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Suppliers 'to fund €1.8bn of costs'

Fifty per cent of the aerostructures work on the A350 XWB will be outsourced to risk-sharing partners, says Airbus chief executive Louis Gallois, which "we anticipate will be €1.8 billion [$2.4 billion] of the development costs".

Gallois says that while "no potential source of funding will be excluded" there is no immediate requirement to look beyond EADS's internal resources to foot the A350 development bill. "The board is satisfied that we'll be able to afford the investment through a blend of internal financing, partnerships and, when the need arises, funds raised on the world market," he says. "We are a net-cash strong company. Cash should be put to work and not lie idle."

Although Gallois declines to be drawn on speculation of government backing for the A350 through refundable loans, he was quick to point out that the rival Boeing 787 is a "highly subsidised" aircraft.

Airbus's official line on the allocation of all A350 production responsibility is that it will be decided during the early part of 2007, although it is seen as extremely unlikely that the final assembly line will be anywhere but Toulouse.

Airbus executive vice-president strategy and co-operation Olivier Andries says that as with previous programmes, A350 risk-sharing partners will be required to fund "the development costs of their work packages and be competitive in terms of recurring costs". Prospective partners with composites skills are being sought to help Airbus boost its knowledge of this area.

Andries says that "10 tier one" international suppliers are in talks with Airbus about risk-sharing on the A350, and that the candidates will be selected and work allocated in spring 2007. Airbus is keen to move more of its supply to US dollar-based countries to reduce its exposure to the exchange rate problem, and executive vice-president programmes Tom Williams says that talks are being held with US manufacturer Spirit AeroSystems about a role on the A350. This former Boeing Wichita plant that was sold to Canadian investment firm Onex last year is responsible for much of the US airframer's aerostructures work, and is producing the complete composite nose section for the 787.

Williams says that the existing A300-600 Beluga air transport system will be used to move subassemblies between plants, but with suppliers likely to be spread around the world ways are being looked at to reduce the need to transport large sections over long distances. "One option for the overseas suppliers would be to have a 'local' subassembly facility [in Europe] to where the large panels could be transported for assembly into subsections."

Airbus has already reached agreement with China about participation in the A350, and is renegotiating deals drawn up under the previous programme with the Russian and South Korean industries, which had agreed to take 3% and 5% workshares respectively. Italy's Finmeccanica, whose Alenia Aeronautica subsidiary is already a major partner on the 787, is also seen as a strong candidate for a role in the A350.

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