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Airbus to Offer New Aircraft

The plane maker is weighing developing an all-new model or modifying an existing one to rival Boeing.

September 07, 2004|From Bloomberg News

Airbus, the world's biggest plane maker, plans to challenge Boeing Co. by offering a new aircraft as early as the end of the year, said Chief Executive Noel Forgeard.

The Toulouse, France-based plane maker is "reflecting" on whether to introduce an all-new plane, which could cost $8 billion to develop, or a cheaper derivative of an existing model, Forgeard said. He wouldn't say what size or range the new plane would have.

Boeing is seeking a comeback in the commercial aircraft market with its first new model in 15 years, the 7E7, which would seat 200 to 300 passengers and be 20% more efficient than the aircraft it replaces. Airbus sells about 80% of the planes in that category.

"Airbus is very concerned about that market, and with a new model they have a chance to weaken the 7E7 business case," said Richard Aboulafia, vice president at Teal Group, a Fairfax, Va.-based consultancy. "They're hoping to prevent Boeing from dominating the market for planes seating 200 to 300."

Airbus delivered more planes than Boeing last year for the first time ever and is set to continue to lead the market for the next few years given its larger backlog of orders.

Airbus plans 305 deliveries this year, versus 285 for Boeing.

Forgeard declined to say whether the new model would be a longer-range version of its A330-200 model, which people familiar with the project have said is in the works to compete against the planned 7E7.

"What was written on the A330-200 is speculation, and it's very premature," he said on the fringe of an airline delivery ceremony in Toulouse. "We can start from scratch or we can modernize existing products."

A revamped version of the A330 with new engines would cost about $2 billion to develop, the people said. New planes can cost $8 billion or more to develop.

"We are working on various scenarios," Forgeard said. "By the end of the year, we should know where we are. We're working closely with the market and with customers."

The first customer should sign on by late 2005, he said.

Airbus is 80% owned by European Aeronautic Defence & Space Co. and 20% owned by BAE Systems.

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