SINGAPORE Rolls-Royce (RR.L) is set to bow to airline pressure by building a new engine for the Airbus EAD.PA A350, a costly rethink of strategy for Europe's newest airliner, aviation industry sources said on Monday.
The plan would involve a major overhaul of Rolls-Royce's largest civil jet engine and give the Airbus A350 some missing muscle to compete with Boeing's (BA.N) popular long-range 777-300ER.
Two smaller versions of the A350 will broadly compete with Boeing's revolutionary new 787 Dreamliner from 2013 onwards.
But airlines have criticized a one-size-fits-all policy that they say would leave the third and largest model, the A350-1000, unable to reach its goal of competing with the popular Boeing 777-300ER mini-jumbo because it is saddled with the same engine.
"My understanding is that Rolls-Royce has agreed to build a new engine," the chief executive of a major A350 customer told Reuters at an IATA airlines industry event on Monday.
Airbus and Rolls-Royce declined comment.
A new engine typically costs up to $2 billion to develop, according to engine industry executives.
In the first glimpse of a strategy change in November, a source familiar with the project told Reuters that Rolls was looking at two variants of the same engine.
But it remained unclear how many components would be shared between old and new models or who would pay for the upgrade.
The Trent XWB is the latest and physically largest member of the Rolls engine family that powers the world's biggest jets.
With a fan wider than Concorde's fuselage and built to devour more than a tonne of air every second, the engine claims to be among the most powerful and flexible in civil aviation.
But engines are designed to work most efficiently in a set band of thrust and critics have said the Trent XWB would find it difficult to operate efficiently across three types of A350. On top of that, they want the A350-1000 to fly further with more weight, straining the single engine policy even further.
One of the world's most influential aircraft buyers, leasing magnate Steven Udvar-Hazy, said he expected Airbus to modify its plans for the A350-1000 and that this could lead to delays.
"They have to address payload, range and runway performance," the chief executive of Air Lease Corp (AL.N) told Reuters.
CLIMBDOWN FOR ROLLS
Aviation analyst Scott Hamilton said on his blog, Leeham News and Comment, that the engine changes would be announced at the Paris Air Show on June 20-26 and would delay the launch of the A350-1000 from 2014 to 2016.
Airbus said last week the first version of the aircraft, the middle-sized A350-900, would be out in late 2013 as planned.
A major engine overhaul would be a climbdown for Airbus and Rolls, which had defended the Trent XWB as a good all-rounder. The XWB is a cousin of the Trent 900 that blew up on an A380 last year.
Rolls-Royce could be forced to examine modifying the core of the engine for the A350-1000, the hottest and most sophisticated part of a jet engine that eats up most development spending.
That is because other changes, such as increasing the size of its already massive 3-metre (118 inch) fan, are difficult to carry out without altering the structure of the plane, leading to even more costs, a senior industry source told Reuters.
"This is definitely not what you would call a light change," another source familiar with the proposals said.
This rethink on the A350, which has gone through repeated redesigns, is the latest throw of the dice between Airbus and Boeing in a market for wide-body, twinjet long-haul planes estimated to be worth $1.6 trillion over 20 years.
Airbus has had the 777 in its sights ever since Boeing wrongfooted the European company by developing wide-body planes with two engines instead of four in the 1990s. The arrival of the 777 smothered sales of the four-engined Airbus A340 except for ultra-long distances or especially demanding conditions.
The planemakers are involved in a parallel struggle for advantage in the market for medium-haul narrow-body planes, which Boeing estimates at $1.7 trillion over the next 20 years.
An A350 engine boost could prompt Boeing to respond by updating its 777 plane, which in turn may force it to scale down plans for a redesign of its best-selling 737 narrowbody jet.
"The 777 is a key market segment if only in terms of the numbers of aircraft needed to replace old ones. With high oil prices airlines can't afford to fly old technology aircraft and expansion will also be driven by the latest technology," said Peter Morris, chief economist at UK consultancy Ascend Aviation.
Rolls' rival General Electric (GE.N) is the monopoly supplier on the current key 777 model, the Boeing 777-300ER. (Editing by Raju Gopalakrishnan and Matt Driskill)