Falling Behind Boeing: Airbus A350 No Match for Dreamliner

One year ago, Noel Forgeard was still flying high. When asked to comment on the announcement of chief rival Boeing's plans to introduce the long-haul, super-efficient 787 Dreamliner jet, the Airbus chief responded: "We don't need to react to the presentation of this plane."

Forgeard was wrong. So far, Boeing has tallied up 266 solid orders and purchasing options for the Dreamliner. The plane, which has the advantage of high fuel efficiency and the ability to carry between 200-300 passengers on long-haul flights, had already developed into a bestseller in a market in which high jet fuel prices are putting enormous pressure on bottom lines.

Now, it's starting to look as though the 787 could lead to a changing of the guards in the aviation industry. Airbus has surpassed Boeing in the number of aircraft orders it gets each year since 2001. In deliveries, it has beaten Boeing every year since 2003. And for a long time, it looked as though Boeing had no plan to stop the juggernaut of its European rival.

But that has changed now. The success of the Dreamliner has instilled a fresh sense of self-confidence in Boeing executives. "We'll beat them this year," Boeing's chief salesman, Scott Carson, said in April. Now, it seems, Airbus is the company that is strategically confused. At first, Forgeard saw no reason to react, but in autumn 2004 he presented the A350 as his company's answer to the Boeing 787. But the jet will offer little in the way of new innovations. Instead of creating a new model from the ground up, Airbus is planning a stretched and modified version of its existing A330 aircraft.

A Handful of Dilemmas for Airbus Part I -- Internal Squabbling: Airbus's Leadership Problem Part III -- Trans-Atlantic Trade War: Airbus's WTO Problem Part IV -- Costly Delays: Airbus's A380 Problem Part V -- Currency Fluctuation: Airbus's Dollar Problem

Prior to Monday, sales had been slow with only 10 orders on the books for the A350. On the first day of the current Paris Air Show, Qatar Airways said it planned to buy as many as 60 of the mid-size jets -- enough, said Airbus, to proceed with the new model. Even with the new orders, however, they are well behind Boeing. Worse yet for Airbus, the Americans also have a time on their side. The first 787s will be delivered in 2008. The first A350s, on the other hand, won't be rolling out of the hangar until 2010.

Prior to the Qatar order, Airbus had said it would delay the official launch of the A350 program until September. Analysts believe the delay is a further signal that airlines have rejected the design of the aircraft and are demanding that Airbus make improvements.

The best scenario would be for the Europeans to offer a brand new jet design. The prospects of that happening, however, are practically nil. Airbus has focused all of its resources on the A380, a European prestige project, and the production of the A400M military cargo plane. Now, there is insufficient time, manpower or money for an adequate competitor for the 787 Dreamliner.