June 20 (Bloomberg) -- Boeing Co. is leaning toward a bigger version of the 787 Dreamliner as the U.S. company seeks to out-maneuver Airbus SAS in a widebody jetliner market it reckons will be worth almost $2 trillion over the next 20 years.
The 787-10 could enter service by 2016, Jim Albaugh, Boeing’s commercial airplanes chief, said yesterday ahead of the Paris Air Show. That would provide competition for Airbus’s A350-900 and steal a march on the larger A350-1000, which won’t be ready until 2017, according to a schedule announced June 18.
“We have to go through some more analysis and we haven’t decided yet if we’ll offer it, but it wouldn’t surprise me if we did,” Albaugh said in an interview in the French capital.
Building the 787-10 would help Boeing counter the A350’s threat in markets where the company’s 777 -- which captured the first widebody orders at the show today -- is dominant, giving it a breathing space to upgrade a design that debuted in the 1990s. The largest Dreamliner would seat as many as 330 people, versus 210 to 250 for the 787-8 variant currently in production and 250 to 290 for the planned 787-9. Airbus’s A350-series planes will be able to carry between 250 and 400 passengers.
“The A350-900 is aimed directly at the 777-200ER, and the 787-10 would be a good way of defending that turf,” said Richard Aboulafia, vice-president of Teal Group, a Fairfax, Virginia-based consulting company. “It means they can attack the replacement market, which is very important.”
Boeing, based in Chicago, received the first major order at the Paris expo with a contract from Qatar Airways Ltd. for six 777-300ER long-distance planes that’s worth $1.7 billion at list prices.
Qatar Air, the second-biggest Middle Eastern carrier, has 25 777s with 15 more already due for delivery and regards the model as the “backbone” of its long-haul fleet, Chief Executive Office Akbar al Baker said today after a press briefing.
Albaugh said separately in a Bloomberg TV interview today that Boeing will have “a number of announcements” for orders at the Paris show this week, including “a few” for its single-aisle 737, which faces competition from Airbus’s re-engined A320neo. Qatar Air could place some orders for the neo, al Baker said.
Boeing is seeking to catch Airbus after its rival remained world No. 1 last year, delivering a record 510 planes, 48 more than the U.S. company. Airbus is also top by orders, winning contracts for 644 jets, with 70 cancellations giving a net intake of 574. Boeing won 530 net orders after 95 cancellations.
Toulouse, France-based Airbus is delaying introducing the A350-1000 by 18 months to add range and payload. The 787-10 won’t match that model for distance, said Nick Cunningham, an aerospace analyst at Agency Partners in London, but will fill a “high-capacity, shorter-range niche” and may appeal to carriers that have already signed up for the two smaller variants.
The 787-10 would be about 15 percent bigger than the 787-9, seating about 40 more passengers, Boeing executives said. Its operating costs would be 10 percent lower than the A350-900 and 5 percent lower than the A350-1000, Nicole Piasecki, Boeing’s head of business development, said in a briefing today.
“Our customers are very interested in this airplane, and we’re in the process now of deciding when to put it into service,” Piasecki said.
Boeing is focused on developing models for the longer term and won’t merely react to moves at Airbus, Albaugh said in a briefing. Its rival’s decision to build a re-engined A320 narrowbody and the more powerful A350 won’t necessarily push Boeing to follow suit with the 737 and 777, he said.
“If we were thinking tactically it might drive us in that direction, but I think we’re thinking more strategically and long-term,” he said, adding that a new single-aisle plane should last 50 years. “We will have an answer on the 777; whether increments or a significant derivative remains to be seen.”
Boeing will evaluate the timetable and performance of the A350-1000 before reaching a conclusion regarding the 777.
“The issue is whether they decide to respond with a 777 upgrade or replacement,” said Cunningham. “They won’t do two programs at the same time.”
Aboulafia said a launch decision for the 787-10 won’t in itself protect the market occupied by the longest-range 777.
“It’s what you do a notch up from that that’s the question,” he said. “It’s not quite the same as having a definitive answer on the 777-300ER front.”
General Electric Co. will begin testing a new compressor next year with a view to developing its GE90 engine in order to be ready when Boeing decides the next step for 777, GE Aviation CEO David Joyce said today in Paris. GE is currently the exclusive provider of engines on the 777 extended-range models.
Joyce said he’s not surprised that Airbus is delaying the A350-1000 so that Rolls-Royce Holdings Plc can improve the performance of the Trent XWB engine that powers the twinjet.
“It’s playing out a lot like we thought it would,” he said. “We never thought you could have one engine that spans the size of those aircraft.”
A verdict on whether to offer an all-new narrowbody or opt to re-engine the 737 will be reached “probably by the end of the year,” Albaugh said.
“We’re not going to be rushed into a decision,” he said in the television interview. “I don’t think there has really been a delay. We’re really trying to get this right. By the end of the year we should have a decision.”
The Alenia Aeronautica unit of Finmeccanica SpA will retain the “opportunity” to work on the horizontal stabilizer on the 787-9, the second Dreamliner variant to be developed, though as second-source manufacturer, Albaugh said. Flaws with stabilizers made by Alenia contributed to the program’s three-year delay, though he said the Italian company’s production has improved.
Alenia has said that it would have to approve any reallocation of work, since it has design and production rights.
It’s a “horse race” as to whether the initial Dreamliner version, the 787-8, or the 747-8, an upgrade of the 41-year-old jumbo jet, commence deliveries first, Albaugh said. Both are slated for handover by September.
Boeing is 97 percent-done with certification testing on the 787, and all six test jets have completed what’s needed for approval by the U.S. Federal Aviation Administration, according to Albaugh. Tests for function and reliability and extended operations will begin this month, he said.
For the 747-8 freighter, about one-third of the scheduled 300 hours of function and reliability tests are done, he said.
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