Boeing says will defend 777 but not rushed by Airbus

Reuters) - Boeing vowed last week to defend its successful 777 wide-body aircraft but said it felt under no immediate pressure to respond to a reported challenge from European rival Airbus.

Industry sources said on Monday that Airbus planned to place a bigger engine on one variant of its future A350 plane in order to compete better with Boeing’s 365-seat mini-jumbo.

Asked how Boeing would react, Jim Albaugh, the head of its commercial airplanes unit, said: “We have time to analyze the situation and at some point in time we’ll do either a derivative or a new plane to make sure we secure what I’ll call the high ground in the markets we serve.”

However, he said Boeing would not embark on two all-new airplane programmes simultaneously, ensuring any overlap with changes to the best-selling 737 plane was staggered.

Albaugh said Boeing would be driven by customers and not by its European rival.

And he said Boeing would await with interest the delivery schedule for the Airbus A350-1000, which a U.S. analyst expects to be delayed by 2 years to 2016 to accommodate the new engine.

Airbus has mounted a separate challenge to Boeing in the most active part of the aircraft market by revamping its A320 narrowbody jet with new engines to offer 15 percent in fuel savings, when combined with performance-enhancing wingtips.

“The A320 is a good plane and has got quite a number of orders but those were orders from carriers that buy Airbus products and were going to buy the A320 regardless,” said Albaugh, who is chief executive of Boeing Commercial Airplanes.

“We are spending a lot of time making sure our customers know we are going to do one of two things. We are going to re-engine or build a new small airplane and regardless of which we do, our plane will be better and more capable.”

Albaugh said the choices were a 737 with new engines capable of producing 8 percent better performance than the A320neo, or a new airplane in 2019 or 2010 with 20 percent better performance in fuel efficiency than where the Boeing 737 is now.

A spokesman said the re-engined option would be ready in 2016 or 2017.

Both Airbus and Boeing are under pressure to deliver fuel savings as quickly as possible to cash-strapped airlines.

Airbus has said its A320neo is an interim solution until the next generation in engines allows a much bigger leap in fuel savings from the second half of the next decade.

But based on the way engine makers currently see the future, this would rely on a radically new type of engine with open fan blades and Albaugh said he doubted this would be popular.

“For those that say wait until 2025 and then there will be a real leap in engine technology, I am not convinced that is the case. If you look at the unducted fan, I have a hard time believing it is going to be an engine that will ever be viable.”

Demand is growing for A320 and Boeing 737 passenger jets to meet growth in emerging markets and growth of low-cost carriers. Many older airlines will soon need to renew their fleets.

“We know we can build a plane that will be 20 percent more efficient. That’s not a question. The issue is, how do you build 60 narrow-body planes in a month. Right now we’re at (a targeted level of) 38 and there is a good chance we could go to 42.

“If you project what demand would be in seven, eight or nine years from now, we think we’ll need to be looking at a number like that.”

Albaugh said Boeing would design the production process at the same time as the plane, and ensure new technologies were matured in advance, in order to avoid a repeat of production problems on the 787 Dreamliner.

Unions have criticized Boeing for outsourcing too much of the 787 production, contributing to a three-year delay.