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Last Updated: Friday, 1 December 2006, 21:27 GMT
Airbus A350 jet gets green light
Airbus A350
The cost of the A350 project has worried many analysts

The firm which owns European plane manufacturer Airbus has agreed to press ahead with its planned A350 mid-sized, long-haul passenger jet.

At a board meeting, EADS bosses decided to approve the 10bn-euro (6.8bn; $13bn) project and said the firm would provide most of the funding itself.

EADS will have to overcome cash shortages caused by a two-year delay in deliveries of its A380 super-jumbo.

Design changes to the A350 and a row over state aid have added to its woes.

Huge cost

The A350, capable of carrying up to 350 passengers, is a competitor to Boeing's 787 Dreamliner, but it will not enter service for several years.

The A350 will be the most modern commercial aircraft and a step ahead of its competitor
Louis Gallois, Tom Enders, EADS chief executives

EADS said the A350 could become the most "efficient and comfortable" passenger jet in the world.

"The A350 will be the most modern commercial aircraft and a step ahead of its competitor," said co-chief executives Tom Enders and Louis Gallois.

The French government - which holds a 15% stake in EADS - backed the decision to press ahead with the plane's development.

"EADS has taken the right decision," said Transport Minister Dominique Perben.

"The commercial success of European civil aviation depends on maintaining a full range of latest-generation aircraft to meet very strong growth in traffic expected in coming years."

Boeing's 787 Dreamliner
The A350 will compete with Boeing's 787 Dreamliner

But the huge cost of the A350 project, combined with the financial strains imposed on Airbus by the delays to the A380, has worried potential investors.

Suggestions that the project could be backed by the French and German governments has aroused suspicion in the US.

The EU and US are involved in a protracted dispute about financial support given to previous Airbus projects - a row now being mediated by the World Trade Organization.

Corporate struggle

Discussions about the project have also been overshadowed by speculation about the future balance of power within EADS.

DaimlerChrysler is cutting its stake in the firm from 22.5% to 15% and Berlin, keen to retain its influence within the company, has talked of buying a stake in the business.

EADS said it would provide most of the finance for the A350 itself but said it was also looking to bring "new risk-sharing partners" on board.

It gave no further details on what this could mean.

EADS has been suffering financially in the wake of delays to the A380 and is planning a major restructuring of its Airbus unit's European sites.

EADS hopes that production of the A350 will help offset the problems with the A380.

The super-jumbo project had major setbacks, as electrical faults led to delivery delays which, in turn, prompted some customers to cancel their orders.

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