=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2006/07/17/financial/= f124049D15.DTL --------------------------------------------------------------------- Monday, July 17, 2006 (AP) Airbus Announces Revamp of A350 Program By LAURENCE FROST and JANE WARDELL, AP Business Writers (07-17) 12:40 PDT FARNBOROUGH, England (AP) -- Airbus scrambled to revive its sagging order book and credibility Monday, announcing a costly and ambitious revamp of its troubled A350 program to take on two of rival Boeing Co.'s best-selling jets. More than three years after Chicago-based Boeing launched its long-range, fuel-efficient 787 Dreamliner, European rival Airbus increased investment in its own mid-sized plane to close to $10 billion. "This is an entirely new design, without compromise and using all the latest technology," new Airbus Chief Executive Christian Streiff told reporters on the first day of Britain's Farnborough Air Show, one of the biggest trade events in the aviation industry. The previous version of the planned A350 had been billed as a rival to t= he 787, but had won just 100 firm orders — compared to 360 for the Dreamliner. Airbus also fell behind on total order value last year as its larger A340 jet lost ground to Boeing's more efficient 777. The new A350XWB — for "extra-wide body" — will take on both the Dreamliner and the 777. Airbus' airline customers had been increasingly vocal about their dissatisfaction with the previous A350 program. The company and its parent, European Aeronautic Defence and Space Co., suffered a further setback last month when they announced a seven-month delay to the flagship A380 superjumbo. "Yes, Airbus in the middle of a serious crisis in our relationship with our customers," Streiff said. "Yes, this is something we are taking extremely seriously inside Airbus, and yes, we know the competition is taking advantage of this today." In a surprise setback for Boeing, however, the plane maker appeared to jump the gun on a potential sale of 777s to Qatar Airways. Boeing put out — and then recalled — a release announcing an order for 20 of the jets valued at $4.9 billion shortly after Qatar canceled a scheduled news conference. Boeing spokesman Peter Conte later said that the order had been booked f= or several weeks to an unidentified customer, and that the order books would not be altered. "It's nothing having to do with the deal. The deal is done," he said. But Qatar Airways said no contract had been signed with Boeing and it was in talks with both Boeing and Airbus about orders. "It's not over yet," said Airbus Chief Commercial Officer John Leahy, adding that he was under the impression Qatar Airways was looking to order Airbus A330 and A340 aircraft. Airbus announced the sale of 10 A320 single-aisle jets to India's GoAir Monday — a deal worth about $700 million at list prices — and Boeing said Indonesia's Lion Air had exercised an option to buy an additional 30 737-900 jets, with a catalog value of over $2.2 billion. LoadAir Cargo, a new air freight operation based in Kuwait, also said it had signed an order with Boeing for two 747-400 extended range freighters. Airbus won more orders than Boeing for a fifth straight year in 2005, but reported only 117 gross orders for the first half — less than a quarter of Boeing's total. Reactions to the A350 announcement were mixed. Experts said Airbus may struggle to meet its own tight timetable, as well as to compete effectively against two Boeing planes with a single new platform. But the cash and time invested in the superjumbo has left Airbus with little choice, said Richard Aboulafia, an analyst with U.S. consulting firm Teal Group. "They made their choice and committed their resources to the A380," Aboulafia said. "Given that background, this is the best use of the resources that are left." Streiff said the A350's industrial launch — when the company begins taking binding orders — will go ahead in October, for entry into service in 2012. The new A350 will make greater use of composites — which make up 45 percent of its mass, compared with 50 percent for the 787. It will also offer a more comfortable passenger cabin than its rival's, Leahy said, with 5 inches (12.5 centimeters) more width at eye level. Like the Dreamliner, the A350XWB maintains higher pressure and humidity = in the cabin to reduce dehydration and features larger windows. Airbus said that in response to customer demand, it had decided to launch the middle-sized of its three planned versions first. The A350-900, due to enter service in 2012, will seat 314 passengers in a three-class configuration, compared with the 280 accommodated by the larger of the two Dreamliner versions announced so far, the 787-9. While matching the Boeing plane's 8,500 nautical mile range, the plane will undercut its rival's cash operating cost per seat by 7 percent, Leahy also pledged. The A350's existing 100 orders will now have to be renegotiated and converted, Airbus confirmed. "I think those firm orders are now more like options," said Jon Kutler, = an analyst with Admiralty Partners. Leahy conceded that Airbus might lose "one or two" of the 14 customers that have placed the 100 firm orders and 82 additional commitments. Boeing has been careful not to gloat at Airbus' recent difficulties. "We know new planes are hard," Boeing Commercial Airplanes CEO Alan Mulally said. Mulally also reiterated Monday that the Dreamliner has problems of its o= wn — albeit much smaller ones. The plane is over its weight target and experiencing delays with some suppliers, he said, but the hitches will not affect its entry into service in 2008. ------------------------------------= ---------------------------------- Copyright 2006 AP