New Airbus plane will challenge both 787 and 777

LUCKNAM PARK, near Bath, England – The co-chief executive of Airbus' parent company confirmed Saturday that Boeing's European rival will announce a new long-range widebody family of jets at the Farnborough Air Show Monday.

Tom Enders, co-CEO of Airbus majority owner European Aeronautic Defence & Space (EADS), said the product specification of the new jet family is complete. Speaking at an EADS media seminar, he provided few details in advance of the Monday press conference, but said the launch is "very important and crucial … for our strategy."

The new product line, a complete revamp of the A350 family offered to airlines last year, will go head to head with two distinct Boeing products, the forthcoming 787 and the much larger 777.

It will enter service in 2012, fully four years after the planned debut of the 787.

Although Boeing's 787 market position is secure, the Airbus move to attack the 777's market with a new jet may cause some consternation in Seattle.

In current plans, the 777—a highly successful and lucrative twin-engine widebody that first flew in 1994—is not up for replacement until probably the end of the next decade. Boeing will have to carefully consider how to react.

Enders pegged the new program cost at around $10 billion but said Airbus won't necessarily need European government launch aid to fund development.

"This company is big enough and strong enough and has ways and means to get the appropriate financing for a convincing business case," Enders said.

However, he also said Airbus is not prepared to give up the option of launch aid, as demanded by Boeing and by the U.S. in a case before the World Trade Organization.

"The basic prerequisite is a level playing field," said Enders, "There's no reason we should go for unilateral surrender."

The trade subsidy issue is intensely sensitive. If Airbus were to use government funding to pay for the new jet family, it could spur a very negative reaction in Congress. That might kill the chances of EADS winning the pending Air Force air refueling tanker contract in competition against Boeing.

Because the Air Force is set to take formal tanker proposals in January, the timing of a decision on how to fund the new Airbus commercial jet family is crucial. Enders said EADS will make that decision "in the next few months."

While new Airbus CEO Christian Streiff will announce the new jet's birth on Monday, it's unclear if he may also be announcing the effective death of the A340—the large four-engine widebody that has been losing share to the fuel-efficient 777.

Airbus executive vice president Tom Williams, head of airplane programs, said during dinner at the media seminar that the A340 will still be offered, though he admitted that it will be a niche product and that Airbus doesn't expect to sell many.

As for the 787-size A330, also to be replaced by the new family, Williams said Airbus will announce at Farnborough a new freighter version of that jet to buoy sales until the new airplane arrives in 2012.

Williams started out as an apprentice machinist in a Rolls-Royce engine factory in his native Glasgow. He was then, he said, a rabid working-class socialist and a trade union representative on the factory floor. He earned an engineering degree only in his 30s.

Now a hard-driving manager, he heads all Airbus commercial programs apart from the A380. He insisted that Airbus has the engineering resources to handle its now very full plate of development programs.

Airbus is only 18 months away from first flight of the A400M military cargo plane, which employs around 6,000 Airbus staff. And a top priority is fixing the massive A380 production issues that led to the resignation of chief executive Gustav Humbert last month.

But Williams said that these programs, each at very different stages of development, require different groups of engineers than the A350, so that resource needs are not overlapping.

He said that initially only around 200 architectural and concept engineers will work on the new revamped A350. Aerodynamicists and stress and loads engineers will be needed later.

And what will Airbus do if Boeing, as anticipated, launches a new program to replace its single-aisle jet as early as 2008?

Williams said Airbus would be ready for that eventuality.

"We will prepare what we need to do for a new product," he said. "We've protected our position on the single aisle so we can react."

In a pre-show interview last week, Barry Eccleston, president and chief executive of Airbus North America, summed up what's ahead in the newly unpredictable competition between the world's two commercial aviation giants.

"Each of us is playing this chess game to figure out what we should do next," said Eccleston.