Airbus could lose out in £700bn race

by David Robertson, The Times, 20/02/2007

Airbus’s inability to launch the A350 could hand rival Boeing a market worth up to $1.4 trillion (£717 billion).

The announcement yesterday that Airbus is postponing a decision on where the A350 will be built is a further blow to a vital programme that is already in trouble.

The European aircraft maker needs the A350 to compete with Boeing’s 787 Dreamliner, the American company’s most successful launch with orders worth $81 billion.

The 787 will fly for the first time in August but Airbus has not even agreed with its partner countries where work on the A350 will be done. The A350 is now at least five years away from flying and Airbus is in danger of losing the entire mid-sized airliner market to Boeing.

According to Boeing’s estimates, this twin-aisle market is forecast to be worth $1.4 trillion by 2025. Airbus’s own figures suggest that it risks missing out on a $1 trillion market. The two manufacturers are evenly matched in most market segments but there is one gaping hole in Airbus’s product range that the A350 is supposed to fill.

At the smaller end of the market the Airbus 320 and the Boeing 737 are both winning huge numbers of orders, while at the large end Airbus’s A380 at last appears to be getting over its production difficulties and will compete with the 747.

However, in the middle market, where the aircraft carry between 200 and 350 people, Boeing clearly has the lead. It has the 777 flying now and the 787 on the way. The 787 is 50 per cent carbon-fibre, making it much lighter than existing jets and this will improve fuel consumption and cut carbon dioxide emissions — an increasingly important consideration for airline customers.

Airbus has the A330 and the A340 but neither of these are winning anything like the orders Boeing is receiving. This is because the A330 is a much older design than the lightweight 787 and the A340 has four engines, making it an unpopular gas-guzzler. The A350 is supposed to be the future but it has already had a difficult life.

Design plans were rejected by Airbus’s airline customers last year as not sufficiently competitive with Boeing’s offering. The result was the redrawn A350XWB, or Extra Wide Body. But six months after the XWB was launched at the Farn-borough Air Show, airlines have yet to see any finalised design specifications.

Indeed, Airbus still does not seem to know how it will build the aircraft. It originally planned to bolt carbon fibre panels together, tiling the fuselage like the space shuttle. This now appears to have been dropped in favour of Boeing’s design, which is to create barrel sections of fuselage and weld the numerous rings together.

Doug McVitie, a director with Arran Aerospace in France, said: “This latest delay further strengthens Boeing’s position. “

While the French and Germans are arguing with each other, the Americans are out winning orders for the 787. By the time Airbus gets the 350 flying, Boeing could have more than 1,000 orders for the 787. Airbus is gifting Boeing this market.

Delays to the A350 present Airbus with a further problem as money and engineering capability will be tied up until well into the next decade. By that time Boeing should have all the creases ironed out of the 787 and be moving on to redesigning the 737.

New engines, a carbon-fibre body and other improvements should make the new 737 even more of a hot seller than the 787. Airbus will have to make similar changes to the A320 to remain competitive but if resources are still tied up in the A350, the Europeans could again lose out to Boeing.

Unless Airbus can get its house in order quickly it is in danger of allowing Boeing to dominate this industry for the next generation.