/ 17 July 2006

Airbus to reveal new A350 plane design

European group Airbus will on Monday unveil new design plans for its troubled long-haul A350 plane, Thomas Enders, co-chief executive of Airbus’s parent company EADS, told reporters.

The cost of developing the mid-sized jet could meanwhile more than double to about $10-billion (€7,9-billion), added the German boss, confirming recent media reports.

Enders spoke during a weekend seminar held by the European Aeronautics Defence and Space Company in Bath, south-west England, ahead of the week-long Farnborough Airshow near London that begins on Monday.

The EADS boss said that Airbus would unveil at Farnborough new plans for the A350, which it launched in 2005 as a direct rival to Boeing’s 787 Dreamliner, but which has been poorly received by potential customers.

An EADS spokesperson added that the plane’s industrial launch, or the start of A350 production, could be expected in the “next months”.

Standing alongside Enders meanwhile, new EADS co-chief executive Louis Gallois acknowledged that EADS needed to rebuild trust after its recent management crisis caused by delays to the Airbus A380 superjumbo.

Regarding the A350, Enders told journalists in Bath: “You can be sure that new Airbus CEO Christian Streiff will present the new A350 at the airshow on Monday. The product specification is complete.”

Regarding development costs of the revised project, he said it could be expected to be “roughly $10-billion”. The original cost had been put at an estimated $4-billion.

The wide-body A350, which in its current design can carry between 250 and 300 passengers, is being overhauled to make it bigger and more fuel efficient.

Some analysts believe it will re-emerge as the A370 and could see an enlarged fuselage.

US aircraft giant Boeing is winning the race in the long-haul market with the 787, which is being marketed to airlines as a fuel efficient, medium-sized jet.

Boeing boss James McNerney, however, predicted that the management upheaval at Airbus and EADS would eventually produce benefits for his rival.

“In the end, the crisis will make EADS and Airbus stronger,” McNerney was quoted as telling the Paris newspaper Journal du Dimanche.

“The two companies will remain strong competitors for Boeing,” he said.

Meanwhile Streiff, who is French, was named head of Airbus earlier this month. He replaced the German Gustav Humbert, who resigned after Airbus announced it had run into manufacturing problems with its A380 superjumbo jet that would delay deliveries of the world’s largest passenger aircraft.

News of the delays saw €5,5-billion ($6,5-billion) briefly wiped off the market value of the EADS, which owns 80% of Airbus.

EADS finances are set to take a further financial hit in the coming months owing to the increased spending on the A350 and penalties it must pay customers for delayed deliveries of the A380, which is set to enter service in 2007.

The company could be forced soon also to pay €2,75-billion ($3,5-billion) for the 20% of Airbus it does not own.

BAE Systems has served EADS with a formal notice permitting the British group to exercise an option to sell EADS its 20% stake in Airbus.

Following the A380 debacle, Gallois told journalists in Bath that his first task was to help restore the reputation of EADS “to the highest standard”.

“Disclosure and trust is clear, it is our mandate. We have clearly to rebuild trust and confidence from our shareholders,” he added.

Gallois replaced Frenchman Noel Forgeard. The latter had been under intense pressure to quit since it was revealed he sold EADS shares worth millions of euros nearly three months before the group had on June 13 announced delays to the A380.

Enders told journalists in Bath that the management crisis was over. But he added: “Undoubtedly the reputation of this company has suffered, so has the confidence of customers and investors. The project that triggered this crisis, the A380, needs to be fixed.” – AFP