Airbus opens A350 plant to meet rising competition

TOULOUSE, France Tue Oct 23, 2012 5:29am EDT

A miniature replica of Airbus A380 is seen in front of Airbus logo. REUTERS/Arko Datta

A miniature replica of Airbus A380 is seen in front of Airbus logo.

Credit: Reuters/Arko Datta

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TOULOUSE, France (Reuters) - European planemaker Airbus inaugurated a factory for its A350 jetliner on Tuesday, sparking a new phase in the race for fuel efficiency and profits with U.S. rival Boeing.

French Prime Minister Jean-Marc Ayrault fought through fog and an air traffic control strike to fly to Toulouse, southwest France, to name the plant after "Father of Airbus" Roger Beteille, a pioneer of twin-engined long haul passenger jets.

Built in response to the Boeing 787 Dreamliner, the A350 is Europe's first contribution to a new generation of jets designed to cut airline fuel bills by using mainly lightweight carbon-composite materials instead of the heavier aluminum.

Airbus and Boeing expect total demand for more than 6,000 such mid-sized, long-range jets over the next 20 years and their arrival is leading to new routes bypassing crowded hub airports.

It is a market worth several hundreds of billions of dollars and is set to upstage the largest jetliners such as the Airbus A380 superjumbo and the latest version of Boeing's 747.

But both firms face huge construction challenges for the revolutionary jets, woven and baked out of carbon fiber that is stronger and lighter than metal but costlier to produce. Neither the A350 nor the 787 is expected to make a profit for years.

Airbus says the A350 will take to the skies in the summer of 2013 and enter service in the second half of 2014, a year later than originally scheduled. Three different models of the aircraft will seat between 270 and 350 people.

The competing 787 went into service in Japan a year ago after complications with a ground-breaking production system and global supply chain delayed its first deliveries by three years.

Even before Tuesday's inauguration, the 74,000-square meter Toulouse plant has been building the first A350 that will never fly but will be shaken apart in stress tests.

Full production will now begin in earnest ahead of next year's maiden flight, rising to 10 planes a month by late 2018.

The factory ceremony comes as competition intensifies for the sales of jets to Asia and other fast-growing markets.

The largest model, the A350-1000, will also compete against Boeing's 777 mini-jumbo, which boasts the world's largest jet engines and dominates a lucrative market just below 400 seats.

Boeing lifted production of the 777 overnight in the wake of record sales and analysts say it is poised to launch a new stretched Dreamliner, to be called the 787-10.

That could slow a rally in sales of the older Airbus A330 which soared as airlines scrambled for capacity to cope with growing traffic, as 787 delays left them short of seats.

Boeing is due to publish third-quarter earnings on Wednesday.

Airbus is also involved in disputes with the United States and even one of its founder nations, Germany, over the funding for the A350, whose development is estimated at $15 billion.

The United States has accused Europe of ignoring recent World Trade Organization rulings by subsidizing the aircraft through development loans, while Germany has withheld part of its share of the loans in a row with Airbus over jobs.

(Reporting by Tim Hepher; Editing by Jane Barrett)

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