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Airbus gets nod to build Boeing 7E7 rival

Airbus' top salesman gave the clearest indication yet Tuesday that the European aircraft maker plans to develop a new rival to the 7E7 "Dreamliner" being developed by U.S. competitor Boeing Co.
/ Source: Reuters

Plane maker Airbus got tentative approval on Monday to market a new model to rival Boeing Co.’s 7E7 from parent firm EADS, which said a final decision was expected next month.

“The EADS board of directors has met and discussed with great interest (and) in detail Airbus’ future product policy,” an EADS spokesman said in a statement.

“The Board fully supports the proposal brought forward by the Airbus management,” he said, adding EADS expected to make a final decision in December.

The project would mean investing up to 4 billion euros ($5.30 billion) at a time when Airbus is devoting most of its development money to the mammoth A380 double-decker due for delivery in 2006.

Up to a third of the money could come from governments but that would also have to be negotiated.

Launching its proposed A350, a longer-range version of the A330, would open a new transatlantic battle with Boeing in the 200-300 seat range where the U.S. planemaker sees demand for 3500 planes over the next two decades.

The A350 would use new engines, a new wing and greater use of lightweight composite materials to reduce fuel consumption.

A spokesman for the UK’s BAE Systems, which owns 20 percent of Airbus, noted BAE would also have to sign off on the programme.

Airbus could then formally begin marketing to see if demand was strong enough to justify proceeding with the A350’s manufacture.

An Airbus source said on Monday the next board meeting to discuss the A350 proposal will take place on Dec. 10.

BAE Chief Executive Mike Turner told reporters last week that the sheer size of the mid-sized market demanded that Airbus take a look, but insisted that BAE would make its own assessment of the business case.

“We don’t take any lead from the EADS board. EADS and us could conceivably make different decisions. ... I think it would be very unlikely,” he said.

He declined to comment on when the BAE board might take up the issue.

Airbus and Boeing have been locked in a dogfight for market share for years. Airbus is set to start delivering the 555-seat A380 in 2006, two years ahead of the debut of Boeing’s 7E7.

Boeing is expected to spend about $6 billion on the all-new 7E7, excluding the money that suppliers are investing as risk partners in developing engines, landing gear and other systems.