'X' factor: Airbus reveals A350 XWB
But will revamped A350 be enough to counter Boeing's Dreamliner?
By Aude Lagorce, MarketWatch
Last Update: 10:31 AM ET Jul 17, 2006
FARNBOROUGH, England (MarketWatch) -- Airbus's new chief executive, Christian Streiff, on Monday unveiled the European aircraft maker's riposte to the Boeing 787 Dreamliner, a redesigned plane with an "x" factor called the A350 XWB.
Airbus made the decision to review the original design for the A350 after key customers complained that the aircraft wouldn't be sufficiently competitive versus the Dreamliner. The A350 was slower, used more fuel and had a dated cabin, they said. Orders reflected their concerns, with Airbus winning only 100 firms ones compared with 360 for Boeing's 787.
The revamped XWB is Airbus' best shot at addressing these issues at a time when the company is deeply troubled.
"It's called XWB for extra comfortable, extra efficient and, hopefully, extra profitable for Airbus," said commercial director John Leahy.
The code name XWB stands for extra-wide body and underlines the jet's wider cabin. Other modifications include the use of the A380 superjumbo's cockpit, a new engine, a revamped cabin with the largest-ever windows and increased use of composite materials in the wings and fuselage.
In answer to higher fuel costs, Airbus also said the XWB would be 30% more fuel efficient than current aircraft and 6% more efficient than its initial model.
"Virtually everything has changed," said Leahy.
Some observers, however, weren't exactly bowled over.
"Streiff looked like a kid with a new toy, but there was no substance to what he said," said Doug McVitie, an analyst with consultancy Arran Aerospace.
"The truth is they're panic-stricken. Airbus' Web site last year referred prophetically to the A350 with the slogan, 'You ain't seen nothing yet.' Well, we still ain't ... and on the basis of today's performance, I'd say there's no more than a 50-50 chance we'll see all three new A350s in service at the same time," said McVitie.
Although the plane's development costs will balloon to $10 billion, almost twice the initial budget, Streiff sought to reassure investors that it would all be worth it in the end.
"We can turn the recent crisis into an opportunity. We're taking the time to come up with an airplane that will be a step ahead of the B787," he said.
The improvements, however, won't come cheap. List prices will range from $186 million to $242 million per plane. Management also acknowledged for the first time that they may actually lose one or two of their original A350 customers.
Streiff also said he's delaying the "industrial launch" of the aircraft for three months to be able to "personally verify" all aspects of the program.
Airbus is putting much emphasis on clarity and honesty after the announcement of a fresh round of delays with its A380 program sent the shares down 26% in a single day and forced former Airbus chief Gustav Humbert to resign earlier this month
Can old customers been won back and new customers won over?
One key element, however, remains unknown -- the reaction of customers, who had already placed 100 firm orders for the A350 and were deeply dissatisfied with the way things were going.
Streiff said Monday that he had a "long, very positive, very tough discussion," with Steven Udvar-Hazy, CEO of leasing giant International Lease Finance Corp, the largest customer for both Boeing and Airbus.
He declined to say more about how the A350 XWB had been received.
But in order to help with the higher development costs, it is clear that Airbus will go back to European governments and ask them for more refundable launch aid, a move which could create tension with Boeing, which labels these loans as unfair.
Streiff, however, didn't seem troubled at the perspective of further poisoning a lingering trade dispute between the U.S. and Europe at the World Trade Organization.
"Obviously we are looking for government support," he said. "It will be the case for the survival of the industry on both sides of the Atlantic.
Tom Williams, the head of the commercial airplane division, also sought to reassure governments that production locations were unlikely to change with the new plane.
The U.K. government, in particular, is concerned that some of the group's 16,000 domestic employees could be laid off should BAE Systems decide to sell its 20% stake in Airbus.
"We build sections of the aircraft where the best competence is. It's not about where the shareholders are based. None of that will change. Whether BAE remains a shareholder or not," he said.
