November 24, 2015 / 9:00 PM / in 2 years

UPDATE 1-Airbus seals riposte to rivals as regulators back revamped jet

(Adds analyst comment, engine approval)

By Tim Hepher

PARIS, Nov 24 (Reuters) - Airbus said on Tuesday it had won certification for the A320neo, paving the way for first delivery of a revamped, best-selling jet that has shored up its joint domination of the global jet market with Boeing.

The European planemaker said the European Aviation Safety Agency (EASA) and the Federal Aviation Administration (FAA) of the United States had jointly approved the model, which is a fuel-efficient upgrade of its popular A320 medium-haul jet.

The approval is a boost for United Technologies unit Pratt & Whitney, whose decision to develop a new generation of engines accelerated airliner projects from Canada to Russia and whose engines will power the first A320neo.

Qatar Airways is expected to take first delivery next month of the first of more than 4,300 jets sold since Airbus launched the A320neo, promising 15 percent fuel savings.

A similar version powered by CFM International, co-owned by Safran and General Electric, should win certification in coming months, Airbus said. Its engines won their own regulatory approval on Friday.

Airbus took the risky decision to upgrade its most popular model, which serves as cash cow for Europe's largest aerospace group, in December 2010 after witnessing a challenge from industry upstarts led by Canada's Bombardier.

Boeing followed suit a year later with plans to upgrade its popular 737, a move that also generated thousands of sales.

"Airbus made a gutsy move and forced Boeing to follow," said Adam Pilarski, senior vice president at Avitas consultancy.

"They took a chance by saying they would be successful with an existing platform if they just updated the engine."

The decision to defend a segment of the market estimated at $2 trillion over 20 years catapulted shares in both companies and many suppliers to record levels, with Airbus Group more than trebling in value since 2010.

Richard Aboulafia, vice president at Teal Group, said Airbus faces a crucial task to ensure ambitious output plans are met.

"When you have first mover advantage, ramping up is hugely important," he said, adding this would be dictated mainly by whether engine firms could deliver on promises.

Boeing says it has started building a 737 MAX test airplane and is on course to deliver the first jet in 2017.

In a reminder of challenges facing those trying to break into the main jet market, just as Airbus celebrated Tuesday's approval, Bombardier briefed investors on turnaround plans after delays and cash shortages on its rival CSeries.

Bombardier is expected to win certification for its plane very soon, but remains under pressure to boost sales after winning emergency investment from Quebec. (Additional reporting by Sudip Kar-Gupta, Cyril Altmeyer; editing by Adrian Croft and Susan Thomas)

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