*http://www.spiegel.de/international/business/0,1518,489103,00.html
Paris Air Show No Party for European Planemaker** By Carol Matlack* Plagued by problems and delays, the A350 widebody is trailing its more fuel-efficient rival, Boeing's Dreamliner. The scenario: Struggling to compete against Boeing's fuel-efficient 787 Dreamliner, Airbus redesigns its planned A350 widebody plane under pressure from airlines. It scores a hefty launch order for the revamped aircraft from Qatar Airways, but most other major carriers hang back, even though Airbus offers deep discounts. That's the situation as the biannual Paris Air Show opens on June 18. But unfortunately for Airbus, it was pretty much the same story at the start of the last Paris Air Show, in 2005. The A350 saga underscores that Airbus has been, in many ways, paralyzed for the past two years. Delivery of its A380 megaplane, originally scheduled for early 2006, is almost two years behind schedule because of wiring problems caused by mismatched design software. The delay plunged Airbus $750 million into the red last year and is expected to wipe out more than $6 billion in projected profits through 2010, denying the company a key source of financing to develop the A350. Panels in Question Multiple redesigns of the A350 have already pushed its planned launch to at least 2013, five years after the 787 is expected to enter service. And the A350 has few major customers apart from Qatar, which had ordered an earlier version of the plane and recently announced it would buy 80 of the revamped model, known as the XWB. Boeing, meanwhile, has mopped up 582 orders for the Dreamliner, giving it a huge advantage over Airbus in widebody planes, the industry's most lucrative sector. Yet the financial hit from the A380 is only one reason for the A350's painfully slow takeoff. Airlines are worried that the plane, which Airbus says will have an aluminum frame covered with composite carbon-fiber panels, still can't match the efficiency of the all-composite 787. Airbus says they're wrong, and that more airlines will order the A350 once they see detailed specs. But at least one big customer appears to have walked: Steven Udvar-Hazy, chairman of aircraft-leasing group International Lease Finance Corp., the world's single largest aircraft buyer. He has repeatedly criticized the A350's design, and ILFC is set to place a major Dreamliner order during the Paris show, according to people familiar with the situation. "This air show will be brutally hard for Airbus," says Doug McVitie, an aerospace analyst in Dinan, France. Why Not Outsource? Why doesn't Airbus just respond with an all-composite A350? For one thing, the Europeans are several years behind Boeing in research and development on composite materials. Building an entire airframe out of composites is a lot more complicated than making composite panels. Even so, Airbus could outsource the composite work. Boeing has subcontracted 65 percent of the work on the Dreamliner to suppliers who are building the wings and almost all of the fuselage. Indeed, one of Boeing's key suppliers, Alenia Aeronautica of Italy, is right in Airbus' back yard and would gladly work for the European plane maker, too. But for Airbus, outsourcing would be fraught with difficulty. As part of its "Power 8" cost-cutting plan -- intended to offset the A380 losses and the effects of a strong euro -- the company is putting 6 of its 16 factories up for sale. It's unlikely to find buyers unless those facilities are guaranteed continued work on Airbus planes. And if Airbus shifted work away from its own factories, the resulting layoffs could trigger crippling strikes and political backlash. "They are really stuck," says Nick Cunningham, an aerospace analyst at the Panmure Gordon brokerage in London. Don't Count It Out The Dreamliner isn't the only Boeing plane that could benefit from the A350's woes. Flush with cash from the hot-selling aircraft, Boeing could revamp its widebody 777 model in the next few years to improve efficiency. That would hurt not only the A350 but also the A330, Airbus's current best-selling widebody. Boeing also could get a head start developing a new composite narrow-body plane, replacing the 737 in the competition against Airbus' A320 line. Airbus certainly won't go out of business. It makes excellent aircraft and has more than 2,500 backorders. Carriers will keep buying from the European maker because they want to have two strong competitors in the industry. And despite the A350's difficulties, Airbus' ace salesman John Leahy is likely to secure some decent orders for the plane. Just last week, for instance, Tim Clark, the chief executive of another key potential customer, Emirates Airlines, said he was mulling a possible A350 purchase. The troubled plane will make it into the air someday, but Airbus' bumpy ride won't be over anytime soon. [Non-text portions of this message have been removed]
