Airbus Launches Neo; Boeing Fights Back; Costa Concordia Floating, US Markets Take Off
PAULA NEWTON, HOST: So close to more records on Wall Street. Who would have thought in the dead of summer we'd be looking at this kind of a market. It's Monday, the 14th of July. New life in an old plane. The CEO of Airbus tells us the A330 can compete with Boeing's Dreamliner. The wreck of Costa Concordia is refloated. And World Cup players, world-class prices. The latest on the transfer market. I'm Paula Newton, and this is QUEST MEANS BUSINESS. And good evening. Airbus has just upped the stakes in its battle with Boeing. It's unveiled a new range of lighter, more fuel-efficient aircraft to try and steal the thunder from Boeing's 787 Dreamliner. Tonight, the CEOs from both sides tell QUEST MEANS BUSINESS why their aircrafts are best. Now, the A330 Neo was announced at the Farnborough International Air Show in England. It's one of the biggest events in the aviation calendar. Now, Boeing insists its 787 Dreamliners remain the best in class and are technologically far more advanced. Now meantime at the show, Russia has told its delegation to leave as the diplomatic row over Ukraine continues to escalate. We'll have more on that later in the program. So first, though, we go to Airbus, who definitely don't believe the phrase, "if it ain't broke, don't fix it." Now, the successful A330 is now getting a makeover, creating the Neo, as it's called, and it's a lot cheaper than designing a whole new aircraft. Now, the new version will have greatly-improved gas mileage, so important to airlines right now. And that's not just down to new engines. The Airbus CEO, Fabrice Bregier, explained how it's all going to work to our own Jim Boulden.</s>FABRICE BREGIER, CEO, AIRBUS: It's not limited to re-engining. We also improved the aerodynamics, the wing of the aircraft. We put wing tips, which are very similar to the ones we have on the 350. So, all-in-all, we'll have a reduction of fuel burn of 14 percent, which puts us at the same level as the 787, but with a mature aircraft, with lower cost of maintenance, and lower cost of capital. So, it will be very competitive on this market.</s>JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: And customers have been asking for this new kind of A330 Neo because of the fuel efficiency they've seen coming through the A350 and obviously the A380.</s>BREGIER: Do you know, for the last five years, we sold more A330s than Boeing sold 787s? But the customers were telling us the new aircraft is fantastic, but you need to improve the fuel burn. And we listened to them, and this is what we have announced today.</s>BOULDEN: And who will be the launch customer? How many A330 Neos do you expect to be rolling off the assembly line in the next year or so?</s>BREGIER: So, the launch customer is ALC. Steve Hazy has always supported the A330 Neo. And we'll announce an order for 25 aircraft. But we'll have other lessors, we will announce those orders during the show. So all-in-all, we'll get probably very close to a hundred aircraft.</s>BOULDEN: OK, a hundred aircraft, the A330. Let's talk the A350, which is on display here, launch customer Qatar, of course. Are we on time with launch, and when will that be?</s>BREGIER: We're on time. We have almost completed the flight test. We still have around 300 hours of flight tests, 2,200 have been completed. So, certification on track, and then we are assembling the first two Qatar Airways aircraft, which will be ready for delivery by the end of the year.</s>BOULDEN: So, the end of 2014. So, this plane, we've been waiting for for a long time, the A350, finally comes off the assembly line.</s>BREGIER: Not finally.</s>BOULDEN: No?</s>BREGIER: It has not drifted away for the last two years, which in this business, I can tell you, is unusual.</s>BOULDEN: I think your competitor wishes they had the same luck with the 787 launch. I've been reading about a little bit bigger has been better, so not talking about the A380, but your A321 doing very well. But everything's stretching a little bit more, isn't it? Is that coming from the customer saying, we just want 20, 30, 40 more seats?</s>BREGIER: Yes, you are right. There are many reasons for that: fuel burn efficiency, but also congestion of airports. Let's take Heathrow.</s>BOULDEN: OK, yes.</s>BREGIER: I'm sure the A380 will be progressively the aircraft of choice for aircraft -- for landing to Heathrow. So, we can see this trend, and you're absolutely right. In the single aisle segment, 321 will account for close to 50 percent.</s>BOULDEN: Wow. Yes.</s>BREGIER: When five years ago, it was only 20 percent.</s>BOULDEN: Twenty, yes. We have the A380 behind me, so I have to ask you, has it been -- is it profitable yet? Has it made you money?</s>BREGIER: Not yet --</s>BOULDEN: Not yet.</s>BREGIER: -- but I hope next year will be break even.</s>BOULDEN: Ah, break even 2015, so everything after that, some good profit.</s>BREGIER: Let's take the bet, yes.</s>BOULDEN: OK. Thank you, sir.</s>BREGIER: Thank you very much.</s>BOULDEN: Appreciate it.