Introducing, the new A350 XWB.....aka the 787 killer......
Airbus is talking to suppliers about producing half of the basic skeleton for its future A350 jet outside the company, saving up to EUR1.8 billion (USD$2.38 billion), its chief executive said on Tuesday.
It is part of a rethink of the way the planemaker builds commercial jets in the face of cost overruns and cumulative delivery delays of two years to its larger A380 superjumbo."On the A350, our plan is to outsource 50 percent of the airframe production, which would allow us to hand over (part of the project) to partners participating in the development," Airbus President and CEO Louis Gallois said."The target is EUR1.8 billion. We have started talking to candidates," he added.Gallois made the comments before giving evidence at a closed parliamentary committee hearing and days before a second attempt by the EADS board to reach final agreement on whether to launch the costly plane and how to fund it.Airbus parent EADS, under pressure to respond to Boeing's success in the mid-sized market after betting heavily on the mammoth A380, postponed a board meeting last Friday amid disagreements over the A350's estimated USD$10 billion to USD$12 billion (USD$13.2 billion - USD$15.84 billion) cost, industry sources said.The EADS board is now expected to meet on Friday.The cost of the A350 has more than doubled since it was initially touted to the market as an updated version of the A330 twinjet, which was first delivered in 1993. Airbus was forced to change the fuselage to counter Boeing's strong-selling 787.Most Airbus production is currently dispersed across 16 sites in France, Germany, Spain and Britain, with final assembly in Toulouse, France, and Hamburg, Germany.Pierre Mehaignerie, who chairs the National Assembly finance commission, said after hearing Gallois' evidence in private that French and German shareholders and politicians were locked in a cat-and-mouse game over who should foot the bill for the A350."It's a slow-motion struggle between shareholders, and between governments, with each one studying the other. The problem of EADS corporate governance is hard to manage," he told reporters.Power at European aerospace group EADS is shared between French and German interests, with the French state among its main shareholders. Internal conflicts have plagued the company since its launch in 2000.Patrick Ollier, whose economic affairs commission met Gallois jointly with the other panel on Tuesday, called on the French government to help fund the A350 if necessary."What we heard today indicates there is one priority today and that is to launch the A350. We have to stay in this market; it's essential to Airbus's survival," he said."It's obvious that if there are particular financial difficulties with a program, then -- and this is what I hope -- the French state has to be able to intervene in parallel with Germany."Airbus and the European Union are embroiled in a trade dispute with the United States over government loans, which make up one third of new jet projects. Washington says these are subsidies.Reports have said efforts to persuade suppliers to share in the development costs of the A350 could reduce the proportion of the project funded by government loans known as launch aid.Gallois -- a former French rail chief and once head of France's state-owned Aerospatiale, which eventually became part of EADS -- was appointed to run EADS in July and was handed direct control of Airbus in October following a management crisis.He remains co-CEO of EADS, meaning he sits on both sides of the fence as Airbus seeks cash to hit back at Boeing.Critics say Airbus took a huge gamble on the wrong plane by building the A380, of which it has sold 159 and seen cancellations of 10 planes. The mid-sized long-haul market for 200-352 seat planes is estimated at around 4,000 over 20 years.Gallois said last month he would present the A350 proposals in a "positive" light to the rest of the EADS board without making a formal recommendation.EADS owns 100 percent of Airbus after partner BAE Systems sold back its 20 percent stake last month.
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EADS Shares Rise on Report That Company's Board Will OK Launch of Airbus A350 XWB
PARIS (AP) -- The board of Airbus parent EADS was meeting Friday as its shares soared on a report that directors had agreed to approve the launch of a planned mid-sized plane to rival Boeing's 787.
Shares of European Aeronautic Defence and Space Co. rose as much as 5.7 percent to 23.48 euros ($30.99) in Paris after the Financial Times said its main shareholders had agreed on how to fund the new A350 XWB, which is badly needed to fill a gap in the Airbus product line and stem a loss of business to Chicago-based Boeing Co.
Two people close to the European defense group's main shareholders, who spoke on condition of anonymity because the discussions were confidential, confirmed widespread reports that a board meeting was taking place Friday in Amsterdam. An EADS spokesman declined to comment.
Franco-German dominated EADS had pledged to announce a decision on the long-range airliner by the end of November, but a board meeting scheduled for Nov. 24 was called off amid disagreements over funding for the program.
Citing anonymous sources, the Financial Times said EADS directors agreed late Thursday that the company should fund about 6 billion euros ($8 billion) of the program independently, with a further 4 billion euros ($5 billion) either provided directly or guaranteed by the French, German, Spanish and British governments. Some of the state-guaranteed cash could be raised in a bond issue, the newspaper said.
