airline on its plans Tuesday.
Qatar could reconsider Boeing's 787 if Airbus is not forthcoming about its intentions for the A350 or a new design, he said.
And Singapore Airlines Chief Executive Chew Choon Seng, in an interview in Paris, said his airline is likely to decide this month between Boeing's 787 or the Airbus offering. In early May, Singapore Airlines' board postponed a decision on what was expected to be a substantial order for the 787 to allow Airbus more time to figure out what it would do in response to criticism - from Chew and others - that the A350 was inadequate.
The comments during the IATA meeting from Al Baker and Chew suggest that Airbus is finalizing technical details about its plane and will tell potential customers first before making any public announcement.
An official announcement could come before or during the Farnborough Air Show outside London in mid-July. This is the industry's biggest event of the year, with media coverage from around the world.
Some details about what Airbus is thinking could emerge next week when the airplane maker hosts its annual technical briefing for analysts and the trade press in Toulouse, France.
Boeing, meanwhile, is in the catbird seat. It is quietly going about the business of trying to sell airlines more 777s and 787s. Just last week, Boeing added 20 more 777s to its order book from unidentified customers. On Tuesday, Continental Airlines announced that it was buying 10 more 787 Dreamliners. It had previously ordered 10.
Scott Carson, head of Boeing's jetliner sales unit and one of several Boeing commercial executives at the IATA meeting, said the industry uncertainty about what Airbus will do with the A350 has had little effect on Boeing's sales efforts. Boeing is confident of its strategy with the 777 and 787, he said.
Two years ago, Airbus executives were dismissing the 787, saying they could easily match it with a derivative of the popular Airbus A330. The A330 was clobbering Boeing's 767 in sales, and the 787 was developed as a 767 replacement. The A350, Airbus said at the time, would have an improved wing and the same fuel-efficient engines as the 787. But Airbus decided not to change the A330 fuselage. A derivative plane is much cheaper to develop than an all-new design.
Airbus now admits that it greatly underestimated the 787, which will be the industry's first large commercial jetliner with a mostly composite airframe, including fuselage. The lighter 787 will be much more fuel-efficient than today's jets, with far longer maintenance intervals, and that has given Boeing a huge marketing advantage.
Chew said he is impressed with the 787. Singapore Airlines, one of the world's leading airlines, spent $1 billion more on fuel in 2005 than in 2004. And the price of fuel has gone up significantly this year. Fuel is now more than 40 percent of Singapore Airlines' direct operating cost. That makes a plane like the 787 very attractive.
"Two years ago, we in Airbus obviously underestimated this animal," Gustav Humbert, the new Airbus boss, acknowledged at the air show in Berlin.
Airbus has won only 100 firm orders for the A350. Boeing has more than 350 for the 787, plus 40 more commitments. The 787 will enter airline service in May 2008 with All Nippon Airways of Japan.
Originally, Airbus had said the A350 would not be available until 2010, though that date had slipped in recent months.
It is not clear when Airbus could have an all-new plane ready, but probably not before 2012 at the earliest.
Airbus did not acknowledge that it needed to do more with the A350 until a couple of months ago, when Steve Hazy, the head of International Lease Finance Corp., one of the biggest Boeing and Airbus customers, stood up at an industry conference and said Airbus should seriously rethink the A350. The lease group had already ordered both the 787 and A350.
A month later, Singapore Airline's Chew, in an interview with the P-I, echoed that criticism, saying the A350 needed a new and wider fuselage to match that of the 787.
On the sidelines of the IATA conference this week, Tim Clark, president of Emirates, the largest Arab airline, said he wanted to shout "hallelujah" when Hazy made his public A350 criticism.
Essentially, Hazy said the A350 "sucks," Clark said, and he was right.
Emirates, which has ordered more than 40 A380s from Airbus and more than 40 777s from Boeing, is considering the 787. It was one of several airlines that persuaded Boeing to develop the 787-10, a bigger 787 that will seat more than 300 passengers. Boeing has said the 787-10 will be available around 2012.
"We continue to be impressed with the 787," Clark said in an interview, adding that he expected a detailed briefing from Airbus as soon as today about its plans for a new and improved A350.
Clark said Emirates wants an all-new plane, not one that was "not ready for the 21st century." He was referring to the previous version of the A350 that Airbus had been offering.
The problem for Airbus is how it can take on both the 777 and the smaller 787 with one plane - if that's what Airbus decides to do.
The 777, which can seat from 300 to more than 350 passengers, has been winning almost all the orders over the competing Airbus product, the four-engine A340.
Boeing sold more than 150 777s last year. Airbus sold only a handful of A340s.
Airlines say they want the more fuel-efficient two-engine Boeing jet.
But the 787 is smaller than the 777. The 787-8, the base plane, will seat fewer than 250 passengers and the bigger 787-9 fewer than 300. Only the 787-10 will be able to carry more than 300 passengers in a typical three-class configuration.
When the 787-10 comes along, it is likely to replace the similar-sized 777-200ER. But the bigger 777-300ER has been Boeing's best-selling 777 the last two years. That plane is already well-established, and it will be difficult for Airbus to displace it, said Randy Baseler, vice president of marketing for Boeing Commercial Airplanes.
And if Airbus takes aim at the 777 with a bigger A370, then what will it do against the smaller 787? Baseler asked. Making a big plane smaller also makes it less efficient. That's why airplane makers develop stretch versions later and not smaller models.
"We don't seen anything (Airbus) can do that will significantly change what we are doing," Baseler said in an interview at the IATA meeting.
"But they are smart guys," he added. "I'm sure they will figure something out."
Just what, however, remains to be seen.
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