Airbus set for Jumbo launch

Development of the A3xx would be expensive

Europe's airline industry looks set to challenge Boeing for the large aircraft market.

Airbus, which already makes more smaller jets than Boeing, is planning to officially announce the launch of its A3XX 'super jumbo' on Thursday after a board meeting.

The project received a further boost on Tuesday when German economics minister Werner Mueller pledged cash to help fund the development of the new plane, which could cost up to $12bn. (£8bn)

Britain has already pledged £500m to the project, while France has also put aside funds in next year's budget.

The new super jumbo aircraft would carry between 550-650 passengers at ranges of up to 8,700 miles (14,000 km).

It will create thousands of jobs across Europe, with the UK's Bae Systems one of the main contractors.

Who will build the plane?

The other members of the Airbus consortium, France's Aerospatiale, Germany's Dasa, and Spain's Casa would also have a key role in construction.

But Dasa chief Rainer Hertrich said that a decision on how to divide up the work will be crucial to the launch decision.

The decision on Thursday is likely to be merely the first stage before the first aircraft begins commercial flight in around 2005.

The "authorisation to offer" will allow Airbus to sign contracts with airlines interested in buying the huge plane.

Airbus says it is confident that there is enough interest the launch the A3XX, with four airlines (Air France, Emirates Air, Singapore Airlines, and leasing firm ILFC) already committed to firm orders and several others (believed to include Virgin Atlantic and Qantas) discussing terms.

The planes are likely to cost between $230mand $280m each, with a substantial discount for launch customers.

But the move is a huge gamble by Airbus.

Boeing, which has said it does not believe there is enough demand for the plane, could launch a spoiling operation by developing a stretched version of the 747.

Airbus says there will be a demand for 1,500 big jets, but Boeing estimates the world-wide demand at closer to 360.

Complicated politics

The launch is complicated by the fact that Airbus itself is supposed to become a commercial company later this year.

And three of its four partners are also merging to form the European Aeronautics, Defence and Space Company (EADS), leaving Bae Systems with the remaining 20%.

The French government will still have a stake in the new company, prompting fears that it will favour Toulouse as a production site.

Boeing is likely to strongly protest any government aid in developing the A3XX.