Boeing (NYSE:BA) recently emerged from the three-month grounding of its wide-body 787 Dreamliner. The aircraft manufacturer is currently increasing the production rate of its 787s to 10 airplanes per month to ensure timely deliveries of the over 830 undelivered orders.  In January earlier this year, Boeing rolled out its first 777 at an increased production rate of 8.3 airplanes per month.  This increase in production rate of its leading wide-body airplane models bodes well for the company as it will contribute to its revenue and profit growth.
However, the Airbus A350, which is expected to make its first flight in the next few days, will increase competition for Boeing in the wide-body commercial airplane segment. Currently under development, the A350 is set to compete with Boeing’s 787 and 777 models with their planned entry into service in the second-half of 2014. As of April 2013, Airbus had received firm orders for 616 A350s. 
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Airbus A350 Is Designed To Compete With Both 787 and 777
The first A350 model – A350-900 – seats around 314 passengers in a three-class cabin configuration and has a maximum range of 8,100 nautical miles. It comes with a price tag of around $278 million and is powered by Rolls Royce TrentXWB engines. Airbus states that this plane will be more fuel-efficient and have 8% lower operating costs than the Boeing 787.  The other models of this airplane include a smaller A350-800, which seats around 270 passengers in a three-class seating arrangement and costs around $246 million, and a larger A350-1000, which seats around 350 passengers (3-class) and costs around $321 million. The -800 version is planned for entry into service in mid-2016 and the -1000 version is expected to enter service in mid-2017. 
In comparison, the Boeing 787, which offers an option between GE-nx and Rolls Royce Trent 1000 engines, seats up to 240 or 280 passengers in a three-class seating arrangement depending on the model. It has a range of around 8,000 nautical miles and comes at a list price of $207 million (787-8) and $244 million (787-9). And, the Boeing 777-300ER seats 386 passengers in a three-class cabin configuration and has a price tag of $315 million.   
Thus, the smaller A350 (-800) competes with the larger Boeing 787 (-9) and the larger A350 (-1000) serves the same market segment as Boeing 777-300ER.
|Parameter\Model||Boeing 787-8||Boeing 787-9||Airbus A350-800||Airbus A350-900||Airbus A350-1000||Boeing 777-300ER|
|Seating capacity (3-class)||240||280||270||314||350||386|
|Maximum range||8,200 nmi||8,500 nmi||8,480 nmi||8,100 nmi||8,420 nmi||7,930 nmi|
|List Price||$206.8 million||$243.6 million||$245.5 million||$277.7 million||$320.6 million||$315 million|
A350 Will Increase Competition In The Wide-Body Segment
Airbus is planning to fly the A350 for the first time in the coming days; however, the program has already been delayed by around a year. So far, the European aircraft manufacturer has had to deal with multiple supply chain issues in its A350 program, and this remains a potential risk going forward.
However, from Boeing’s perspective, the entry of A350 will intensify competition with Airbus in the wide-body segment. Boeing currently estimates that the global airline industry will require 7,950 wide-body twin-aisle airplanes worth over $2 trillion over the next two decades.  In order to prevent its share of this large wide-body market from declining, Boeing has already started work on the next generation of 777, dubbed as 777X, which will offer improved fuel efficiency and increased range compared to the current 777. This upgraded version of 777 is expected to enter the market near the end of this decade.Notes:
- Unfilled orders for Boeing through May 2013, June 10 2013, www.boeing.com [↩]
- Boeing rolls out first 777 at increased production rate, January 10 2013, www.boeing.com [↩]
- Orders for Airbus A350, June 10 2013, www,wikipedia.com [↩]
- Web archive of Airbus’ A350 presentation accessed through wikipedia, December 2006, www.wikipedia.com [↩]
- Airbus A350, June 10 2013, www.wikipedia.com [↩]
- Boeing 787 Dreamliner, June 10 2013, www.wikipedia.com [↩]
- Boeing 777, June 10 2013, www.wikipedia.com [↩]
- Boeing commercial airplane list prices, June 10 2013, www.boeing.com [↩]
- Boeing’s long-term market forecasts, June 10 2013, www.boeing.com [↩]