Bloomberg News

Airbus A380 Jumbo Will Need Improvements to Match Boeing’s 777X

May 19, 2014

Airbus will need to improve its A380 superjumbo to repel Boeing Co.’s updated version of the 777, its bestselling wide-body airliner that is slated to enter service next decade, Chief Executive Officer Fabrice Bregier said.

Boeing will present a serious challenger to the flagship A380 when it comes out with a larger and longer-range variant of the 777, called the 777X, Bregier told journalists in Berlin.

“After 2020, we will face the challenge of the Boeing 777X, and it is clear that and as the challenges evolve, the A380 will have to evolve,” Bregier said in Berlin late yesterday on the eve of the ILA Berlin Air Show.

Since going on offer in 2000, the A380 double-decker has won contracts and commitments for 324 planes, a fraction of the customers for models one level down in the twin-aisle category. The 777X has already garnered 300 orders and commitments since going on offer last November, the bulk of them from Middle East customers, which are also major buyers of the A380.

Bregier used his presentation to attack Boeing’s use of tax breaks from the state of Washington, which he said amount to $8.7 billion in connection with the 777X, more than the total cost of developing the plane.

The European Commission has raised concerns about the issue with the U.S. government, Bregier said, “though not enough,” adding that the industry needs to “find a level playing field.”

Airbus’s biggest focus remains on progressing with the A350 program, with the long-range plane set for first delivery with Qatar Airways Ltd. before year-end. While the aircraft doesn’t need major design changes from today’s perspective, the challenge will be to lower recurring costs, Bregier said.

The unit of Airbus Group NV, based in Toulouse in southern France, is coming closer to deciding whether to upgrade its existing A330 wide-body airliner with new engines to make the 20 year-old model more fuel-efficient and more attractive to customers, Bregier said.

The CEO called the exchange rate between the dollar and the euro his “biggest enemy.” Almost all aircraft are sold in dollars, though Airbus, with 90 percent of its employees in Europe, pays labor costs in the local currency and exports the vast majority of its products, he said.

A 10-cent difference has an impact of more than 1 billion euros on the company’s bottom line, he said.

A more acceptable exchange rate for European exporters would be around $1.25 to the euro, Bregier said.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

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


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