Sunday, Jul 18, 2010


 
   By Dan Michaels 
   Of THE WALL STREET JOURNAL

LONDON (Dow Jones)--Contrary to earlier suggestions, Airbus won't announce a decision on whether it will offer new engines on its popular single-aisle jetliners at the Farnborough Air Show, said Louis Gallois, chief executive of Airbus parent European Aeronautic Defence & Space Co. (EADSY, EAD.FR).

Airbus and rival Boeing Co. (BA) are both studying whether to put more modern jet engines on their most popular short-range models. The duo are under pressure from rivals in Canada, Japan, Russia and China, which are developing entirely new short-range planes.

(This story and related background material will be available on The Wall Street Journal website, WSJ.com.)

While not direct competitors to Boeing's 737 models or the Airbus A320 family, the upstarts threaten to eat into their lucrative market. As a result, Airbus and Boeing have been studying how they could put more advanced engines their current-model planes, and whether such a change would make business sense.

Airbus has recently begun discussing a "New Engine Option," or NEO, version of its A320 family, but hasn't finalized designs or officially begun selling it. Many people in the aviation industry had expected Airbus to announce its decision at this week's airshow.

Airbus Chief Operating Officer John Leahy told a press conference Saturday that a decision is likely by the end of the year.

"Will we do it? I'd like to believe we will," he said.

Among concerns Airbus and Boeing both faces are the cost of changing the products, the impact on sales of current versions and how many engineers would be needed to handle design work.

"We have to be sure we have the right business model," Mr. Gallois said in an interview. "Engineering resources is clearly one of the main issues for us," he added.

Airbus has faced costly problems in recent years with new programs, including the A380 superjumbo and the A400M military transport plane.

Mr. Gallois said the challenge is to ensure Airbus has both a sufficient number of engineers overall and having "the right people for specific tasks."

-By Dan Michaels, Wall Street Journal; +32 473 178 929, daniel.michaels@wsj.com

(END) Dow Jones Newswires

18-07-10 0510GMT