Airbus

PARIS -- At Yves Saint Laurent, the storied French design house that manufactures exclusively in Europe, the plunging value of the U.S. dollar has CEO Valerie Hermann thinking about the number of pockets on a skirt and the price of embroidery on a dress. Hermann is adamant that YSL must include in its ready-to-wear offerings cocktail dresses that don't cost more than 1,900 euros. "It's a crucial limit," she said. Six months ago, that was the equivalent of $2,565. Today, she'd have to sell the same garment for $215 more to make the same profit.

PARIS -- Airlines gave a major lift to the order book for the next generation Airbus A350 yesterday, announcing contracts for 114 of the planes on the first day of the Paris Air Show. The vote of confidence puts the late-to-the-gate program on more solid footing, although it is still well behind Boeing's rival jet. The A350 orders, worth more than $27 billion, were part of a total haul of 219 firm orders and 120 provisional ones - including 13 for the much-delayed A380 superjumbo - with a combined value of $45.7 billion at list prices.

LONDON -- Three years into the steepest surge in jetliner production in aviation history, earnings at the world's two biggest aircraft makers are plummeting.Boeing Co. and Airbus Industrie have slashed prices in a fierce battle for market share, and Boeing hurt its cause further with production snarls that cost $3 billion. It's a disappointment for both as they gather at Farnborough, England, this week for the year's biggest air show.Now the bust is approaching fast. Orders are drying up from recession-struck Asia.

ST. LOUIS -- Trans World Airlines Inc. split an estimated $3.9 billion order for short-range jets between Boeing Co. and Airbus Industrie, stretching the resources of a carrier that hasn't made an annual profit since 1988.The St. Louis-based airline announced yesterday that it ordered 50 Boeing 717s valued at about $1.4 billion, with options for 50 more.It also ordered 75 Airbus planes, including 50 A318s and 25 from the A320 family, with options for 75 others. TWA would not discuss financing terms except to say it would lease, not own, the planes.

PHILADELPHIA -- US Airways officials, fearful that they may not win union concessions in time to complete a contract with Airbus Industrie for 400 large aircraft, revealed yesterday that they have begun talks with manufacturers of small jets used for short-range hauls.US Airways' chairman and chief executive officer, Stephen M. Wolf, speaking to shareholders at the company's annual meeting here, indicated that the smaller planes,which seat 50-70 people, are part of the airline's fallback plan to scale back to a regional airline instead of a global carrier.

TOULOUSE, France -- Airbus Industrie said yesterday that its board gave the go-ahead to a $2.9 billion investment in building two new aircraft models intended to challenge Boeing Co.'s dominance of the market for large, long-range jetliners.The European plane maker has been selling the new models since June, when it unveiled them at an air show in Paris. So far, it's won public commitments for orders and options of 100 of the planes from five airlines including Lufthansa AG, Virgin Atlantic, Air Canada, Taiwan's Eva Airways and EgyptAir.

JAKARTA, Indonesia -- Working in a thick haze from nearby forest fires, rescuers on the island of Sumatra dug yesterday through the debris of an airliner that crashed Friday in Indonesia's worst air disaster.The rescuers were shown on television carrying away bodies in black plastic bags or wrapped in sarongs or large banana leaves. Officials said that so far, only 11 bodies had been identified.Officials said all 234 people on board, including 12 crew members, were killed when the Airbus A-300 crashed in remote, hilly terrain 30 miles short of the airport at the city of Medan, 900 miles northwest of Jakarta.

Our European allies can barely restrain their satisfaction over the downward spiral in American-Chinese relations.They see deutsche marks rather dollar marks in the controversy over Hillary Rodham Clinton's possible attendance at a U.N. Women's Conference sure to be embarrassing to the Beijing leadership. They figure U.S. agitation over China's human rights record, now personalized in the plight of imprisoned Harry Wu, is bound to help their business prospects. And increasing tension over the Taiwan question conveniently coincided with a stunning Chinese decision to have Germany's Daimler Benz rather than Chrysler or Ford build its first minivan manufacturing facility.

LAST week, speaking at Boeing's big Seattle plant, President Clinton accused the European Community of unfairly subsidizing the arch-rival Airbus. The message, aimed at the 28,000 Boeing workers slotted for layoff due to declining orders, apparently signals a harder line on trade.But while the United States indeed should seek the elusive "level playing field," and while Boeing's plight is serious, Airbus is the wrong target. Both the United States and the Europeans have committed comparable subsidies to aircraft.

PARIS -- Settling one of the most bitter trade disputes between the United States and Europe, U.S. officials announced a tentative agreement yesterday limiting government support for the commercial aircraft industry.For several years, Boeing Co. and McDonnell Douglas Corp. have accused Europe's fast-growing Airbus Industrie consortium of stealing business through unfair direct state subsidies.Airbus has countered that U.S. manufacturers are indirectly subsidized by orders from the Pentagon and the space program and are engaged in a thinly veiled attempt to thwart a European upstart in an industry they have long dominated.

