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 The European planemaker's decision to add new, more fuel-efficient
Rolls-Royce <RR.L> engines to its best-selling long-haul jet comes
as it tries to preserve market share against Boeing's <BA.N> all-new
787 Dreamliner and amid disappointing sales of its own new A350-800
model.
The challenge facing new aviation technology was underscored on the
eve of the Farnborough show, the world's biggest aerospace industry
gathering of the year, when Lockheed-Martin's <LMT.N> Joint Strike
Fighter was pulled out of the opening day.
The warplane is grounded following an engine fire last month
although Lockheed hopes it will still make its international debut
at the event this week. Two initial partners in the program - Canada
and Denmark - are weighing fresh orders.
The absence of the F-35 left Airbus <AIR.PA> to grab the limelight
on day one of the July 14-20 show. The European planemaker's chief
executive, Fabrice Bregier, predicted up to 100 orders for the
A330neo during the event.
The A330 has enjoyed a resurgence of sales helped by delays in
deliveries of Boeing’s technically ambitious carbon-fiber 787 jet,
but it is in need of a revamp to keep selling.
Analysts say that will also plug a potential future gap in the
Airbus wide-body jet portfolio after poor sales of its A350-800 -
the smallest of the next-generation A350 family and a model which
looks set to be halted or suspended as a result.
The 250-300 seat market is the largest segment of the wide-body jet
market by volume and represents 4,520 aircraft worth more than $1
trillion over the next 20 years, according to Boeing’s latest market
forecast, published last week.
Airbus believes the new A330-800neo and A330-900neo models can
achieve at least 1,000 of those orders, but Boeing says the market
opportunity is closer to 400 planes and even then, only for a short
period.
Still, the cheaper A330neo is expected to spark increased price
competition.
"The A330neo could potentially offer the right mix of fuel-burn
reduction and lower acquisition cost ... Less clear is whether the
economics and timing will be sufficient to sway customers from the
787 this time," said Rob Morris, head of consultancy at Flightglobal
Ascend, in a report being published at the air show.
OLDER TECHNOLOGY
The A330neo will have a range increase of up to 400 nautical miles,
with room for up to 10 extra seats in the cabin, Airbus said. The
aircraft will also have aerodynamic improvements such as new wing
tips, as well as an increased wingspan.
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Deliveries will start in the fourth quarter of 2017. Airbus said it
would incur development costs for the A330neo from 2015 to 2017,
with an impact of around 70 basis points on the group's 2015
return-on-sales target.
The European group is aiming to replicate the success of its smaller
revamped A320neo.
But Boeing is relaxed about the challenge.
"It is an older technology airplane that is being improved. It will
compete with brand new technology airplanes that we’ve got across a
wide spectrum of widebodies," Boeing co-CEO Jim McNerney told CNBC.
"We feel highly confident in our new technology line that is already
in place as it competes against a refurbished A330."
Boeing begins the air show with a clear advantage after gaining 703
gross orders up to July 8, or 649 after cancellations, against
Airbus’s end-June total of 515 gross orders and 290 net.
But after an intense sales drive in recent weeks, Airbus is expected
to outpace its U.S. rival by about two to one at the air show.
Analysts have generally predicted a low-key show, because of
steadily growing fears of airline overcapacity.
However, industry sources gathering at the event said evidence
pointed to well over 500 orders or commitments ranging from a
100-plane lessor deal to a single plane for Fiji.
(Additional reporting by Cyril Altmeyer, Jack Stubbs, Victoria
Bryan, Sarah Young and James Regan' writing by Tim Hepher and Mark
Potter; editing by Jason Neely)
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