Airbus parent firm EADS has confirmed the development of the A350, a new mid-sized aircraft, adding that it has turned down contentious state support.
The A350 is designed to rival the forthcoming Boeing 787
Designed to compete with Boeing's forthcoming 787 Dreamliner, the A350 is expected to cost 4.35bn euros ($5.3bn; £3bn) to develop.
EADS is rejecting its usual state aid to try to calm a subsidies row between Europe and the United States.
It expects to get 200 orders for the A350 by the end of this year alone.
Project to cost 4.35bn euros
253 or 300 seats
Extra use of lightweight materials
"The A350 programme has a very promising business case," said EADS co-chief executives Tom Enders and Noel Forgeard in a joint statement.
"The new airliner family will deliver strong value not only to Airbus customers but also to Airbus shareholders."
With allegations of unfair state aid for both Airbus and US rival Boeing currently under investigation by the World Trade Organisation (WTO), it was widely expected that EADS would turn down support for the A350 so as not to aggravate its case.
Boeing's Dreamliner is set to arrive two years before the A350
Both Brussels and Washington claim the other side gives its main passenger airline manufacturer illegal state aid - and thus an unfair advantage in the global aircraft market.
Franco-German EADS, which owns 80% of Airbus, said it would initially turn down the first 12 months of possible government support.
Mr Enders and Mr Forgeard said they strongly support efforts to find an "equitable and mutually supported resolution" to the dispute over aircraft subsidies.
US Trade Representative spokesman Christin Baker said the US would be continuing with its complaint to the WTO.
He said that while Airbus had turned down the first year's state support, there was no guarantee the European companly would not wish to get future financial support for the A350.
Airbus hopes to start deliveries of the A350 in 2010, two years after the first Boeing Dreamliners take to the air.
The A350 idea began simply as a long-range version of the existing A330-200, but has since been redesigned with more seats and extra use of lightweight composite materials.
Airbus calls it a 90% new plane, and plans two versions - one with 253 seats and the other with 300.
The smaller version will have a range of 16,300 km (8,800 nautical miles), and the larger, 13,900km.
Both are being designed to keep running costs as low as possible for the airlines.
Rolls Royce and General Electric have both said they intend to supply engines for the A350.