The Plane That Airbus Was Reluctant to Build Could Have the Boeing Company Running Scared

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The brand new A350-900 XWB (Extra Wide Body) aircraft successfully taking off and landing today after a four-hour maiden flight proved that Airbus ( EAD ) is capable of delivering on schedule. And it might be a powerful signal for the airline industry in light of the upcoming Paris Air Show at Le Bourget , which begins June 17.

A350 is a state-of-the-art wide-body twin-engine aircraft capable of getting up to 350 passengers (or even 440 in "all-economy" layout) a distance of up to 8,500 nautical miles - that's roughly the equivalent of non-stop service between New York City and Wellington, New Zealand. The A350 Family will feature three planes: -800, -900, and -1000, differing in passenger capacity and range. New engines, advanced composite wings, and lighter bodies make the A350 Family the best bet in its class in terms of cost efficiency.

According to Airbus, A350 offers 25% lower seat-mile cost compared to The Boeing Company's ( BA ) 777 Family and an 8% advantage over the current 787-8 Dreamliners.

The new craft not only saves the airline money, but it also has perks for passenger: Travelers will enjoy a handful of new modern cabin features, including ambient LED lighting, HD-entertainment features, and a built-in connectivity system.



Airbus was, at first, reluctant to develop a new plane family as an answer to Boeing's 787 program in 2003 (known then as 7E7). Airbus officials called Dreamliner's benefits "minor" and thought discounts on massively popular A330-200 aircraft could negate any fuel-efficiency advantages.

"We don't need to react to the presentation of this plane," said Noel Forgeard, Airbus CEO in 2004. "We are very content to stay with our A330-200," reiterated Airbus Chief Commercial Officer John Leahy in his comment to Reuters .

Airbus soon reconsidered and announced its 787-rival, the A350, in December 2004 as a "sistership to the A330." After about a year of heavy criticism , Airbus agreed that the revamped A330 wouldn't get off the ground and restarted the program from the ground up in 2006 , changing the name to A350 XWB. "Based on previous lessons learnt, the A350 XWB brings Airbus fully back into the game and will be a success," the then-president and CEO Christian Streiff stated.

Seven years and some $14 billion in R&D later, the first flight of A350 XWB might well support the Streiff's words.

If flight tests go as planned and the first commercial A350 is delivered in late 2014, the all-time rival of Airbus might feel some pressure. Boeing has already suffered a massive hit from Dreamliner groundings due to battery issues , and the company keeps losing money on each Dreamliner delivery; it only plans to break even by 2015.

Boeing has a larger Dreamliner, 787-9 in the works now with its first flight planned for later in 2013. The company is said to soon be announcing an even bigger 787-10, which will compete in value with the A350 on shorter routes. The company is also reportedly looking to revamp its 777 family .

Boeing won more than 800 orders for its 787 craft and has had 57 Dreamliners already delivered, compared to A350 with 616 orders.

Airbus and Boeing have not announced any additional commercial aircraft families in development; the companies are likely to expand and tweak currently existing families instead.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: BA , EAD

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