msnbc.com news services
updated 7/17/2006 12:47:35 PM ET 2006-07-17T16:47:35

Boeing's 787 Dreamliner is overweight and experiencing delays with some suppliers, the company said Sunday, while stressing that the long-range, fuel-efficient jet remains on budget and on schedule.

Rival Airbus, however, announced this weekend that the widely expected redesign of its planned A350 - billed as a competitor to the 787 - will nearly double the development cost of the plane.

Boeing Co.'s head of commercial planes said Sunday some areas of its fast-selling 787 Dreamliner are behind schedule, but that should not push back the new lightweight mid-sized plane's entry into service scheduled for 2008.

The comment, made by Boeing's Alan Mulally at a London briefing on the eve of the Farnborough International Airshow, comes shortly after rival Airbus was thrown into disarray by a delay in production of its A380 superjumbo and design problems with its mid-sized A350.

"Some areas are ahead of schedule, some areas are behind where we want to be," Mulally said, when asked about the 787 program. "That's the nature of making new airplanes." He did not specify which areas were late.

He added the new plane, to be built mostly from carbon fiber and titanium to save weight and cut fuel costs, was still over its target weight, but declined to say by how much.

Airbus and parent firm EADS have confirmed the planemaker will unveil plans this week for a new range of mid-sized airliners as well as a freighter model designed to catch surging rival Boeing Co.

EADS co-Chief Executive Tom Enders said the new line-up of twin-aisle, long-range planes would cost about $10 billion to develop.

"This important segment - long-range, wide-body - is one we won't desert," Enders told journalists in remarks embargoed for Sunday.

"You can be sure that (Airbus) Chief Executive Officer Christian Streiff will present the new A350 (at) the air show on Monday," he said.

Airbus has grappled with its proposed A350 model since 2004 after plans to offer simply an upgraded, long-range version of the existing A330 were met with demands from would-be buyers for a wider, all-new plane instead.

Analysts expect Airbus to finalize plans for the A350 as a new family of long-range planes with 250 to about 350 seats and deliveries starting in 2012, two years later than originally planned.

The planemaker will also announce a freighter version of the existing A330 passenger jet to reach the market in late 2009, Airbus Executive Vice President Tom Williams told reporters.

The year's biggest air show opens at Farnborough, near London, on Monday with the France-based planemaker keen to end two years of uncertainty over the A350.

It has commitments for 182 planes from 14 customers for the version of the A350 it has offered to build, deals it will have to re-confirm as the plane on offer is changing.

Enders said it was important to make an announcement this week: "This is part of a story that is already too long."

The A350 is aimed at competing with the twin-engined, long-range Boeing 777 and the smaller 787 due in 2008.

Airbus has booked more orders than Boeing for five consecutive years but that streak is at risk, with the U.S. planemaker leading this year by more than 360 planes.

"It's a very powerful product that will allow us to re-assert our position in the marketplace," Williams said of the latest version of the planned A350, though he admitted one version of Boeing's 787 was likely to be unmatched because the Airbus plane would not address the 200- to 250-seat segment.

Williams told Reuters he did not see a big risk of Airbus cannibalizing demand for the more than 200 orders it has on backlog for the shorter range twin-engined A330 or its current long-range line-up, the four-engined A340 series.

Steven Udvar-Hazy, the influential boss of International Lease Finance Corp., warned Airbus that if it did not revamp its A350 plans it would be relegated to as little as 25 percent of the market for such planes.

Asked if Airbus might raise its outsourcing of component production to the level seen on the 787 now under development, Enders said: "The Boeing (production) model is very interesting and we are studying that."

EADS is a Franco-German-Spanish firm which owns 80 percent of Airbus, in which the UK's BAE Systems owns the other 20 percent.

Enders said it was open to the idea of adding a Briton to its board in the event BAE sells its stake back to EADS, a step the British company is considering.

"We see it as a natural development," EADS co-CEO Tom Enders told reporters. "We can certainly envision having a British person on our board."

The UK is a major aircraft and defense equipment market for Airbus and EADS.

The Dreamliner 787, which has almost single-handedly turned around Boeing's fortunes, capturing 360 firm orders in only two years on the market, is still on track for its first test flight in the middle of next year and delivery to customers in 2008, Mulally said.

He said Boeing would not unveil plans for the much-anticipated stretched version of the new plane, the 787-10, at Farnborough, but said the planemaker has already been working with airlines such as British Airways on such a design.

He left open the possibility of more orders for its latest jumbo, the 747-8, saying the passenger version -- which has only one anonymous customer so far -- has been getting a "very positive response."

"We're talking to them (airlines) right now," Mulally said, without identifying which. Large sales of Boeing's 787-8, which can seat up to 450 passengers, would be a blow to Airbus, which is looking to dominate the very large end of the market with its A380, the largest ever commercial passenger jet, which will be able to seat more than 500 people.

Sources told Reuters earlier on Sunday that Dubai-based airline Emirates is set to announce an order for 10 747-8 freighters, in a deal worth $2.8 billion at list prices. Officials at Emirates and Boeing declined to comment.

Mulally said he felt no pleasure in the turmoil at Airbus as it hits snags in the design of production of its new models.

"We're very compassionate about Airbus -- we're in this business," he said. "New airplanes are very hard ... they'll figure it out."

(Reuters and AP contributed to this story.)

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