EADS Chief Backs Away From A350 Design, Subsidy Plans
Wednesday October 20, 1:55 PM
WASHINGTON (Dow Jones)--A top executive at European Aeronautic Defence & Space Co. (5730.FR) on Wednesday backed away from details of a possible new Airbus plane.
Last week, Airbus Chief Executive Noel Forgeard said his company was planning to develop the A350 to compete with Boeing Co.'s (BA) brand-new 7E7. He described development costs of up to EUR3
billion, a new request for up to EUR1 billion in government launch aid, and a design based on the Airbus A330.
But on Wednesday, EADS co-Chief Executive Philippe Camus told reporters that the company has not yet decided whether or how to proceed.
"We have not yet decided anything. First we are looking to business opportunities," Camus said.
Only one possible design for the A350 has been floated publicly: a modified A330-200 with 1,000 nautical miles of extra range, using engines made by either Rolls-Royce Group PLC (RR.LN) or General Electric Co. (GE
). Those companies also are developing high-performance engines for the 7E7.
But Camus on Wednesday insisted that there isn't a fixed plan for the new plane.
"We have made no decision about the form of the A350," Camus said. Airbus is owned 80% by European Aeronautic Defence & Space Co. and 20% by BAE Systems PLC (BA.LN).
Airbus spokesman Clay McConnell in Washington said Forgeard was speaking "from among the possibilities" for a new aircraft. McConnell said the firm still is talking to customers about how to proceed.
"There has been no announcement about an airplane being launched. If that indeed happens, then we would have the details at that time," McConnell said.
Talk of a new Airbus plane started around the same time that a simmering dispute escalated into a vocal trade war. On Oct. 6, the U.S. ended a 1992 agreement on aircraft subsidies and filed a World Trade Organization complaint, protesting aid to Airbus.
The European Union retaliated immediately with its own complaint protesting aid to Boeing. Separate consultations will begin soon, and both sides have spoken out to defend their systems and point out unfair aspects of the competition.
European officials have said the WTO case was timed to coincide with the U.S. elections. But U.S. trade officials have said the real driver was the prospect that Airbus would use subsidies to develop a new midrange plane, even as it prepares to roll out its A380 superjumbo jet.
Analysts say Airbus may need to do more than touch up an existing aircraft if it hopes to steal market share from the 7E7. The new Boeing plane features state-of-the-art materials and other new technologies, said aircraft analyst Richard Aboulafia of the Teal Group, a Washington-area consulting firm.
"What it comes down to is whether or not there's going to be an all-new A350 or merely a new version of the A330," Aboulafia said. "It's not fears of a derivative that are driving the Boeing case. It's the prospect of a long-term, all-new plane."
-By Rebecca Christie, Dow Jones Newswires; 202-862-9243; rebecca.christie@ dowjones.com