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The turbulence in the most important segment of the airplane business is going to get heavier, with Airbus SAS launching a salvo at Boeing Bombardier and other rivals by announcing its A320 family of narrow-bodied planes will sport new, more fuel-efficient engines by 2016.

Airbus will offer the same engine as the Bombardier C Series planes, which are scheduled to begin commercial flight in 2013, in a move aimed not only at Bombardier and other global players planning to enter the narrow-bodied segment, but also at arch-rival Boeing.

What Airbus is calling the new engine option on its A320 family will offer fuel savings of 15 per cent over existing planes. But it does not provide the same overall leap in airplane technology that Bombardier's C Series creates, analysts said Wednesday.

By 2016, the A320 will be a 20th-century plane with 21st-century engines, while the C Series is a 21st-century plane with 21st-century engines, said Ernest Arvi, president of aviation consulting firm the Arvi Group.

The C Series will fly on wings made of composite materials and a fuselage made of a lithium-aluminum alloy, and will contain advanced avionics and other technical advances.

There was little worry expressed at Bombardier about the Airbus decision.

"We were prepared for a true head-to-head competition," Ben Boehm, Bombardier's vice-president of commercial aircraft, said of the A320 announcement. "It's an old airplane with a new engine on it."

Airlines are expected to buy 19,000 narrow-bodied planes worth $1.4-trillion ( U.S.) during the next 20 years.

Montreal-based Bombardier is making a $3.4-billion bet that it can challenge both Airbus and Boeing in the narrow-bodied segment, where the workhorse A320 and Boeing 737, respectively, have been cash cows for the two industry giants and help finance their head-to-head battle in wide-bodied airplanes.

One of two engines Airbus is offering is the geared turbofan developed by Pratt & Whitney, a unit of United Technologies Corp.

Airbus's decision to offer that engine vaults Pratt &Whitney back into the large airplane market that has been dominated by Rolls-Royce PLC and General Electric Co.

Bombardier's C Series will maintain a double-digit advantage in operating costs over the Airbus models with the new, more fuel-efficient engine, Mr. Boehm said in an interview from Montreal on Wednesday.

Bombardier had already heard from airlines that were disappointed by the Airbus announcement, he said, but would not predict when that disappointment might translate into new orders for the C series.

Two airlines and one airplane-leasing company have placed orders for 90 C Series planes and taken options on another 90.

Senior Bombardier officials and industry analysts have said that some airlines have been delaying decisions about new planes while they waited to see how Airbus and Boeing will react to the new competition, which will also include aircraft from China, Russia and likely Brazil.

Boeing has signalled that it is unlikely to match the Airbus move, and is more likely to offer a completely new version of its 737 by the end of the decade.

Both industry giants are dealing with huge demands on their engineering resources as they deal with delays in the wide-bodied segment, where the Airbus A380 is already in the air, but the Boeing 787 Dreamliner is more than two years behind schedule.

One potential outcome of Wednesday's move is that Airbus uses the economies of scale it has generated from having already built 4,400 A320 models to cut prices and compete with Bombardier by offering discounts to airlines, said Richard Aboulafia, vice-president of analysis at aviation consulting firm Teal Group Inc., in Fairfax, Va.

The list price for the A320 is $81-million, while the smaller A319 is offered at $74-million.

Bombardier's CS100 is listed at $55-million (Canadian), while the larger CS300 carries a list price of $63-million.









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