Airbus to fly biggest A350 in battle of big twinjets

By Tim Hepher

PARIS (Reuters) - Airbus (NYSE: AIR) is preparing to stage the maiden flight of its largest twin-engined airplane, the A350-1000, stepping up a war for sales in a market segment dominated by U.S. rival Boeing.

Barring bad weather that could lead to a postponement, Thursday's roughly three-hour debut will add a new 366-seat member to the lightweight carbon-fibre A350 family, which entered service with the smaller A350-900 early last year.

It is part of a game of leapfrog at the top of the market for twin-engined long-haul jets, as the dominant planemakers vie to outdo each other in size and efficiency in a category expected to generate $1 trillion in orders over the next 20 years.

It is also at the center of a new subsidy row between Europe and the United States at a time of protectionist pressures on both sides of the Atlantic. The World Trade Organization is expected to rule in coming days that Boeing received at least one strand of banned support for its response to the A350-1000, known as the 777X.

Airbus said the A350-1000, a stretched version of the model which entered service last year, was scheduled to take off from its Toulouse base at around 0930 GMT on Thursday, returning there later, in an outing that marks the start of roughly a year of flight testing.

The United States says the plane and its smaller A350 sister model could only get off the drawing board thanks to damaging European subsidies, in a dispute likely to rumble on long after the A350-1000 enters service in the second half of 2017.

The aircraft, which sells for $356 million at list prices, is designed to compete with Boeing's 777-300ER, the most successful version of the U.S. planemaker's popular 777 family.

Airbus hopes it will help it reach 50 percent of wide-body aircraft deliveries, up from 35 percent in 2015. But critics say the aircraft failed to deliver the knockout blow to the older 777 it had hoped, despite an upgrade in engine design.

Airbus has sold 195 new-generation A350-1000s out of 810 total A350 orders, compared with 809 sales of the 777-300ER.

LEAPFROG

Unwilling to cede a lucrative spot at the top of the market for twin-engined jets, Boeing responded by launching the "777X", including the 406-seat 777-9. That has in turn sent its European rival looking for new and bigger solutions.

Even before taking flight, industry sources say the A350-1000 has been eclipsed by a potential 400-seat version called A350-2000 which is being offered to key airlines, though Airbus recently deferred a decision on whether to develop it.

In one final throw of the dice, Boeing is mulling plans for an even larger "777-10X" which could seat some 450 people.

Singapore Airlines could make a decision on which of those two concept jets to order by year-end, CNN reported this month.

"The category killer has been the 777-300ER and the A350-1000 fits there. The question is where the market is?: The sweet spot may not be the largest aircraft, but manufacturers don't yet know," said Agency Partners analyst Nick Cunningham.

The growth of the big twinjet is driven by advances in the largest engines, sparking a parallel battle between Boeing ally General Electric (NYSE: GE) and Airbus supplier Rolls-Royce (NYSE: RR).

But by conquering 400 seats, the rise of the "big twin" raise questions over demand for slightly larger four-engined jets like the A380 and Boeing 747-8, whose sales are weak.

The trend was highlighted as recently as June. While Airbus celebrated a much-needed order boost from Virgin Atlantic, people familiar with the matter said the airline had decided behind the scenes to cancel its remaining orders for A380s.

Adding to pressure on both planemakers as they stretch their designs, Thursday's debut coincides with a dip in demand for wide-body jets due to a surge of aircraft scheduled to be delivered later this decade and concerns over the economy.

Boeing said last month it saw "hesitation" from airlines over such planes, but insisted long-term demand was sound.

(Editing by Adrian Croft)

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