Airbus to Propose Jet to Rival 7E7

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Airbus (search) is eager to launch an aircraft to rival Boeing Co.'s (BA) efficient new 7E7 (search) passenger jet and hopes to make an announcement by the end of the year, the European planemaker said on Tuesday.

Airbus is studying the idea of developing the new A350 (search) as a long-range version of its wide-body A330 (search), Airbus marketing chief John Leahy told reporters.

"We are looking at the A350 (after) airlines asked if we could build an A330 that flies longer," Leahy said. "Will we launch the 350? I hope we do. A lot of airlines are hoping we do... I hope we have something more to say by the end of the year."

Airbus and U.S.-based Boeing are locked in a battle for market share, with Airbus set to deliver the mammoth 555-seat A380 in 2006. Boeing's 7E7 is expected to enter service in 2008.

Airbus Chief Executive Noel Forgeard has said the planemaker could spend as much as 4 billion euros to build a challenger to the 7E7, which will seat as many as 300 people in three versions and offer airlines lower operating costs.

Boeing estimates demand at 3,500 planes in this segment over the coming 20 years.

The Wall Street Journal reported earlier on Tuesday that Airbus expected to propose the competitor to the 7E7 to its shareholders EADS and BAE Systems in coming weeks.

Quoting people familiar with Airbus's plans, the Journal said the latest version could cost the company as much as 3.5 billion euros ($4.6 billion) as engineers plan to design new wings with increased aerodynamic efficiency to boost the jet's range and speed.

Boeing is expected to spend about $6 billion to develop the 7E7 from scratch, excluding the money that suppliers are investing on items such as engines, landing gear and other systems.

Quoting company sources, German newspaper Handelsblatt said EADS would decide in the next two weeks on the official start of sales of the A350. The paper quoted industry sources as saying deliveries could start in 2009.

Handelsblatt also said Irish carrier Aer Lingus (search) was in talks with Airbus about the purchase of 12 A350s.

Leahy also told the gathering of reporters in the southern French city of Toulouse that Airbus hoped to conclude a deal with Thailand to sell it six of its giant new A380s by the end of the week.

Thailand's government said earlier on Tuesday that it would delay buying Airbus aircraft worth more than $2 billion until the European Union eases food import restrictions.

Leahy also said Airbus expected to sign a contract in the next few weeks with Gulf-based Eithad Airways (search) to sell it four of its A380 passenger jets in a deal expected to involve at least some of the four prototype aircraft currently being assembled for testing.

European aerospace company EADS owns 80 percent of Airbus, and the rest is owned by British aerospace and defense company BAE.

EADS shares were up 1.3 percent at 23.95 euros in Paris at 1350 GMT. BAE stock was up 0.4 percent at 241 pence in London.