Airbus 350 Redesign Not Flying With Airlines

The proposed Airbus A350 sports new engines, a new cockpit, a new tail and new wings made out of plastic--all designed to match the rival Boeing 787 Dreamliner.

But it doesn't appear to be new enough, at least not by the number of initial orders.

Not only does Boeing Co. have 3 1/2 times as many orders for the 787, but the Chicago-based aerospace giant also has blue-chip roster of customers, including Qantas, Continental Airlines and Japan Airlines. Boeing had a two-year head start in selling its plane, which is expected to make its debut in 2008, but it doesn't look like its European foe will narrow the gap anytime soon.

The mismatch has Airbus considering an expensive redesign of the A350, a rare setback for the proud Europeans, who could do no wrong in overtaking the legendary Boeing in recent years as the largest planemaker in the world. It's a $5 billion-plus decision. More missteps, and Boeing could regain supremacy in the global airplane market.

"If they don't come out with an all new plane by the middle of year, there will be major questions asked," said Richard Aboulafia, an aerospace consultant at the Teal Group in Virginia. "Airbus is looking at permanent marginalization in the industry if they don't come back this year."

Airbus thought it could compete with Boeing's all-new plane by modifying an older model, its A330. Designing a new plane means billions of dollars in development costs, a project Airbus could not afford in 2002, when Boeing first unveiled the 787, then known as the 7E7.

At the time, Airbus was embarking on its own innovative jet, the A380, a superjumbo plane that can carry 555 passengers, about 125 more than Boeing's 747.

The 787 and A380 mark the divergent philosophies of the two companies. Boeing believes more passengers want to fly longer distances without stopping at hub airports. Airbus, on the other hand, bet its future on shuttling large numbers of travelers while also relieving congestion at the world's largest airports.

With its engineers stretched thin, Airbus responded to a competitive threat as other aerospace manufacturers, including Boeing, have in the past: by updating a best seller.

In 2002, the wide-body A330 was only a 10-year-old plane and faring well against the aging Boeing 767 in the lucrative midsize market comprising planes seating 200 to 300 passengers. It had won big contracts from airlines in traditional Boeing strongholds in Asia and the Middle East, as well as an order from U.S. carrier Northwest Airlines.

Minimal changes

Its first design for the A350 hardly could be called an update. Airbus merely installed new engines, similar to the engines on the 787, to offer better fuel efficiency and longer range.

It turned out to be a naive attempt at matching Boeing's technological advances in the 787, the first jetliner with a plastic fuselage. Carbon-fiber composite materials, which weigh half as much as aluminum, have been used to make airplane parts for years but never to the extent used on the 787. With oil prices soaring, Boeing promises that the lightweight plane will cut fuel bills by 20 percent.

Airbus went back to drawing board. But instead of coming up with a comprehensive plan to create a successor to the A330, it continued to tinker.

It replaced aluminum in the fuselage with composites and other metal alloys to reduce weight. It updated the cockpit with the latest flight-deck technology. In the cabin, it introduced a wireless in-flight entertainment system.

Customers still were not impressed. This time, Airbus designed an all-composite wing that resulted in smoother aerodynamics and a loss of 10,000 pounds. With each tweak, development costs kept rising and now stand at about $5 billion.

Airbus and its corporate parents, European Aeronautic Defense & Space Co. and Britain's BAE Systems PLC, formally launched the plane in October.

"This development was extremely unusual," Aboulafia said. "Usually, planes are launched with careful consultation with customers and on the basis on what the market needs, rather than on how much you can afford."

The slapdash development of the A350 is reflected in the order book. Airbus has collected 100 firm orders, compared with 350 for the 787.

Despite the numerous modifications, customers continue to complain that the A350 falls short of the 787, especially in the fuselage. The 787's fuselage is 15 inches wider at the head-and-shoulders level of a seated passenger, where space matters most, said Randy Baseler, a marketing vice president at Boeing.

Airbus has countered that its rival's space advantage isn't as large, just 4.5 inches at the widest place. Boeing originally designed the 787 for eight-across seating in economy class.

But airlines want to squeeze in an extra seat in these tough times. Some customers have questioned whether the A350 can provide the same comfort levels as the 787 with nine-across seating.

An evolving product

Airbus remains mum on its plans to widen the A350 fuselage.

"The A350 was developed as a result of demands from our customers, and the existing specs on the aircraft reflect those demands," said Mary Anne Greczyn, spokeswoman for Airbus North America.

"And as we know, the market and resulting airline needs continually morph, which sometimes prompts similar product evolution."

Industry analysts expect Airbus to launch an all-new A350 within the next two months, despite concerns about being second to the market. A redesign is expected to push back delivery of the first jet to 2012 from 2010 and push up the costs to about $10 billion.

Customers are willing to wait because they want two strong players in the midsize market, analysts said. And being second is not such a bad position to be in. Boeing was third to market, behind the A340 and the MD-11, with the 777 in 1995, and now it enjoys much success.

But in a warning to Airbus, Merrill Lynch analyst Charles Armitage said to investors recently, "We do not believe that [being second] is a bad thing, so long as the product is better."

Copyright (c) 2006, Chicago Tribune.

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