Bloomberg News

Airbus Weighs New A350 Assembly Line on Demand for Largest Model

February 25, 2013

Airbus SAS (EAD) said it’s looking to add another assembly line for the new A350 wide-body jet, a competitor to Boeing Co. (BA:US)’s troubled 787 Dreamliner, to meet rising demand for the plane’s largest version.

With more than 600 orders placed for the A350, due for its first flight this summer before deliveries begin in the second half of 2014, Airbus is looking at adding capacity for the -1000 variant, Chief Operating Officer John Leahy said.

“I would like to believe that sometime this year we’ll be able to make a decision to do that,” Leahy said yesterday in an interview in Singapore. Production of the baseline A350-900 began in October, with the smaller -800 due to enter service in 2016 followed by the -1000 in 2017.

Airlines’ quest to cut fuel bills will keep driving sales of more-efficient models such as the A350 and the Dreamliner, said Leahy, who predicted that Boeing will find a fix for the 787’s battery faults. Airbus said Feb. 15 it would revert to traditional batteries on the A350, dropping the lighter lithium- ion cells tied to the 787’s grounding, to help stay on schedule.

“It’s unfortunate that these things happen but safety is the most important thing,” Leahy said. “When incidents happen like what they had with the battery we have to put the fleet on ground till you get it fixed. We’re talking about going back to a proven nickel cadmium battery technology that would be about 60 kilograms heavier. Why take a risk for 60 kilograms?”

Stronger Sales

Boeing is offering a battery redesign for the 787 to answer safety concerns after the jet’s grounding on Jan. 16 as a result of incidents in which lithium batteries smoldered and emitted smoke, people with knowledge of the plan said. The U.S. Federal Aviation Administration is reviewing the proposed redesign.

Leahy, who is also Airbus’s chief salesman, said the A350 has been “very popular” in the Asia. Chief Executive Officer Fabrice Bregier said Oct. 23 he was confident Airbus could sell 70 or 80 -1000 variants a year as customers upgrade to bigger jets, compared with a previous planning assumption of 40 or 50.

The 350-seat -1000, which has a list price of $332 million, broke a four-year sales drought on July 11 as Cathay Pacific Airways Ltd. of Hong Kong placed an order for 10 aircraft. The model has accrued 105 firm commitments in total.

Toulouse, France-based Airbus is also in talks with several airlines regarding further sales of the A380, Leahy said yesterday, reiterating the company’s target of securing 25 new orders for the superjumbo this year.

“I would like to believe that almost everyone who has it will place orders for more because it’s a very cost-effective airplane,” he said. “We also see some new customers. One of the reasons why you will see new customers is that airlines are discovering that it takes an A380 to compete with an A380.”

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net


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