Fuel prices hit Airbus where it hurts: orders

3rd April 2006, Comments 0 comments

PARIS, April 3, 2006 (AFP) - The four-engined Airbus A340 long-haul airliner has been hit by the high price of jet fuel and is losing orders heavily to the rival Boeing 777, aviation industry sources say.

PARIS, April 3, 2006 (AFP) - The four-engined Airbus A340 long-haul airliner has been hit by the high price of jet fuel and is losing orders heavily to the rival Boeing 777, aviation industry sources say.

The latest problem for the plane came Sunday when Emirates of Dubai told Airbus it was postponing indefinitely the date on which it was due to take delivery of the 20 A340-600 jets it has on order. Deliveries were to have started next year.

An Airbus spokesman acknowledged that there had been some "backsliding" of orders.

Emirates reportedly wants to wait until Airbus has developed an improved version of the aircraft that is more fuel-efficient, a concern shared by most airlines as they grapple with an upward spiral of oil prices.

Their collective fuel bill increased by 50 percent last year to US $92 billion dollars (EUR 76 billion), according to the International Air Transport Association in Geneva.

Boeing claims that its recently introduced 777-200LR twin-jet is the world's longest-range aircraft and can transport more than 300 passengers for 24 percent less fuel per passenger than its rival, which also operates in the 300-400 seat range.

However, Airbus has maintained that with its four engines the A340 frees operators to fly any route in the world, including the shortest and most effective paths across oceans and deserts.

Twin-engined planes have to operate within a certain range of an emergency airport in case one of the engines fails. Insisting that engines are now thoroughly reliable, Boeing has argued for flight restrictions to be lifted, which would erode the A340's advantage.

In the climate of high oil prices, the A340 family, launched 15 years ago as a rival to the aging four-engined Boeing 747, has become Airbus's Achilles heel. Only 15 A340s were ordered last year, despite the fact that Airbus received a record 1,055 firm orders for all types of passenger jet.

Airlines ordered 154 Boeing 777s last year.

Noel Forgead, co-chief executive of Airbus's principal owner, EADS, acknowledged in January that the 777 "has taken a preponderant share of the market in comparison with our A340 family" and agreed that this was a matter of concern.

While it is considering how to improve the model, Airbus has not lost hopes of recapturing lost ground and is confident it can restore sales in the 300 to 400-seat market.

"One year does not make a trend," said Airbus president Gustav Humbert.

The company's commercial director, John Leahy, said a four-engined plane burns only six or seven percent more fuel than a twinjet of equivalent size.

While Airbus is considering an enhanced A340 with lower fuel consumption, there are indications that price has become the key factor in selling the plane.

"With the 777, Boeing has a better product that uses less fuel," the head of India's low-coast Kingfisher airline, Vijay Mallya, told AFP in February. "Nevertheless, we are contemplating buying the A340 all the same, if we can come to an agreement on the price."

Airbus also seems to have found arguments to win over Qatar Airways. Its president, Akbar al Baker last June announced his intention to buy 20 Boeing 777s, but at the Singapore air show in February he said he might change his mind and buy Airbus 340-500/600s instead.

Boeing strategists believe that Airbus does not have the resources to renew the A340 range at the same time it is bringing its A380 superjumbo to market and developing a new twin-jet A350 to compete with the Boeing 777-200ER and the 787 Dreamliner.

Randy Baseler, Boeing's vice president for marketing in the civil airplanes division, said at the Singapore show that Airbus risked being overtaken in the next decade in the battle to develop and sell a new generation of medium-range aircraft to replace the current Boeing B737s and Airbus 320s.

Copyright AFP

Subject: French news

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