UPDATE 1-Airbus will not rush A330 move, stresses profitability

Thu Jun 12, 2014 6:56pm EDT

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By Tim Hepher and Cyril Altmeyer

PARIS, June 13 (Reuters) - Airbus mapped out a potential revamp of its A330 jet, but vowed not to let the estimated $2 billion investment divert it from improving profits at Europe's largest aerospace group.

Fabrice Bregier, chief executive of the flagship planemaking unit of Airbus Group, said the company would decide whether or not to launch a re-engined version of its most profitable wide-body jet before the end of the year.

"We are studying it. We have many customers telling us 'this aircraft is excellent, please try to also reduce the fuel burn with new engines," Bregier told reporters.

"So we are looking at that, we are not rushing. We will take the decision this year. It's not limited to putting new engines on, it's more complicated than that."

Airbus faces a drop in orders for the 20-year-old A330 from 2016 as attention switches to the newer Boeing 787, but appears progressively more confident about being able to prolong its wide-body 'cash cow' with improvements in fuel efficiency.

But this depends on a number of factors including advanced talks with engine manufacturers General Electric and Rolls-Royce and the outcome of a debate about whether the market is big enough to support more than one choice of engine.

It must also weigh the fuel savings provided by newer - but larger - engines against their increased weight and drag.

Airbus believes matching the performance of the Boeing 787 is within reach because of factors such as cheaper maintenance and dismissed what its strategy chief Kiran Rao described as a misconception that the new Boeing airplane is lighter. Although built from advanced materials, it also carries more structure to give it a range that most customers don't need, Airbus said.

A Boeing spokesman responded that the 787 is lighter. Boeing officials have also said it is competitive whatever the range.

The U.S. planemaker has dismissed the A330 makeover as a short-term distraction but has pledged to "react" in a sign that it may be tempted to shift its pricing strategy.

Airbus said it would only go ahead with the project if it could see a market for the A330 throughout next decade, indicating it sees the exercise as more than a brief stopgap.

The A330 review comes as Airbus looks beyond the anticipated December service debut for its brand-new A350, which it says is on schedule, to the production ramp-up needed to make it profitable by 2019 in line with its targets.

Bregier, who has made avoiding the delays and cost overruns that beset the rival Boeing 787 Dreamliner his chief priority, said the A350 would prove itself financially and downplayed the impact of a major order cancellation this week.

"At the end of the day, we are looking at profitability," Bregier said.

"We believe that at the end of the decade we will have not only the A320, the A330, but also the A350 very profitable. On the A380 our goal is to break even. If we have that, the financial challenges that you know for Airbus will be met."

Some analysts have expressed concerns over the strategy for the aircraft after Emirates cancelled 70 airplanes.

Bregier meanwhile held out the prospect that Airbus would continue to increase production of smaller narrowbody A320-family jets if the market called for it.

Airbus and Boeing are producing narrowbody jets at record rates in what is the largest segment of the market and have suggested they could go even higher from around 2018.

"There is no industrial limit. Conversely, I don't want to build extra capacity and not be able to make the best use of my cash," Bregier said during an annual media seminar. (Reporting by Cyril Altmeyer, Tim Hepher, Editing by Geert de Clercq)

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