The European Union and United States are already embroiled in World Trade Organization litigation over subsidies to Airbus and Boeing, and a decision to draw on state guarantees or launch aid for the A350 XWB -- repayable only if the program turns a profit -- could exacerbate the dispute.
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
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EADS seeks A350 funding alternative
By Aimée Turner
Ongoing WTO dispute leads to rethink on twinjet support
Shareholders at Airbus parent EADS are looking at alternative ways of funding the proposed Airbus A350 XWB widebody twin, which could signal an end to controversial launch aid for the programme.
EADS cancelled last week's board meeting where shareholders were due to discuss the industrial launch of the A350 XWB, a 9-10 billion ($12-13 billion) project controversially at the heart of the ongoing transatlantic dispute over support for large aircraft.
The meeting was cancelled due to a reported lack of agreement among EADS shareholders DaimlerChrysler, Lagardere and the French government over launch aid, with France thought to be reluctant to provide the project with repayable finance while the World Trade Organisation (WTO) dispute is active.
In November Airbus chief executive Louis Gallois said the manufacturer will make a formal decision on its proposed A350 XWB programme before the end of the month, but admitted this may be extended to early December.
Financing options could include funding the programme from cash reserves or raising debt on the commercial market and industrial partnerships, in addition to repayable launch aid.
The USA meanwhile filed its first WTO submission on 15 November, to which the European Commission will reply on 9 February. The EC has also asked the WTO to select panellists and set a timetable for its own case against the USA before 27 November. When this is done, both the US and EC panels will run in parallel.
The EC says: "We have not closed our doors to exploring a negotiated solution, in the context of which the question of launch investment and public support to Boeing could be addressed.
"Our examination of the US submission reconfirms the validity of our arguments. In addition, we are pursuing a case against the WTO-illegal subsidies granted by the US government to Boeing, which we are confident we will win."
Ted Austell, Boeing vice-president international trade policy says: "The US submission sets the clock ticking and this should focus the parties on whether there's any prospect for a negotiated settlement before the determination, next fall by the WTO, on the notion that launch aid, as a financing instrument for aircraft development, is not compatible with WTO rules."
He says additional launch aid would be an "unwelcome" development and would make it much more difficult for the US and the EC to secure a negotiated solution.
EADS co-chairman Manfred Bischoff is said to be preparing to quit his role to become chairman of DaimlerChrysler, which currently holds a 22.5% stake in the aerospace and defence business.
Airbus is talking to suppliers about producing half of the basic skeleton for its future A350 jet outside the company, saving up to EUR1.8 billion (USD$2.38 billion), its chief executive said on Tuesday.
It is part of a rethink of the way the planemaker builds commercial jets in the face of cost overruns and cumulative delivery delays of two years to its larger A380 superjumbo."On the A350, our plan is to outsource 50 percent of the airframe production, which would allow us to hand over (part of the project) to partners participating in the development," Airbus President and CEO Louis Gallois said."The target is EUR1.8 billion. We have started talking to candidates," he added.Gallois made the comments before giving evidence at a closed parliamentary committee hearing and days before a second attempt by the EADS board to reach final agreement on whether to launch the costly plane and how to fund it.Airbus parent EADS, under pressure to respond to Boeing's success in the mid-sized market after betting heavily on the mammoth A380, postponed a board meeting last Friday amid disagreements over the A350's estimated USD$10 billion to USD$12 billion (USD$13.2 billion - USD$15.84 billion) cost, industry sources said.The EADS board is now expected to meet on Friday.The cost of the A350 has more than doubled since it was initially touted to the market as an updated version of the A330 twinjet, which was first delivered in 1993. Airbus was forced to change the fuselage to counter Boeing's strong-selling 787.Most Airbus production is currently dispersed across 16 sites in France, Germany, Spain and Britain, with final assembly in Toulouse, France, and Hamburg, Germany.Pierre Mehaignerie, who chairs the National Assembly finance commission, said after hearing Gallois' evidence in private that French and German shareholders and politicians were locked in a cat-and-mouse game over who should foot the bill for the A350."It's a slow-motion struggle between shareholders, and between governments, with each one studying the other. The problem of EADS corporate governance is hard to manage," he told reporters.Power at European aerospace group EADS is shared between French and German interests, with the French state among its main shareholders. Internal conflicts have plagued the company since its launch in 2000.Patrick Ollier, whose economic affairs commission met Gallois jointly with the other panel on Tuesday, called on the French government to help fund the A350 if necessary."What we heard today indicates there is one priority today and that is to launch the A350. We have to stay in this market; it's essential to Airbus's survival," he said."It's obvious that if there are particular financial difficulties with a program, then -- and this is what I hope -- the French state has to be able to intervene in parallel with Germany."Airbus and the European Union are embroiled in a trade dispute with the United States over government loans, which make up one third of new jet projects. Washington says these are subsidies.Reports have said efforts to persuade suppliers to share in the development costs of the A350 could reduce the proportion of the project funded by government loans known as launch aid.Gallois -- a former French rail chief and once head of France's state-owned Aerospatiale, which eventually became part of EADS -- was appointed to run EADS in July and was handed direct control of Airbus in October following a management crisis.He remains co-CEO of EADS, meaning he sits on both sides of the fence as Airbus seeks cash to hit back at Boeing.Critics say Airbus took a huge gamble on the wrong plane by building the A380, of which it has sold 159 and seen cancellations of 10 planes. The mid-sized long-haul market for 200-352 seat planes is estimated at around 4,000 over 20 years.Gallois said last month he would present the A350 proposals in a "positive" light to the rest of the EADS board without making a formal recommendation.EADS owns 100 percent of Airbus after partner BAE Systems sold back its 20 percent stake last month.