</s>NEWTON: I'm not sure that was very definitive. But despite the attempts of Airbus, Boeing insists it's its 787 Dreamliner that is the best in its sector, now especially when fuel burn remains such a critical factor for so many airlines. Now, Boeing today announced a leasing deal which includes six 787-9 Dreamliners valued at more than $2 billion, that's if you go by the list price. Now, the CEO, Jim McNerney said the Airbus Neo is a "worthy adversary," and he actually said that, but he also says it still doesn't come close to --</s>JIM MCNERNEY, CEO, BOEING: There is no question that the A330 Neo will be an improvement over the current A330 family. It'll have modern engines. I believe there will be some wiglets --</s>BOULDEN: Yes.</s>MCNERNEY: -- all of which help. But it doesn't get you anywhere near this airplane. So, it's going to be an interesting competition over the years, but we think we're on a different technology platform with different levels of not only fuel efficiency but maintenance. And so, that's what they thought their response had to be. I like our lineup a lot.</s>BOULDEN: OK, we're halfway through the year. How would you describe the year? Are we fully back from the recession? A lot of the airlines that may have delayed orders are now really into the market again?</s>MCNERNEY: Yes. I think we're seeing steady demand. We're already halfway through the year at a book-to-bill of about one. So, the rest is gravy in terms of staying above that one-to-one book-to-bill.</s>BOULDEN: Yes.</s>MCNERNEY: There's a big technology replacement cycle going on, and that's why aerospace sector commercial is growing a little faster than GDP in general, because planes like this are replacing planes that used to be like that before they're ready for the scrapheap --</s>BOULDEN: Yes.</s>MCNERNEY: -- because these economics are so compelling, you're sort of replacing them a little faster than you used to.</s>BOULDEN: OK.</s>MCNERNEY: And that's why we're a little disconnected and a little favorable to GDP growth.</s>BOULDEN: Haven't seen the 777X yet.</s>MCNERNEY: Yes.</s>BOULDEN: Just been reading a little bit about it. What's that going to bring? It was a fabulous plane when it came out in the early 90s, but - - so this is another incremental step, would you say?</s>MCNERNEY: Yes, well, it's -- the 777X, we're in a position now of taking the hard-fought technology maturation on the 87, which had its issues --</s>BOULDEN: Yes.</s>MCNERNEY: -- and now we're flowing it into the 777 family.</s>BOULDEN: OK.</s>MCNERNEY: And specifically, we're taking composite wings and adding it to the current fuselage on the 777.</s>BOULDEN: OK.</s>MCNERNEY: And adding new engines.</s>BOULDEN: Yes.</s>MCNERNEY: And the numbers are astounding. Now, a composite wing the size of the new 777 is the largest airfoil ever built.</s>MCNERNEY: And it's the largest composite airfoil ever built.</s>BOULDEN: Yes.</s>MCNERNEY: And it offers not only huge weight advantages, but tremendous aerodynamic efficiencies.</s>BOULDEN: As you said, the 787 had a lot of issues. So you're saying incremental is now the way to go, because you've done this technology, and now you can add it to others?</s>MCNERNEY: But he impact isn't incremental.</s>BOULDEN: Right.</s>MCNERNEY: OK? In terms of technical risk, it's incremental, because we've done it before.</s>BOULDEN: OK. Yes.</s>MCNERNEY: But in terms of its impact on the 777 family, you're getting that same step function improvement that we had -- that we're getting with this airplane over and above the A330, over and above the 767. So, we're now in a position of over the next 20 or 30 years off this higher technology platform of improving the entire fleet.</s>NEWTON: The Costa Concordia cruise ship is floating for the first time in two and a half years. Thirty-two passengers were killed when it capsized off the coast of Italy, and it could yet take another two years to dismantle the ship once it's towed into a nearby port. Now, the total cost of the wreck could yet reach $2 billion. Erin McLaughlin has more.</s>ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT (voice-over): After two and a half years of intense preparation, the Costa Concordia is finally floating.</s>MICHAEL THAMM, CEO, COSTA CONCORDIA: The ship is on even keel, the ship is afloat again, and all technical systems are working very well, so I think we've seen a great start of this refloating operation, and let's move forward.</s>MCLAUGHLIN: For the past ten months, engineers have been hard at work attaching metal boxes to either side of the ship. Monday morning, they pumped compressed air into those boxes, raising it some two meters off of massive underwater steel platforms. Next, they began to tug the Concordia about 30 meters to the east. It was a dangerous and tricky procedure. The ship is rotting, and there was a real risk the bottom of it could give way. Once the ship was afloat, underwater divers went to work to find the remains of a 32-year-old crew member. Russel Rebello is the last missing casualty of the disaster. Over the next few days, divers will begin to attach chains and cables to help secure the ship's vulnerable underbelly, and they'll lower some of the metal boxes on the starboard side of the ship. Then the full refloat begins, lifting the Concordia up deck by deck, clearing any debris along the way.</s>NEWTON: That was CNN's Erin McLaughlin reporting. The Obama administration is continuing to seek justice over the 2008 banking crisis. One of the world's biggest banks has its second-quarter earnings nearly wiped off the books. The details of the CitiGroup settlement. That will be up next.