The revamped Airbus A350 finally gives airlines a real alternative to the Boeing 787 and gives the 777 a new competitor. But is it too little, too late for Airbus?
Airbus has some serious catching up to do. The A350 XWB, launched last year, will not enter service until 2013, five years after the Boeing 787. (Read Flight's Boeing 787 special)Boeing has cashed in, taking full advantage of the Airbus deliberations over a radical redesign of the A350. It has racked up over 400 orders for the 787 from almost 40 customers since its launch three years ago. Airbus, meanwhile, has just completed negotiating the first contracts for the A350 XWB, mainly with customers who ordered the original A350 following its 2004 launch.
But for the European manufacturer, the situation is still much better than a year ago, when customers were pushing Airbus to improve the original specification of the A350. The result, A350 launch customers say, is a much more capable aircraft that at least matches the 787. Airbus also extended the A350 family to include the 350-seat A350-1000, giving the 777 a new competitor from 2015.
"Based on the information I have, just like the 777 killed the A340, the A350 will kill the 777 for sure and it will come close to the 787 as well," says Kingfisher Airlines executive vice-president Hitesh Patel.
Adds Stephen Vella, management adviser to the original A350 launch customer, Qatar Airways: "The A350-1000 XWB, nominally 10 seats smaller than the 777-300ER, is a real threat to the Boeing product. We believe Boeing is already well advanced in studying possible solutions for this threat, which could be available at the same time as the A350-1000 XWB, if not sooner."
Boeing admits it is being pressured to improve the specification of a proposed stretched variant of the 787, the 310-seat 787-10, to make it more competitive with the A350 XWB. The 787-10's entry into service, originally expected in 2012 or 2013, may also be accelerated. But Boeing is not about to give up on the 777 and it believes the 777 and 787 provide the perfect "formula" for future long-haul point-to-point networks.
Combination
The combination of the two "will give you a better solution economically" than operating only the A350, claims Boeing Commercial Airplanes vice-president marketing Randy Baseler.
His counterpart at Airbus naturally has a different view. Vice-president marketing Colin Stuart predicts Boeing will have to ultimately stop selling the 777, which entered service in 1995, because the A350 will be 20-30% more efficient. "Even if we're a couple of percentage points wrong, this is a dramatic improvement," Stuart says.
Baseler points out that Airbus wrongly predicted the demise of the 747 after it launched the A380. The A350 or 787 "won't eliminate the 777 per se" because although they are similarly sized they cover different sectors of the market, he argues.
The world's largest 777 operator, Singapore Airlines (SIA), agrees: "The -300ER and -200ER versions of the 777 will still provide a network beyond what we intend for the A350 XWB, although we do recognise that aircraft's flexibility for long-range routes. We can keep our route plans open for longer range options if we wish."
SIA is now the A350 launch customer and will take the first of 20 A350-900s in 2013. It has ordered an equal number of 787-9s, with deliveries from 2011.
"If you listen to the manufacturers you'd believe it's a choice of one or the other, but we can see ways of integrating both into our fleet quite easily, with sufficient numbers of each to achieve the necessary critical mass for operating efficiency," SIA says. "To an extent the 787 and A350 XWB will serve slightly different markets in the guise that we're looking at."
SIA, the only airline to commit to both the A350 and 787, signed a letter of intent with Airbus last July just a few days after the XWB was unveiled at the Farnborough air show. Seven other carriers and four leasing companies placed just over 100 orders for the original A350 before the programme was delayed and subsequently relaunched as the XWB. Airbus is confident all these original orders will be converted to the XWB over the next few months. It also expects to secure another 100 orders by year-end from several other customers including Qatar Airways.
Qatar has been working with Airbus since 2004 on developing the A350 specification and announced its intention at the 2005 Paris air show to buy 60 A350s for delivery from 2010, which would have made it the launch customer. But Qatar never signed a deal for the original aircraft and is still negotiating a contract for the redesigned XWB.
"Initially Airbus was reluctant to introduce the specification features requested by Qatar Airways to make the A350 competitive with the 787, but eventually realised the inevitability of this requirement," recalls Vella. "In the process they lost five years lead time to Boeing. Hence Airbus has a real motivation to produce a better aircraft than the 787 to make up for the delivery delay."
Redesign
Most of the seven carriers that did sign contracts for the original A350 also urged Airbus to redesign the aircraft. "We shared the concerns that it wasn't enough of an aircraft to compete with the [787] Dreamliner," says US Airways vice-president financial analysis Dion Flannery.
He adds that US Airways supported the redesign in part because it was concerned it could become a niche operator of an unpopular aircraft type. "We're comfortable the [redesigned] aircraft fits our needs," says Flannery, adding if the A350 XWB did not measure up well against the 787 "we wouldn't order it".
Patel agrees: "We're extremely happy with the specifications. The changes are significant. It now has a tremendous advantage over the 777. The redesign was an extremely smart move."
But several customers are not so ecstatic about the delivery delays the redesign is causing. Kingfisher, which ordered five A350-800s for delivery from 2012, will now not receive its first aircraft until 2015. TAP Portugal, which was to receive its first of 12 A350-800/900s in 2013, will have to wait until late 2014 or early 2015. Finnair, which was to take the first of 11 A350-900s in 2012, and US Airways, which was to get the first of 10 A350-800s in 2011, now expect their deliveries will start in 2014.
