Airbus wins key A350 orders despite funding doubts

Airbus wins key A350 orders despite funding doubts

Associated Press, Le Bourget, France

Airbus came out fighting on the first day of the Paris Air Show,
saying it has won enough orders to launch its mid-sized A350 jet
after beating the rival Boeing 787 to a 60-plane deal with Qatar
Airways.

After a run of bad news for the European plane maker, Qatar
Airways announced that it chose to buy up to 60 A350s instead of
Boeing's "Dreamliner."

Although the Doha-based carrier also said it plans to buy at
least 20 Boeing 777s, the A350 announcement is a major boost for
Airbus and a blow to Chicago-based Boeing Co. - which had hoped
Qatar would add to the 266 Dreamliner orders already on its
books.

Before the Qatar deal, which has yet to be finalized, Airbus
had announced just 10 nonbinding A350 orders from Spanish carrier
Air Europa. Boeing's claims - that the A350, derived from the
existing A330, was no match for its all-new jet - were gaining
credibility.

But Qatar's order was seen as a vote of confidence in the
latest, improved design for the Airbus jet, which now includes
more lightweight composites than originally promised.

"It's certainly a well-needed morale boost for the A350
program," said Jon Kutler, head of the U.S. aerospace consulting
group Jefferies Quarterdeck.

Airbus Chief Executive Noel Forgeard said the Qatari deal
means he now has "more than enough" orders to launch the plane.

That decision has effectively been postponed by Airbus parent
European Aeronautic Defence and Space Co., which said last week
it planned to give the green light "by the end of September,"
instead of during the show, as many had expected. Dubai-based
airline Emirates, which had been expected to order 50 of the
planes this week, said two days later it had no plans to announce
any purchases.

EADS has been without a CEO for over a month. The appointment
of French Airbus boss Forgeard and German Tom Enders as joint-
CEOs has been blocked by German resistance to Forgeard's plans to
increase the group's control over divisions including Airbus when
he takes up the job.

World Trade Organization (WTO) litigation filed by the United
States against the government funding Airbus receives to develop
its planes has also delayed a decision on how to finance the
A350. The EU has countersued, citing military funding and
subsidies received by Boeing and its foreign suppliers.

A person close to Airbus, who asked not to be identified
because no decision had been made, said the company and its
shareholders are asking governments to contribute U.S.-style
research funding toward the A350's development cost, instead of
the usual soft loans. Washington has attacked the loans as
subsidies because they shift financing costs and risk from Airbus
to the governments since they do not have to be repaid if the
plane flops commercially.

Ministers from Airbus' four supporting governments - France,
Germany, Britain and Spain - discussed A350 funding with Forgeard
on the margins of the show but reached no firm conclusion, French
Transport Minister Dominique Perben said.

Asked whether they had considered research funding as an
alternative to development loans, British Industry Minister Alun
Michael said: "It's very clear that research and technology is at
the heart of the long-term viability of the industry."

Airbus canceled a news conference that had been scheduled just
after the ministerial talks, and EADS also canceled a news
conference planned for on Tuesday because of its ongoing deadlock
over management appointments.

Airbus still has to clinch more deals if it's to deliver on
Chief Commercial Officer John Leahy's earlier pledge to unveil
more than 100 new A350 orders at the show.

Leahy said on Monday the total order book stands at 90,
including the Air Europa deal and 20 more commitments from U.S.
Airways - which are subject to the completion of its planned
merger with America West Holdings Corp.

U.S. Airways said last month it had struck a deal with Airbus
to become the launch customer for the A350 in return for a US$250
million loan from the Toulouse, France-based plane maker.

More than 200 planes and helicopters are on display at Le
Bourget, the aerospace industry's biggest gathering, alongside
aeronautical and military hardware from 41 countries.