Airbus Industrie said it would spend £6bn ($10bn) to develop a super-Jumbo to rival the 747, Boeing's most profitable aircraft. The new plane would carry up to 650 people with a range of up to 10,000 miles.

The A3XX is expected to be launched in 2004, and the company says it expects it to be a big seller.

Managing director Noel Forgeard said at the Farnborough Air Show that "there will be indeed be a demand for the A3XX in the next twenty years...It's a vital programme that we intend to deliver on."

Boeing has said there is no commercial demand for a plane larger than the 747.

The new plane is expected to create 10,000 high skilled jobs across Europe.

Rival orders

Thousands of jobs are at stake in the aircraft industry

The Farnborough Airshow is traditionally the place where manufacturers announce their big orders.

Airbus has already had a big year for its smaller A320 family of jet aircraft after wooing British Airways last month with an order for 59 aircraft worth $8bn.

It is expected to announce a further $2bn in orders, and it says it will launch a new 100 seat A318 by the end of the year.

Boeing jumped the gun with the announcement of the sale of 21 aircraft to Dutch carrier KLM and the US-based International Leasing Corporation. They will buy six 757-200s, one extended range 767-300ERand one 777-200ER, while KLM has bought four more new generation 737s to add to the eight already on order.

But overall Airbus is gaining on Boeing. It has 388 orders this year, compared to 370 for Boeing.

Last year Airbus sold 460 planes, for a 45% market share, and its target is a 50% share by the year 2000-2001.

Uneasy Consortium

But Airbus is still struggling to convert itself into a private limited company, which it says it will do by the end of 1999. The UK government is keen to encourage the merger which would lead to one company big enough to challenge the American aerospace giants.

The problem lies in the state-owned Aerospatiale, which makes up 37.5% of the Airbus Consortium. The privately owned British and German partners - British Aerospace and Deutsche Aerospace, part of the Daimler Group - are reluctant to combine until the French company is privatised.

Aerospatiale, and the French government in turn, fear that the two private companies will merge first. Both companies denied merger rumours on Monday at the show's opening, after the French condemned such a move.

But British Aerospace - Europe's largest defence company - said it was planning a joint venture with Dassault, the privately owned French military aircraft manufacturer.