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Airbus grabs first headlines at air show

Farnborough, England - Airbus announced a revamp of its twin-aisle A330 passenger jet yesterday, sharpening a contest with Boeing for up to $250 billion (R2.7 trillion) of orders at the core of the market as the start of the Farnborough International Airshow fuelled a debate about new technology.

The European plane maker’s decision to add new, more fuel-efficient Rolls-Royce engines to its best-selling long-haul jet comes as it tries to preserve market share against Boeing’s all-new 787 Dreamliner and amid disappointing sales of its own new A350-800 model.

Eric Schulz, left, Rolls-Royce's president of civil large engines, Airbus chief executive Fabrice Brgier, centre, and John Leahy, Airbus Group's chief operating officer, display an Airbus A330-800neo model, on day one of the Farnborough International Airshow yesterday. Photo: Bloomberg. Credit: Bloomberg

The challenge facing new aviation technology was underscored on the eve of the Farnborough show, the year’s biggest aerospace industry gathering, when Lockheed-Martin’s F-35 fighter jet was pulled out of the opening day.

The warplane was grounded after an engine fire last month although Lockheed hopes it will still make its international debut at the event this week. Two initial partners in the Joint Strike Fighter programme – Canada and Denmark – are weighing fresh orders.

The absence of the F-35 left the limelight to Airbus on day one of the show, which runs until Sunday. Fabrice Brégier, the chief executive of the passenger jet unit of Airbus Group, predicted up to 100 orders for the A330neo during the event.

The A330 has enjoyed a resurgence of sales, helped by delays in deliveries of Boeing’s carbon-fibre 787 jet, but it needs a revamp to keep selling.

Analysts say that will also plug a potential future gap in the Airbus wide-body jet portfolio after poor sales of its A350-800 – the smallest of the next-generation A350 family and a model that looks set to be halted or suspended as a result.

Planes with 250 to 300 seats made up the largest segment of the wide-body jet market by volume and would generate sales of 4 520 aircraft worth more than $1 trillion over the next 20 years, Boeing said in its market forecast last week.

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.

“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,” Rob Morris, the head of consultancy Flightglobal Ascend, said.

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

Deliveries would 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.

But Boeing is relaxed about the challenge.

“It is an older technology airplane that is being improved. It will compete with brand new technology airplanes that we’ve got across a wide spectrum of wide-bodies,” Boeing co-chief executive Jim McNerney said. “We feel highly confident in our new technology line that is already in place as it competes against a refurbished A330.” – Reuters

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