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EADS Shares Rise on Report That Company's Board Will OK Launch of Airbus A350 XWB
PARIS (AP) -- The board of Airbus parent EADS was meeting Friday as its shares soared on a report that directors had agreed to approve the launch of a planned mid-sized plane to rival Boeing's 787.
Shares of European Aeronautic Defence and Space Co. rose as much as 5.7 percent to 23.48 euros ($30.99) in Paris after the Financial Times said its main shareholders had agreed on how to fund the new A350 XWB, which is badly needed to fill a gap in the Airbus product line and stem a loss of business to Chicago-based Boeing Co.
Two people close to the European defense group's main shareholders, who spoke on condition of anonymity because the discussions were confidential, confirmed widespread reports that a board meeting was taking place Friday in Amsterdam. An EADS spokesman declined to comment.
Franco-German dominated EADS had pledged to announce a decision on the long-range airliner by the end of November, but a board meeting scheduled for Nov. 24 was called off amid disagreements over funding for the program.
Citing anonymous sources, the Financial Times said EADS directors agreed late Thursday that the company should fund about 6 billion euros ($8 billion) of the program independently, with a further 4 billion euros ($5 billion) either provided directly or guaranteed by the French, German, Spanish and British governments. Some of the state-guaranteed cash could be raised in a bond issue, the newspaper said.
The European Union and United States are already embroiled in World Trade Organization litigation over subsidies to Airbus and Boeing, and a decision to draw on state guarantees or launch aid for the A350 XWB -- repayable only if the program turns a profit -- could exacerbate the dispute.
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
-------------------------------------------
EADS seeks A350 funding alternative
By Aimée Turner
Ongoing WTO dispute leads to rethink on twinjet support
Shareholders at Airbus parent EADS are looking at alternative ways of funding the proposed Airbus A350 XWB widebody twin, which could signal an end to controversial launch aid for the programme.
EADS cancelled last week's board meeting where shareholders were due to discuss the industrial launch of the A350 XWB, a 9-10 billion ($12-13 billion) project controversially at the heart of the ongoing transatlantic dispute over support for large aircraft.
The meeting was cancelled due to a reported lack of agreement among EADS shareholders DaimlerChrysler, Lagardere and the French government over launch aid, with France thought to be reluctant to provide the project with repayable finance while the World Trade Organisation (WTO) dispute is active.
In November Airbus chief executive Louis Gallois said the manufacturer will make a formal decision on its proposed A350 XWB programme before the end of the month, but admitted this may be extended to early December.
Financing options could include funding the programme from cash reserves or raising debt on the commercial market and industrial partnerships, in addition to repayable launch aid.
The USA meanwhile filed its first WTO submission on 15 November, to which the European Commission will reply on 9 February. The EC has also asked the WTO to select panellists and set a timetable for its own case against the USA before 27 November. When this is done, both the US and EC panels will run in parallel.
The EC says: "We have not closed our doors to exploring a negotiated solution, in the context of which the question of launch investment and public support to Boeing could be addressed.
"Our examination of the US submission reconfirms the validity of our arguments. In addition, we are pursuing a case against the WTO-illegal subsidies granted by the US government to Boeing, which we are confident we will win."
Ted Austell, Boeing vice-president international trade policy says: "The US submission sets the clock ticking and this should focus the parties on whether there's any prospect for a negotiated settlement before the determination, next fall by the WTO, on the notion that launch aid, as a financing instrument for aircraft development, is not compatible with WTO rules."
He says additional launch aid would be an "unwelcome" development and would make it much more difficult for the US and the EC to secure a negotiated solution.
EADS co-chairman Manfred Bischoff is said to be preparing to quit his role to become chairman of DaimlerChrysler, which currently holds a 22.5% stake in the aerospace and defence business.
