Aerospace & Defense
Airbus Considers Sacrificing A350
Chris Noon, 10.05.06, 2:35 PM ET
In a Darwinian twist to the battle between the world's two dominant makers of commercial aircraft, Airbus may have to sacrifice the weaker of two upcoming models to get its troubled superjumbo offering to market.
Thomas Enders, the co-chief executive of European Aeronautic Defense and Space (other-otc: EADSF - news - people ), Airbus' corporate parent, told The Financial Times Deutschland that the company might scrap its planned A350 XWB (extra-wide body) aircraft--the planned competitor to rival Boeing's (nyse: BA - news - people ) 787 Dreamliner--as a result of the current crisis at the aerospace and defense giant.
When asked if EADS had considered halting development of the aircraft, Enders said, "I can't rule it out." He added that "nothing can be considered automatic" in the company's difficult situation.
Enders' pessimism is unsurprising. Airbus can't make any promises on the A350 program right now, as it has to fix and deliver the jinxed A380 superjumbo first. Media reports have suggested that Middle Eastern airline Emirates, frustrated by new delays to the Airbus A380 program, is close to canceling at least half of its orders for the aircraft, which can seat 555 to 850 people, and is discussing with Boeing terms for an initial order of approximately 20 of its 747-8s, meant to carry up to 450 passengers.
Halting development of the 270- to 310-passenger A350 seems like the wisest course for Airbus, which is reeling from problems related to the A380. Among these are penalty payments for late deliveries, credit downgrades, French-German government disputes, union unrest and a continuing lack of credibility among key major airlines, who are furious at the cost, inconvenience and arrogance surrounding this Titanic debacle.
As far as the manufacturing of the A350 goes, Airbus is caught between a rock and a hard place. It can't outsource the work to a cheaper development area, such as China, because training and infrastructure costs would be too high and the time period too long. To develop the A350 internally, Airbus would need billions of euros and a steady income stream from A380 deliveries, neither of which it currently has.
Insiders say the company had been chewing over plans to make the A350 an all-carbon-fiber aircraft to match the Boeing 787, but that would involve massive investments in new technology plus a high degree of risk, neither of which Airbus is in a position to contemplate right now. Bear in mind that all Airbus' A350 "orders" are for the current, heavier metal-alloy version of the craft, so the company runs the risk of losing many of them to airlines that are not interested in being carbon-fiber guinea pigs.
The end result--even if Airbus were able to build the A350--would be an aircraft that will fly in 2013 or 2014, half a decade after Boeing's 787, with room for 210 to 330 people, takes to the skies. Around that time, both Airbus and Boeing, acutely conscious of the uncertainty over oil prices, will likely be refocusing on switching their entire narrow-body lines to carbon-fiber fuselages to save weight.
In truth, Airbus' plans to redesign its A350 model always had a whiff of the slapdash about it. In mid-July, Airbus--anxious to mollify its customers who groused that the original A350 was slow, thirsty and suffered from poor interior design--added the designation XWB to its previous A350 proposal, an abbreviation for "extra wide body." Yet the revamped A350 is a measly five inches wider than Boeing's competing 787.
It is hard to imagine that airlines and shareholders who had been massively and expensively inconvenienced by Airbus program mismanagement on the A350 or A380 over the past two years will be terribly excited about the promise of five inches of extra cabin width in an aircraft to be delivered eight years from now.
Besides the widening, the new planes, which will debut sometime between 2012 and 2014, will use the A380 superjumbo's cockpit and will feature beefier engines and increased use of composite materials in the wings and fuselage.
"It could be wise for Airbus to just quietly put the A350 on the back burner [and] see if they can squeeze a little better performance out of the 295-passenger A330, in the same way they're trying to gain a 5% fuel efficiency improvement on the narrow bodies over the next couple of years, and ride it out," said Doug McVitie, a former Airbus employee and managing director of the France-based Arran Aerospace consultancy. "Whichever way they turn, they have no magic solution, so dropping the program or at least deferring its launch seems to me to make sense."
http://www.forbes.com/2006/10/05/airbus-eads-boeing-biz-man-cx_cn_1005airbus.html?partner=yahootix