(Adds details, quotes, background)
By Tim Hepher
PARIS, June 26 Airbus is very close to a
decision to upgrade its A330 with engines provided by
Rolls-Royce, setting the stage for a bitter new phase in
the battle for wide-body jet orders with Boeing's 787
Dreamliner, people familiar with the matter said.
The move will strengthen a growing strategic pairing between
the European companies, with General Electric - the main
alternative engine supplier on the existing version of the jet -
no longer seen as a contender to take part in the $2 billion
project, provisionally dubbed "A330neo", they said.
The people, asking not to be named, said the go-ahead with
Rolls-Royce as sole supplier for a new version of the A330,
offering up to 14-15 percent in fuel savings with the help of
new wingtips, remains subject to Airbus Group board approval.
Board members at the Franco-German group are expected to
meet well before the July 14-20 Farnborough Airshow, usually the
occasion for splashy aircraft launch announcements.
However, it remains unclear whether Airbus will officially
unveil the new project at the world's premier aviation event,
since it usually waits to have orders in the bag first.
Purchasing decisions are expected later this year from some
potential key launch customers such as Delta Air Lines,
which is currently replacing Boeing 767 and 747 jets.
Airbus, which has promised investors a decision this year on
whether to revamp the 253-295 seat A330 passenger jet, said none
had been taken so far.
"We will have a comment when we have a decision. There is no
decision yet," a spokesman said.
Rolls-Royce said it was "not aware" of a final A330 decision
having been reached, and any announcement would come from
Airbus. GE reiterated it had offered its GEnX engine for the jet
but declined to comment on the commercial talks.
The A330 first entered service 20 years ago and had been
expected to be overtaken by a new generation of carbon-composite
jets like the 787 Dreamliner, and soon the Airbus A350.
Following a three-year delay to the 787's arrival, sales of
the A330 held up better than expected.
But the backlog of undelivered aircraft has been dwindling
as the 787 recovers momentum, and Airbus is keen to inject new
life into its most profitable wide-body jet.
The move raises the prospect of a potentially bruising
transatlantic battle for sales at the lower end of the market
for wide-body jets, ranging from the 230-250 seat A330-200 and
787-8 to the 525-seat A380 superjumbo.
Airbus has said it will offer the refreshed A330 at
significantly lower prices than the 787 and match the newer
plane's performance per seat on most key routes.
Boeing denies this but is preparing to put up a fight, with
its sales chief telling Reuters this month that it would "react"
to the relaunch of the A330.
Industry experts have speculated that Boeing could respond
by changing its one-size-fits-all 787 pricing strategy by
offering different prices for different levels of performance -
a move which can serve as a form of discounting.
But the U.S. planemaker is also expected to look just as
hard at ways of increasing availability of the 787, which is
mostly sold out until around the end of the decade.
Both planemakers will be under pressure from investors to
prevent the contest developing into a price war that might
destabilize wider pricing and undermine profitability goals.
The A330neo is expected to be launched in two versions,
updating the A330-200 and A330-300.
One casualty will be the smallest member of the Airbus A350
family, the slow-selling 270-seat A350-800.
The re-engined A330 is accordingly expected to be marketed
as the entry point for Airbus's wide-body portfolio, already
nicknamed by some in the industry as an A350-200/300.
(Additional erporting by Alwyn Scott, James Regan; Editing by