=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/2006/12/01/financial/= f143938S65.DTL --------------------------------------------------------------------- Friday, December 1, 2006 (AP) EADS Board Approves Mid-Sized Airbus By LAURENCE FROST, AP Business Writer (12-01) 15:20 PST PARIS, France (AP) -- The board of Airbus parent EADS approved the launch of the Airbus A350 XWB, the mid-sized jet designed to rival Boeing's 787, the company said Friday. In a statement, European Aeronautic Defence and Space Co. said funding for the new plane would come "predominantly from the company cash flows," but gave no details. Its success would depend on the successful implementation of cost-cutting plans at Airbus, EADS said. It gave no timetable for when it would go into service. The decision by the EADS board, meeting in Amsterdam, comes a week after shareholders called off an earlier board meeting amid a dispute over how the plane would be funded. Friday's statement did not say whether the program would draw on government funding. The European Union and United States are already embroiled in World Trade Organization litigation over subsidies to Airbus and Boeing Co. A decision to fund the A350 XWB with state-guaranteed loans or launch aid — repayable only if the program turns a profit — could exacerbate the dispute. Shares of EADS rose Friday on reports that the company's main shareholde= rs had agreed to launch the new plane — badly needed to fill a gap in the Airbus product line and stem a loss of business to Chicago-based Boeing. EADS stock closed 3 percent higher at 22.87 euros ($30.19) in Paris before the announcement. Boeing shares rose $1.02 to close at $39.55 on the New York Stock Exchange. After concentrating massive resources on its flagship A380 superjumbo, Airbus has been outmaneuvered by Boeing's two-engine 787, which delivers better fuel economy than older four-engine Airbus jets in the same size category. As fuel prices rise, the fuel-efficiency sales argument has grown more persuasive. Boeing spokesman Peter Conte said the company remains confident that its 777 and 787 will dominate the market for mid-sized and large long-haul passenger jets over the next several years. "The 777 is performing today, and the 787 will be available in 2008 at least five years before the A350," Conte said. "Together the 787 and the 777 offer the most advanced, preferred available twin-aisle family — completely covering the market segment from 200 to 400 seats." EADS did not say when the A350 XWB will enter service or confirm its development cost, although co-CEO Tom Enders has previously said the total program outlay will be close to 8 billion euros ($10.5 billion). The bulk of the spending will be spread over the years 2010-2013, the statement said — suggesting the plane is five years behind its main rival, which enters service in 2008. The Franco-German dominated defense company has indicated it will seek to reduce its share of the cost by encouraging suppliers to invest up to 1.8 billion euros ($2.4 billion) — effectively selling them a share of the program in the way Boeing has done for the 787. The A350 XWB will offer a "unique opportunity to bring on board new risk-sharing partners," EADS said. Toulouse, France-based Airbus recently angered customers by doubling the estimated production delay blighting the double-decker A380 to two years, prompting an EADS profit warning and threatening to undermine the A350 XWB program. A weaker U.S. dollar has worsened the squeeze, since planes are priced in dollars but most of Airbus' costs are in euros. Airbus is set to fall behind Boeing on orders this year. Last year, the European aircraft maker set an industry record with a total of 1,111 orders compared with Boeing's 1,002. But its market share by value fell to 45 percent, from 54 percent in 2004, as its widebody A330, A340 and planned A350 planes lost ground to the rival 777 and upcoming 787. Airbus said Friday it had received 635 orders so far this year worth $49= .2 billion at average catalog prices — to Boeing's 823 orders worth roughly $84 billion. That gives Airbus about 37 percent of the $133 billion in orders won by both aircraft makers, based on the same list prices, which are subject to significant discounts. Unveiled at July's Farnborough Air Show, the A350 XWB — for "extra-wide body" — boasts a roomier passenger cabin design, increased use of composite materials and large, Dreamliner-like windows. Criticism from airlines had forced Airbus to scrap an earlier, less ambitious A350 design derived from its existing A330 plane. The French state owns a 15 percent stake in EADS, while Paris-based Lagardere SCA owns 7.5 percent. The two main French shareholders are balanced by Germany's DaimlerChrysler AG, which owns a 22.5 percent stake. = ---------------------------------------------------------------------- Copyright 2006 AP