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Tue, Jul 10, 2007

Spat Between Airbus, General Electric Over A350 XWB Engines Deepens

GE Doesn't Want To Compete With Itself Against Boeing's 777

Could Airbus be facing yet another setback in the development of its A350 XWB? This time around, however, the problem seems to lie not within the company... but outside, regarding a supplier.

As ANN reported, Airbus' John Leahy announced in June the planemaker was unlikely to select a version of the GEnx turbofan -- which is offered as an option on the Boeing 787, and is the exclusive powerplant for the upcoming 747-8 -- to power the A350 XWB. "GEnx engines don't work for us at all," the outspoken (some would say bombastic) salesman said at the time. "We have no intention of putting their GEnx engine on the A350 at all. It has to be a generation beyond."

It appears now, however, there were whole bunches of sour grapes in that statement. The Wall Street Journal reports this week it is GE which appears reluctant to offer a version of its GEnx for Airbus, for fear of competing with itself at the largest end of the planned XWB family.

General Electric has offered a version of the GEnx to power the two smaller version of the XWB... but Airbus intends the largest model, the A350-1000 XWB, to compete with longer-range versions of Boeing's 777, for which GE is the exclusive engine supplier. Executives at GE have told Airbus it won't build an engine to compete with the GE90 they supply for the 777... leaving Airbus with but one engine offering, an XWB variant of the Rolls-Royce Trent engine family, to power the A350.

"We have a family of airplanes with the A350, and we want to keep the family concept," said Airbus CEO Louis Gallois recently, in explaining why the planemaker wants a GEnx offering for all three A350 XWB variants.

As the launch engine for the 787, the Trent 1000 has proven a popular offering on the Boeing plane, and there's no reason to think a Trent XWB won't deliver acceptable performance on the A350... but airlines prefer to have a choice, and Airbus' singular powerplant option is seen as a negative in the market.

Leahy has accused GE of playing favorites.

"The problem we have with GE is they go to Seattle and say, 'What kind of engine should we design for your airframe?'" said Leahy. "Then they come to Toulouse and say, 'Here is the kind of airframe you need to build to fit our engine.'"

GE Engine Division president Scott Donnelly disputes Leahy's thinly-veiled accusations, noting his company offers its smaller engines on Airbus' highly popular A320 Family. Instead, Donnelly blames the matter on Airbus, for radically changing the design for the proposed A350 in July 2006.

"We were the guys with Airbus" on the first A350 offering, Donnelly says, noting those orders have now disappeared. Customers are pressing GE to make peace with Airbus, Donnelly added... but he isn't certain it would prove a profitable move for the enginemaker.

There are also concerns the dispute is a sign of a deepening rift between the US and Europe. There's already the ongoing Boeing vs. Airbus sales and deliveries battle; a similar conflict between GE and Rolls-Royce could be brewing, as well. In addition to the 777, GE also is the exclusive engine supplier for Boeing's 737; Rolls-Royce is the only producer of engines for the two largest versions of Airbus' four-engine A340.

Executives on both sides played down that possibility. "It's absolutely not the intent for us, Boeing or Airbus" to chose sides, said Rolls-Royce CEO Sir John Rose in a recent interview with the WSJ. GE's Donnelly echoed similar sentiments.

As for Boeing? Boeing Commercial Airplanes CEO Scott Carson appears happy to stand on the sidelines, watching the dispute play out.

"Airbus happened to build an aircraft that overlaps with the 777, where we have an exclusivity agreement with GE," said Carson. "Are we going to give that up? Not on your life."

FMI: www.geae.com, www.rolls-royce.com, www.airbus.com, www.boeing.com

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