Flannery says there is "economic value" to early deliveries and US Airways has pointed out to Airbus how much the delay has cost the carrier. He says US Airways does not want to wait until 2014 to replace its 767 fleet and as an interim solution it is looking to acquire additional A330s or A340s, which Airbus is offering as part of the carrier's renegotiated A350 contract.
Finnair Aircraft Finance managing director Colin Molloy says the carrier also does not want to wait until 2014 to replace its Boeing MD-11 fleet and will use at least seven of the near-term A330/A340 delivery slots Airbus has been holding for Finnair to compensate it for A350 delivery delays. TAP chief executive Fernando Pinto says he will acquire at least three additional second-hand A330s this year and may later buy more new A330s to make up for A350 delays. Pinto says TAP "will be able to survive with the A330 and A340" three more years than planned, but the carrier will incur extra costs because the A350 is cheaper to operate and gives TAP the flexibility to launch new routes.
For some customers the new specification has resulted in a larger aircraft than they really need. The redesign includes a more efficient wing, a wider fuselage, an improved cabin and a new Rolls-Royce engine. As a result, the aircraft can fly faster and accommodate more passengers. Not only was the 350-seat A350-1000 added to the mix, the A350-800's capacity increased from 253 to 270 passengers in standard three-class configuration and the -900 was expanded from 300 to 314 seats.
Additional capacity
The additional capacity "is a concern", says Flannery of US Airways. "We're not a global carrier like other US majors." According to TAP's Pinto: "The initial aircraft would have suited us. We were not part of the group that asked for a different airplane. But it's there and it's more economical. We don't need [the extra capacity] now, but it's always good to have that capability there."
The range also increased on the A350-900 from 13,900km (7,500nm) to 15,600km. "The original A350 worked for us. We don't need an 8,500nm airplane," says Finnair's Molloy. "The original plane was priced right and had the right range for us."
But like Pinto, Molloy is quick to point out that the aircraft overall is better and the extra capacity could come in handy. "The XWB actually burns marginally more fuel, but you have a more capable airplane," he says. "They will start five to six years behind Boeing, no question. [But] the A350 being six years later in some ways is an advantage."
Stuart says the extra five years will allow Airbus to make the A350 5-7% more efficient than the 787. While he acknowledges Boeing secured over 400 787 orders before Airbus finally launched the A350 XWB, he points out it is a very big market and Airbus already has more than 200 A350 commitments - although most of these still need to be converted into firm orders for the XWB. "There's a long way to go before anyone can say it's too late," Stuart says.
In fact, Boeing predicts 5,800 aircraft will be sold over the next 20 years in the 200- to 400-seat category, while Airbus estimates a remarkably similar 5,600 200- to 300-seaters over the same period. As Molloy points out, the medium-size widebody market "is one market both agree on the size and both say they will get 40-60% each".
Several major carriers - including British Airways, Emirates and Lufthansa - have not yet ordered the A350 or 787. Emirates, which helped persuade Airbus to redesign the A350, is now evaluating the A350-1000 XWB against the 787-10. Lufthansa corporate senior vice-president Nico Bucholtz says the carrier also has worked with both manufacturers "since the beginning of the design phase" and has "a comfortable knowledge base for any decision". But he adds Lufthansa is not under any time pressure to replace its A330/A340 fleet.
BA commercial director Robert Boyle says BA is now evaluating the A350 and 787 and plans to make a selection later this year. BA generally looks for aircraft with larger capacity, which perhaps favours the A350, but also wants an aircraft that can help develop new routes, which perhaps favours the 787. "One of the attractive things about the A350 is it covers a big size band," Boyle says.
But Boeing points out there is still a big gap in the Airbus product offering because the A350 starts at 270 seats compared with 210 seats on the 787-8. It claims long-haul operations with aircraft smaller than 250 seats is an increasingly important strategic market and the 787 gives airlines more opportunities to open new point-to-point routes and increase frequencies.
Boeing also claims the specification Airbus has published for the A350 XWB in particular its 15,000km-plus range, may not be achievable.
Performance claims
"Airbus has not given airlines enough information yet on the A350 specification for them to be sure whether the performance claims are achievable," says Baseler. "But from what we can tell the A350-900's range is probably more likely to be around 7,300nm."
Finnair's Molloy responds: "Boeing has to say that - they are really trying to sell the 777 and 787. Airbus doesn't think so, the engine guys don't think so, our performance guys here aren't concerned about it and we have guarantees." Stuart also insists the A350-900's range specification will be met. "That's our design," he says.
As the design will not be frozen until next year, there is always a chance the A350 specification will change yet again. "The spec for the A350 is still incomplete in some regards, but it is coming together," says Flannery.
Adds Patel: "This aircraft is still on paper. When they actually start working on it, who knows? We'll see what happens when it starts flying."
But Airbus and its customers are confident there will not be any more drastic changes or disappointments. The customers believe Airbus has learned its lessons from the costly mistakes made with the A380 programme and has built a big cushion in the A350 programme.
"I find it difficult to believe they'll make the same screw-ups with the A350," Molloy says.
Adds Vella: "Although the specification of the A350 XWB will not be finalised until 2008, Qatar Airways is very comfortable with the evolution of the design. Airbus will build a good aircraft - its future depends on it."
Source: Airline Business
