Tuesday, May 31, 2016

Airbus Ponders How to Blunt Boeing Range Advantage: A330neo jetliner, although cheaper, lacks range of Boeing’s 787-9 Dreamliner

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The Wall Street Journal
By ROBERT WALL
May 31, 2016 5:39 a.m. ET


HAMBURG, GERMANY—Airbus is studying whether to upgrade its new A330neo jetliner to blunt the range advantage of a rival plane built by Boeing Co.
The move is the latest in the move, countermove chess match between the two biggest plane makers as they jostle for sales in the highly lucrative market for widebody airplanes. Boeing has traditionally dominated the high-end of the long-range plane market.

Airbus chief operating officer for customers John Leahy on Tuesday said the enhancement to the plane that is also called the A330-900 would allow airlines to carry more fuel to allow the plane to fly farther or carry more load at the current range. The effort is still in the design stage, he said, with no decision made on pursuing the upgrade.

Mr. Leahy said the upgrade of the A330-900 would help reduce a range advantage Boeing’s 787-9 Dreamliner currently has on the European plane maker’s product. Airbus sees the Boeing plane as offering 1,473 miles (2,370 kilometers) of greater range, although Mr. Leahy said the A330 is far less costly.

The A330-900 is due to enter service at the end of next year.

Airbus designers are assessing whether they can upgrade the A330 to carry more weight with minimal design changes, Mr. Leahy said. The company wants to avoid major structural changes, such as adding a much larger landing gear, which can make changes costly. The Rolls-Royce Holdings PLC engine to power the plane should be able to handle the higher weight, he said.

As part of the continuous back and forth on produce developments, Airbus also continues to study whether it should launch a bigger version of its largest twin-engine, long-haul plane, the A350-1000, to take on the Boeing’s 777X. The Chicago-based plane maker’s jetliner, which is still in development, seats more than 400 people or around 40 more than the model Airbus currently sells.

But a dearth of orders for Boeing’s big plane since an initial flurry of deals has Airbus wondering whether there is sufficient market potential left to build a more direct competitor. Developing a larger A350 would cost several billion dollars, Mr. Leahy said.

The product competition also is playing out at the lower end of the plane market, where Boeing is assessing changes to its 737 Max single-aisle product lineup to more forcefully compete against Airbus’s A320neo narrowbodies, which have won a greater share of orders. Boeing has yet to announce exactly how the single-aisle family may change.

The efforts by both plane makers to refine their products to win orders comes at a time the pace of deals has slowed this year.

Airbus booked more than 1,000 plane orders in each of the past three years but has secured only 92 net orders in the first four months of 2016, feeding investor concern that the boom times for plane makers are over. Rival Boeing Co., the world’s largest plane maker by deliveries, has secured 265 net orders this year through May 24.

Mr. Leahy said he still expected order intake at Airbus to be roughly on par with planes delivered this year. Airbus has committed to shipping a company record of 650 airliners in 2016. As long as orders match deliveries Airbus would be “content,” he said.

“We have to get back into balance,” Mr. Leahy said, after years in which new deals secured were twice as high or more than planes delivered. Airbus’s backlog of planes orders and not yet built is above 6,700 aircraft.

That backlog underpins Airbus’s plan to boost production, especially of its popular A320 single-aisle plane. Airbus is ramping up output to 60 narrow body planes a month in 2019 from the mid-40s today. Mr. Leahy said there was scope to go even higher, although others at Airbus are urging caution.

Mr. Leahy played down the threat from the newcomer to the single-aisle market, Canada’s Bombardier Inc. which recently won a landmark order for its CSeries aircraft from Delta Air Lines Inc. The U.S. carrier in April said it would take 75 of the planes with options for 50 more, a breakout order for Bombardier that had struggled to gain wide market acceptance from well-known airlines.

The pricing the Canadian plane maker offered the U.S. carrier is unsustainable, Mr. Leahy said.

Bombardier announced a $500 million provision alongside the Delta deal. It said the provision took into account the sales price and the production costs. Bombardier said such provisions are typical meeting early orders for a new jet.

Original article can be found here:  http://www.wsj.com