Mistakes of the Past
The year 2009 wasn't a great one for the A340. Etithad chose not to replace the -600 that was written off in a 2007 Toulouse ground-test accident, Kingfisher cancelled one of their orders for a -500, and on December 30th, Virgin Atlantic chose to transfer its outstanding order for six -600s to A330s instead. The A340 suffered a net order deficit of seven aircraft last year. When you consider that those seven aircraft had accounted for HALF of the order backlog, that deficit becomes even more depressing. With only 125 aircraft delivered to date, the second generation -500/-600s of the A340 model have had a mediocre commercial presence at best.
When launched, the A340-500 and -600 were pitched as the future of air travel, offering unprecedented route options, passenger comfort and airline economics. It was Airbus's response to the very successful Boeing 777 which had been aggressively eating away at the market share of the legacy A340s.
Despite some early market gains, in reality the four-engined A340-500 and -600 just weren't good enough to compete with the economic advantages of the twin-engined 777 (particularly the -200LR and -300ER). Compared to Airbus's 125 A340-500s and -600s delivered to date, Boeing has delivered 260 777-200LRs and -300ERs, and still has a healthy backlog of 206 unfilled orders.
Airbus tried to improve the A340 to compete with the 777 but they simply couldn't pull it off. The 777 was a fundamentally better aircraft for the airlines to operate. What Airbus really needed was a twin-engine airframe with the capacity and range performance beyond what the A330 can do, but they didn't (or couldn't?) invest in one, with so many resources being focused on the A380 at the time.
Now zoom forward a few years into the middle of this coming decade. Airbus will have the A350-1000 available. Provided it works as advertised, this will be a great plane and the first real threat to the Boeing 777. The existing 777 types will be outdated and outclassed by the end of this decade, and Boeing needs to do something about that in the next couple of years. However, with the financial drain of the 787 and 747-8 programs, Boeing could find itself in the same position as Airbus was in ten years prior - unable to meet a market threat with full force.
There has been plenty of chatter about giving the 777 a new wing and a new engine, but will this really be enough? The A340 couldn't compete with the 777 because it had a fundamental disadvantage - four engines instead of two. In the coming years, the 777 is going to run into it's own fundamental problem with respect to the A350 - a heavy, non-composite airframe. Examples of airlines looking beyond the 777 are already here - United Airlines' (the company that launched the 777!) chose not to replace their older 777s with new ones, option for A350s to cover the high capacity end of their fleet.
An mere enhanced 777 may appear to be an attractive, cheaper option for Boeing, but will they simply end up with a lackluster aircraft that just won't be able to compete with the composite A350? The 777 has been hugely successful for Boeing, and it has given them an overwhelming share in a very lucrative market. But unless the 777's replacement is a new, composite aircraft taking full advantage of all the 787's development, then large chunks of that large widebody market will start disappearing to Airbus.