Airbus targeting 777 with its A350

One has to hand it to Airbus. Like a couple on the edge of divorce who pulls it together to present a brave face at the family reunion, the team from Toulouse put on a great performance last week.

Analysts are applauding the announcement of the new A350XWB – or “extra-wide body” – which wags on this side of the Atlantic have dubbed the A350 “Xbox.”

The Xbox is a smart play, Teal Group analyst Richard Aboulafia told his clients in a letter this week.

The A350 originally was intended to counter the Boeing Co.’s 787, which seats between 200 and 300 people (assuming, as most do, Boeing goes ahead with its proposed 787-10).

But this newest A350 will come in 250- to 350-seat versions, meaning it will take on Boeing’s larger 777s.

“We’re cautiously optimistic about this,” Aboulafia said. “Going after the 777 is way smarter than going after that heart of the 787 market.”

Airbus won’t be able to get the Xbox aloft until 2012, but “by 2012, the 777 will be vulnerable,” he added.

Leeham Co. analyst Scott Hamilton agreed.

“That’s a 777 killer,” he said. By the time the A350 enters service, the 777 will have been in service for 18 years, based on a design of the early 1990s. By then, it will have relatively old technology, systems and engines.

It’s not a foolproof plan, however. The analysts noted that by targeting the 777, Airbus is largely giving up on the market for 200- to 250-seat jets. That could be big. Hamilton said the decision could hand Boeing as many as 1,000 787 orders – uncontested.

“They’re making a mistake,” he said.

But in Aboulafia’s view, Airbus had no choice but to move ahead with some sort of plane in the mid-size market.

“They could wait a few years until they get the right mix of new enabling technologies and leapfrog the 787, but that would mean spending 2009 through 2016 or beyond as a niche player,” he said.

Airbus got a seeming endorsement for the Xbox when Singapore Airlines placed an order for 20 of them, but Hamilton said we shouldn’t read too much into that. He speculated that the Singapore order – which included more A330s and A380s – was Airbus’ way of defusing the airline’s anger over the delays with its A380 deliveries, which will arrive a year behind schedule.

“I betcha Singapore is getting their A330s for next to nothing,” he said.

Airbus also will have to deliver on its Xbox promises, the analysts said – not an easy task. New chief executive Christian Streif “has his work cut out for him,” Hamilton said.

Still and all, “this announcement was a good start,” Aboulafia said. “There’s only one way to eat a rhinoceros – one bite at a time.”

That’s not to say Boeing had a bad air show. The home team announced orders for 79 jets – fewer than Airbus but more than enough to keep its wide lead in sales for the year.

And Boeing vice president of sales Scott Carson clearly had the week’s top soundbite.

When told that his Airbus counterpart, John Leahy, was boasting that the Europeans were serving “by far the best lunch at the air show,” Carson was quick to reply.

“It’s great that they have great food,” he told The Washington Post. “But we’re not selling food.”

Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.