But will revamped A350 be enough to counter Boeing's Dreamliner?
By Aude Lagorce, MarketWatch
Last Update: 10:31 AM ET Jul 17, 2006
FARNBOROUGH, England (MarketWatch) -- Airbus's new chief executive, Christian Streiff, on Monday unveiled the European aircraft maker's riposte to the Boeing 787 Dreamliner, a redesigned plane with an "x" factor called the A350 XWB.
Airbus made the decision to review the original design for the A350 after key customers complained that the aircraft wouldn't be sufficiently competitive versus the Dreamliner. The A350 was slower, used more fuel and had a dated cabin, they said. Orders reflected their concerns, with Airbus winning only 100 firms ones compared with 360 for Boeing's 787.
The revamped XWB is Airbus' best shot at addressing these issues at a time when the company is deeply troubled.
"It's called XWB for extra comfortable, extra efficient and, hopefully, extra profitable for Airbus," said commercial director John Leahy.
The code name XWB stands for extra-wide body and underlines the jet's wider cabin. Other modifications include the use of the A380 superjumbo's cockpit, a new engine, a revamped cabin with the largest-ever windows and increased use of composite materials in the wings and fuselage.
In answer to higher fuel costs, Airbus also said the XWB would be 30% more fuel efficient than current aircraft and 6% more efficient than its initial model.
"Virtually everything has changed," said Leahy.
Some observers, however, weren't exactly bowled over.
"Streiff looked like a kid with a new toy, but there was no substance to what he said," said Doug McVitie, an analyst with consultancy Arran Aerospace.
"The truth is they're panic-stricken. Airbus' Web site last year referred prophetically to the A350 with the slogan, 'You ain't seen nothing yet.' Well, we still ain't ... and on the basis of today's performance, I'd say there's no more than a 50-50 chance we'll see all three new A350s in service at the same time," said McVitie.
Although the plane's development costs will balloon to $10 billion, almost twice the initial budget, Streiff sought to reassure investors that it would all be worth it in the end.
"We can turn the recent crisis into an opportunity. We're taking the time to come up with an airplane that will be a step ahead of the B787," he said.
The improvements, however, won't come cheap. List prices will range from $186 million to $242 million per plane. Management also acknowledged for the first time that they may actually lose one or two of their original A350 customers.
Streiff also said he's delaying the "industrial launch" of the aircraft for three months to be able to "personally verify" all aspects of the program.
Airbus is putting much emphasis on clarity and honesty after the announcement of a fresh round of delays with its A380 program sent the shares down 26% in a single day and forced former Airbus chief Gustav Humbert to resign earlier this month
Can old customers been won back and new customers won over?
One key element, however, remains unknown -- the reaction of customers, who had already placed 100 firm orders for the A350 and were deeply dissatisfied with the way things were going.
Streiff said Monday that he had a "long, very positive, very tough discussion," with Steven Udvar-Hazy, CEO of leasing giant International Lease Finance Corp, the largest customer for both Boeing and Airbus.
He declined to say more about how the A350 XWB had been received.
But in order to help with the higher development costs, it is clear that Airbus will go back to European governments and ask them for more refundable launch aid, a move which could create tension with Boeing, which labels these loans as unfair.
Streiff, however, didn't seem troubled at the perspective of further poisoning a lingering trade dispute between the U.S. and Europe at the World Trade Organization.
"Obviously we are looking for government support," he said. "It will be the case for the survival of the industry on both sides of the Atlantic.
Tom Williams, the head of the commercial airplane division, also sought to reassure governments that production locations were unlikely to change with the new plane.
The U.K. government, in particular, is concerned that some of the group's 16,000 domestic employees could be laid off should BAE Systems decide to sell its 20% stake in Airbus.
"We build sections of the aircraft where the best competence is. It's not about where the shareholders are based. None of that will change. Whether BAE remains a shareholder or not," he said.
