(Adds share reaction, 787 engine suppliers)
By Tim Hepher
PARIS, June 27 Airbus is set to upgrade its A330
with engines provided exclusively by Rolls-Royce, setting the
stage for a bitter new phase in a battle for wide-body jet
orders with Boeing's 787 Dreamliner, people familiar with the
The move accelerates a growing interdependence between the
European firms on large jets, with General Electric - the
main alternative A330 engine supplier - no longer in the running
for the $2 billion "A330neo" revamp, they said on Thursday.
Shares in Airbus and Rolls-Royce both rose as much as 1.8
percent against a flat market in early Friday trading.
The people, asking not to be named, said the provisional
selection of Rolls as sole supplier for the revamped A330neo,
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 in coming days ahead of the July 14-20 Farnborough Airshow,
which is usually the showcase for major launch announcements.
It remains unclear whether Airbus will officially unveil the
new project at the world's premier aviation event, since it
usually waits to secure orders first.
Purchasing decisions are expected this year from some
potential launch customers such as Delta Air Lines,
which is currently replacing Boeing 767 and 747 jets.
Airbus, which has promised investors a decision before the
end of the year on whether to revamp the 253- to 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 that any announcement would come from
Airbus. GE reiterated it had offered its GEnX engine for the
revised jet, but declined to comment on the commercial talks.
The A330 entered service 20 years ago and for years had
looked set to be overtaken by a new generation of
carbon-composite jets such as the 787 Dreamliner and soon the
But following a three-year delay to the 787's arrival, sales
of the A330 held up much better than expected.
Now, however, the backlog of undelivered aircraft is
dwindling rapidly as the 787 recovers momentum, and Airbus is
keen to inject new life into its most profitable wide-body jet.
The Airbus-Rolls partnership raises the prospect of a
potentially bruising transatlantic battle for sales at the lower
end of the market for wide-body jets, which ranges from the 230-
to 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 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 seen 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. Boeing
produces 10 787s a month but targets output of 14 a month by
The 787 is powered by engines from Rolls or GE, but industry
sources say GE is now expected to be more proactive in cutting
deals with airlines that help Boeing compete with the A330neo.
Both planemakers will be under pressure from investors to
prevent the contest developing into a price war that might
destabilise wider pricing and undermine profitability goals.
The A330neo will 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, prompting
some in the industry to give it a different name: the
(Additional reporting by Alwyn Scott, James Regan; editing by
Laurence Frost and Jason Neely)