Airbus faces tough battles over A330 longevity plan

Tue Feb 25, 2014 3:50pm EST
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By Siva Govindasamy and Tim Hepher

SINGAPORE/PARIS (Reuters) - As Airbus (AIR.PA: Quote) races through flight testing of its newest plane, the next-generation A350, Europe's planemaker faces growing battles to secure a future for the A330, until now its only truly lucrative wide-body jet.

Twenty years after it entered service, the 250 to 300-seat jet has repeatedly been pronounced dead by rival Boeing (BA.N: Quote) but refuses to lie down, outliving its A340 sibling and surviving for now the arrival of lighter new jets like Boeing's 787 and the A350.

But analysts say time is finally ticking on Airbus's most profitable wide-body jet, despite a steady series of changes aimed at prolonging the end of its production cycle and with over 1,000 still in service.

Without a fresh burst of sales or a slowdown from current record production levels, they say, Airbus faces a sharp drop in deliveries from 2016 onwards, with the visible backlog of undelivered aircraft now worth just 26 months of production.

"The A330 had an amazing past five years, not only because of its merits, but because Boeing's 787 was delayed," said industry analyst Richard Aboulafia at Teal Group.

"But with the 787 hitting (its targeted) production of 10 aircraft per month, that is going to crowd the A330 out of the market space pretty quickly," he added.

That leaves Airbus with a two-fold challenge. It must decide

how best to maintain a foothold in the 200 to 300-seat market, where it first developed jets more than 40 years ago and which Boeing later targeted in part with its 787 family.   Continued...

An Aeroflot Airbus A330 plane heading to the Cuban capital Havana is taxied at Moscow's Sheremetyevo airport June 27, 2013. REUTERS/Alexander Demianchuk