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Airbus Redesign of A350 Plane Reassures Emirates (Update3)

By Massoud A. Derhally

June 11 (Bloomberg) -- Emirates, the biggest Arab airline, said Airbus SAS is doing the ``right thing'' with the redesign of the long-range A350 jet and that the carrier may buy as many as 100 of the wide-body planes, a competitor to Boeing Co.'s 787.

Airbus ``realized there has to be a centralized process of design and execution,'' Emirates President Tim Clark said in an interview today in Dubai, United Arab Emirates. ``I am more relaxed now about what I see with regard to the A350 program and the way they have gone about that as a new aircraft program,'' he said.

Emirates is considering the A350 XWB and Boeing's 787 Dreamliner as the airline retires planes and expands routes. The Dubai state-owned carrier plans to pick one model in the 300-seat category rather than a combination of planes. The average list price for the A350 is $229 million, giving an order of 100 planes a value of $23 billion.

Emirates is also considering replacing some A330s, A340s and Boeing 777s, and may buy 20 passenger versions of the 747-8 from Boeing, a deal worth $5.5 billion at list prices, Clark said.

The A350 will enter fleets in 2013, five years after the 787 begins commercial service. The 787 may help Boeing regain the lead in commercial-jet building from Toulouse, France-based Airbus as soon as 2008. Chicago-based Boeing has 584 orders for the 787 from 45 customers as of June 9, while Airbus, the biggest commercial planemaker, has 13 firm A350 orders.

Superjumbo Delays

Emirates, the biggest customer for Airbus's 555-seat A380, is no longer very concerned about delivery delays related to wiring installation on the superjumbo plane, Clark said. European Aeronautic Defence & Space Co, the parent of Airbus, is spending 2.5 billion euros ($3.38 billion) fixing the A380.

``I am fairly optimistic that the worst is behind them,'' Clark said. ``My interaction with them gives me more comfort now and I know they have tried their absolute hardest to get the A380 delay issues resolved. You have never seen a work force so motivated and driven, because I think they were fairly ashamed that it happened.''

Airbus unveiled a reorganization Feb. 28 that eliminates 10,000 jobs and sets a 2.1 billion-euro annual savings target by 2010. Without the savings, Airbus won't have the means to develop the 250- to 350-seat A350. Airlines snubbed initial versions of the aircraft. Clark said in an April 11 interview that there had been ``a canyon'' between the plane and its Boeing competitor.

The chief operating officer of EADS, Jean-Paul Gut, quit after a dispute over how the company organizes marketing and sales. Gut will leave Oct. 1, the company said today.

Shares of EADS rose 40 cents, or 1.8 percent, to 22.69 euros in Paris. The stock has declined 13 percent this year and Boeing shares have advanced 10 percent.

Boeing's 747-8

Emirates wants to buy larger planes to add more routes. The carrier has 47 A380s on order and said it needs even more of the aircraft. If Boeing improves the performance of the 747-8, Emirates intends to fly it to the U.S. West coast, Clark said.

The 747-8 will be built using the more-efficient engines and wing design from Boeing's 787 Dreamliner. The plane costs 21 percent less to operate than Airbus's A380, according to Boeing's Web site.

Emirates is also considering buying the extended range of Boeing 777s, Clark said. The airline doesn't intend to order more A330s, he said.

Emirates plans to start flying between Dubai and Sao Paulo in October, followed by service to Houston in December. The carrier also will add flights to Buenos Aires, Los Angeles and San Francisco.

Persian Gulf airlines including Etihad, Qatar Airways and Emirates are among the top customers for Airbus and Boeing, the world's two largest commercial planemakers, as the carriers build the region into a hub for tourism and transit flights between Europe, Asia and Africa.

Last month, Airbus won a $16 billion pledge from Qatar Airways for 80 A350 XWBs in the first major commitment to the new jet.

To contact the reporter on this story: Massoud A. Derhally in Dubai, United Arab Emirates at mderhally@bloomberg.net.

Last Updated: June 11, 2007 12:05 EDT

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