July 14, 2014 / 10:19 AM / 5 years ago

Airbus revamps A330 jet in long-haul battle with Boeing

FARNBOROUGH England (Reuters) - Airbus (AIR.PA) announced a revamp of its twin-aisle A330 passenger jet on Monday, offering a cheaper alternative to the Boeing 787 Dreamliner as the two planemakers vie for up to $250 billion in orders from cost-conscious airlines.

The European planemaker launched the A330neo to open Britain’s July 14-20 Farnborough Airshow with a deal for 25 planes from leasing company Air Lease Corp (AL.N).

Airbus boss Fabrice Bregier predicted up to 100 purchase commitments this week for the model, which features new, more fuel-efficient Rolls-Royce (RR.L) engines.

Airbus is aiming to prolong the success of its A330 planes amid a challenge from Boeing’s all-new carbon-fiber 787 Dreamliner.

The A330neo is also aimed at addressing poor sales of its own new A350-800, the smallest of the next-generation A350 family and a model which looks set to be halted or suspended as a result.

Air Lease Corp, which encouraged Airbus to upgrade the A330, said the new plane offered improved efficiency at a good price, and predicted it would extend the model’s life by 20-25 years.

“There is a compelling price difference between the A330neo and any other wide body (plane). I think it was a very smart, astute move on the part of Airbus,” Air Lease President and Chief Operating Officer John Plueger said.

Industry sources said the A330neo was likely to undercut the Boeing’s 787 by about 25 percent based on the price of actual deals rather than list prices.

However, Boeing defended the value offered by the 787.

“I don’t really care what is said, this is really the most efficient airplane family around,” Boeing Commercial Airplanes Chief Executive Ray Conner said of the 787.


Airbus and Boeing slug it out for the lion’s share of the $100 billion a year global commercial jet market.

Their record order books, swelled by demand from fast-growing Middle Eastern and Asian airlines as well as low-cost carriers, have raised questions over their ability to deliver as well as concerns about over-capacity.

The 250-300 seat market is the largest segment of the wide-body jet market by volume and represents 4,520 aircraft worth more than $1 trillion over the next 20 years, according to Boeing’s latest market forecast, published last week.

A pilot looks out of the cockpit of an Airbus A350 aircraft as it is parked at the 2014 Farnborough International Airshow in Farnborough, southern England July 13, 2014. REUTERS/Kieran Doherty

Airbus believes the new A330-800neo and A330-900neo models can achieve at least 1,000 of those orders, but Boeing says the market opportunity is closer to 400 planes and even then, only for a short period.

Still, the cheaper A330neo is expected to spark increased price competition.

“The A330neo could potentially offer the right mix of fuel-burn reduction and lower acquisition cost ... Less clear is whether the economics and timing will be sufficient to sway customers from the 787 this time,” said Rob Morris, head of consultancy at Flightglobal Ascend, in a report being published at the air show.

The A330neo will have a range increase of up to 400 nautical miles, with room for up to 10 extra seats in the cabin, Airbus said. It will also have aerodynamic improvements such as new wing tips and an increased wingspan.

Deliveries will start in the fourth quarter of 2017. Airbus said it would incur development costs for the A330neo from 2015 to 2017, with an impact of around 70 basis points on the group’s 2015 return-on-sales target.

The European group is aiming to replicate the success of its smaller revamped A320neo.

However, Boeing begins the air show with a clear advantage over its rival after gaining 703 gross orders up to July 8, or 649 after cancellations, against Airbus’s end-June total of 515 gross orders and 290 net.

Boeing on Monday scored a coup of its own, announcing an order for 30 of its 737 MAX 8 planes from Britain’s Monarch Airlines, a carrier which had previously bought planes from Airbus. The deal was worth $3.1 billion at list prices.

Slideshow (2 Images)


Notable by its absence at the world’s biggest aerospace industry gathering on Monday was Lockheed-Martin’s (LMT.N) Joint Strike Fighter. The warplane is grounded following an engine fire last month although Lockheed hopes it will still make its international debut at this week’s air show.

“We’re not giving up yet. We still have a few more days left to try to get the airplane over here,” Air Force Lieutenant General Chris Bogdan, the Pentagon’s F-35 program chief, told reporters at the event on Monday.

Two initial partners in the Joint Strike Fighter program - Canada and Denmark - are weighing fresh orders.

Additional reporting by Cyril Altmeyer, Victoria Bryan, Tim Hepher, Andrea Shalal and James Regan; Writing by Tim Hepher and Mark Potter; Editing by Jason Neely

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