NYTimes.com Article: Airbus Sees a Strong Market for Its Planes

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Airbus Sees a Strong Market for Its Planes

December 16, 2004
 By DON PHILLIPS





<alt-code idsrc="nyt-geo" value="London (Eng);Great
Britain"/>LONDON, Dec. 15 - Airbus predicted Wednesday that
an average of 830 new passenger aircraft would be built
each year for the next two decades, and that its new A380
jumbo plane would be so successful that Boeing would be
forced to develop a competitor.

The annual Airbus 20-year Global Market Forecast was far
more enthusiastic about the future of huge aircraft -
planes with 450 or more seats - than Boeing's forecasts.
Boeing, in fact, has openly scoffed at Airbus's predictions
of sales of more than 1,500 A380-size planes, a number
Airbus raised this year to 1,650 planes, including 400
freighters.

Although the number of A380's is relatively small compared
with the total 20-year forecast of aircraft with more than
100 seats - 17,328 new passenger and freight aircraft - the
huge A380 would account for 22 percent of all new aircraft
orders industrywide, or $416 billion. They issued their
forecast in dollars.

John Leahy, Airbus's chief commercial officer, predicted
that Boeing would be forced to build a competitor in the
450-plus passenger range, especially if its current
largest, the 747-400, is phased out under pressure from the
A380. The Airbus superjumbo jet will have its ceremonial
introduction in Toulouse, France, on Jan. 18 and is
expected to make its first flight this spring. "We believe
they will have to do something," Mr. Leahy said of Boeing.

He added that Boeing's management team would have to
retire or be phased out before the company could admit its
mistake and start building a superjumbo. While calling
Boeing's decision inevitable, he added: "I could be wrong.
I hope I'm wrong."

Buttressing its contention that the A380 would sell well,
the European manufacturer also predicted that the recent
downturn in the average number of passenger seats in
commercial aircraft would be reversed, and that the average
aircraft size would grow by 20 percent over the next two
decades, from 181 seats currently to 215 seats.

Airbus said it had 139 firm orders and options for the A380
this year and that it expected airlines to place firm
orders and take options on more than 150 by the middle of
next year.

The A380 project, however, is running 1.45 billion euros,
or $1.9 billion, over budget because of work to improve the
efficiency and weight of the aircraft, according to Rainer
Hertrich, the co-president of Airbus's parent company, the
European Aeronautic Defense and Space Company, or EADS,
Reuters reported.

Total costs for the double-decker jet are now estimated at
more than 12 billion euros, Mr. Hertrich said in Munich
late Tuesday in comments embargoed until Wednesday. The
extra costs cover the entire A380 development project,
including a freight version by 2008, he added.

Airbus said there was a huge increase in orders over all
this year, but that growth in orders should settle down to
about 6 percent a year for some time, starting next year.
Over the next 20 years, Airbus predicted, there will be an
average growth of 5.3 percent a year in passenger
kilometers. About 9,200 of the aircraft now in service will
be retired in favor of new, more fuel-efficient models,
Airbus said.

The nine trillion passenger kilometers a year expected by
2023 will mostly be generated in Europe, with 32 percent,
followed by Asia-Pacific with 31 percent and North America
with 26 percent, the Airbus forecast said.

http://www.nytimes.com/2004/12/16/business/worldbusiness/16airbus.html?ex=1104207833&ei=1&en=ef79b8d7fc570171


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