LESSOR GODS

Steven F. Udvar-Hazy last week flung down the gauntlet over the proposed design of the Airbus A350. In front of an audience of aircraft dealers, the chairman of International Lease Finance Corp. (ILFC) criticized the design as too dependent on the A330 and urged the manufacturer to commit to a new mid-size wide-body product line.

Airbus stands at a crossroads, Udvar-Hazy said. It can go ahead with the A350, a "good solid airplane" built on the A330 platform, "or commit themselves to a whole new product line," one that will replace the A330 and A340 over the next 20-25 years.

The ILFC chairman says a decision is critical to Airbus's future in the mid-size aircraft category, and he advised the manufacturer's executives to reach a decision by the Farnborough air show in July.

A new product line would cost $8-10 billion and could financially strap Airbus, which currently is focused on the A380, the newest large commercial transport now undergoing tests for entry into service around year-end. Although A380 development spending is starting to ramp down, development for the freighter is still in full swing.

Further complicating the issue for Airbus is pressure on Toulouse to update the A340-500/-600 long-range wide-body, which has seen its order intake fizzle as Boeing's 777-300ER orders have surged. One senior EADS official, the Airbus parent, says the aircraft maker will have to do something to try and re-invigorate the four-engine wide-body product. But there are still questions about timing, availability of engineering resources and extent of design changes that need to be made.

Udvar-Hazy says Airbus officials should consider whether the A350 is only a marketing response to the Boeing 787, "or are they going to have a new family of aircraft that will be the backbone of their wide-body, mid-sized product line?" He described the aircraft as "excellent"--ILFC is already a customer for 16 A350s--with a lot of new technology that will match much of that on Boeing's 787. But he said it still had elements "left over from the early models of the Airbus wide-body family."

Although Airbus says the A350 uses around 90% new parts, the company opted to retain the 222-in. fuselage cross-section to fit smoothly into the A330/340 production line concept. The design has been evolving in recent months in reaction to customer pressure for a more advanced design.

Udvar-Hazy made his remarks to a stunned crowd of 800, largely financiers, manufacturers and aircraft dealers, attending a conference of the International Society of Transport Aircraft Trading (Istat). He was joined on a panel by Henry Hubschman, president of GE Commercial Aviation Services (Gecas), and Steve Hannahs, managing director of Aviation Capital Group.

Hubschman did not endorse his colleague's remarks but said they showed why he had achieved a top place in the leasing field these last three decades. Like ILFC, Gecas is a launch customer. In a later interview Hannahs said that Udvar-Hazy's assessment of the A350 was "in effect, right." Aviation Capital has not ordered the A350.