Airbus Offers Russia Larger Share Of A350 XWB Production

Airbus has offered a Russian company a larger role in the future production of its A350 XWB airliner in the face of mounting development costs.

Bloomberg reports Alexei Fyodorov, chief executive of Russia's OAO Unified Aircraft Corporation, met Thursday at Airbus headquarters in Toulouse, France, with top executives of Airbus and its parent, EADS.

Airbus executive vice president Olivier Andries said, "We feel that the Russians are ready to take more responsibility on the A350."

Fyodorov told Bloomberg, "We are interested in this project, but we have to study it first to know how we can participate."

EADS recently approved the estimated $15.5 billion development costs for Airbus' A350 XWB, a planned long-range, medium capacity airliner.

Those considerable development costs pale in comparison to the costs the company continues to bear as it struggles to get its massive A380 superjumbo into production and in customers' hands. That program is nearly two years behind schedule and continues to hemorrhage cash.

Richard Aboulafia, a Vice president the Teal Group, a Fairfax, VA-based consulting agency, told Bloomberg, "The Russians offer nothing unique technologically, but Airbus needs to spread costs, and because there's Russian government money available, the Russians can certainly do this."

As ANN reported, Russia's state-controlled VneshTorgBank (VTB) purchased a 5% stake in EADS in September, and expressed great interest in purchasing more. Those overtures were rebuffed by EADS leadership, but these latest developments might signal a sea change in EADS funding strategies.

EADS Co-CEO Louis Gallois said in a news conference last Monday the company will fund development of the A350 XWB with EADS' internal financial resources, associating partnerships and, if necessary, funds raised on the world's capital markets.

Can Russia take advantage of EADS' apparent financial woes to get its foot further in the ownership door? Keep watching this space...

FMI: www.eads.com