4 Afghans die in blast outside U.S. Embassy KABUL, Afghanistan: A suicide car bomb targeting a convoy of foreign troops exploded about 200 yards outside the U.S. Embassy in Kabul yesterday, killing at least four Afghan bystanders as people entered the compound for a Thanksgiving Day race. At least 18 others were wounded in the morning attack, said Abdullah Fahim, a Health Ministry spokesman. Police officer Abdul Manan said the explosion was set off by a suicide bomber in a Toyota Corolla.

US Airways Group Inc. said yesterday that it would remove in-flight movie systems from its domestic aircraft to save about $10 million a year in fuel and other costs. The carrier decided to pull the entertainment systems because the number of people paying $5 for headsets has dropped as money spent on jet fuel, maintenance and studio fees has climbed. The video systems add about 500 pounds to a plane's weight, increasing fuel use. "When you combine dramatically increasing expense with dramatically decreasing revenue, that is a bad recipe and we simply can't afford to do it anymore," Travis Christ, US Airways vice president for sales and marketing, said.

In a high-stakes rivalry pitting two of the world's largest defense contractors, Northrop Grumman Corp. gambled and won. The word came down Feb. 29 from the U.S. Air Force that a contract worth up to $40 billion for aerial refueling tankers would go to Northrop and its partner, Airbus, a unit of Netherlands-based European Aeronautic Defence and Space Co. Shut out was rival Boeing Co., which thought it had a winner. It was a decision likened to last month's stunning Super Bowl loss by the heavily favored New England Patriots, with the favorite losing a cliffhanger.

PARIS -- At Yves Saint Laurent, the storied French design house that manufactures exclusively in Europe, the plunging value of the U.S. dollar has CEO Valerie Hermann thinking about the number of pockets on a skirt and the price of embroidery on a dress. Hermann is adamant that YSL must include in its ready-to-wear offerings cocktail dresses that don't cost more than 1,900 euros. "It's a crucial limit," she said. Six months ago, that was the equivalent of $2,565. Today, she'd have to sell the same garment for $215 more to make the same profit.

PARIS -- Airlines gave a major lift to the order book for the next generation Airbus A350 yesterday, announcing contracts for 114 of the planes on the first day of the Paris Air Show. The vote of confidence puts the late-to-the-gate program on more solid footing, although it is still well behind Boeing's rival jet. The A350 orders, worth more than $27 billion, were part of a total haul of 219 firm orders and 120 provisional ones - including 13 for the much-delayed A380 superjumbo - with a combined value of $45.7 billion at list prices.

China will set up a company to build large passenger airplanes, a first step as it seeks to take on Boeing Co. of the U.S. and Airbus SAS of Europe. Premier Wen Jiabao approved the plan at a Feb. 26 Cabinet meeting in Beijing, according to a statement posted on the central government's Web site Sunday. "Building a large aircraft is an important strategic decision of the Communist Party and the State Council, and it has been the desire of all Chinese people for many years," the government said in its statement.

NEW YORK -- FedEx Corp. scrapped an order for 10 Airbus A380s yesterday and switched to Boeing Co. 777s, the first cancellation as a result of repeated production delays on the world's largest commercial jet. With the A380 program already struggling, "this could potentially be the domino that knocks the whole thing down," said George Hamlin, vice president of aviation consulting firm Morten Beyer & Agnew, adding that Airbus should consider ending the...

Lesson to investors: Your holdings must be a watched pot, because the status quo in an industry can change quickly. Let's go back to early last year. European aircraft manufacturer Airbus SAS seemed capable of cleaning the clock of U.S. rival Boeing Co. The devastating volley would be its superjumbo A380 passenger jet, proudly unveiled in a ceremony in France. Just as important, its division of labor between German, French, Spanish and British production sites symbolized unity among nations that felt they could take on U.S. industry head to head and win. Wrong.

Elvis has not yet left the building. But when he does, our way of thinking about the world of aviation will change as we're propelled even further into the 21st century. Elvis is the nickname I've given to the new Airbus 380, the world's largest, first-ever fully double-decker passenger plane now being built at Airbus' factory in the quiet countryside of Toulouse, France. As Elvis was known as the "King of Rock 'N' Roll," the A380 will indisputably be crowned the "King of Aviation" when it rolls off the assembly line later this year and is readied for passenger service.

BRUSSELS, Belgium - The United States and European Union sued each other at the World Trade Organization over subsidies to airplane makers Airbus SAS and Boeing Co., setting the stage for the biggest clash in the WTO's 10-year history. The EU asked the WTO yesterday to outlaw U.S. aid to Boeing, a day after the Bush administration revived its case against European government loans to Airbus. Boeing lost its lead as the world's top seller of commercial jets to Airbus two years ago. Boeing, which EU Trade Commissioner Peter Mandelson said was instrumental in pressuring the United States to lodge the complaint, is attacking Airbus "not because it fears subsidies, but because it fears competition," he told a Brussels news conference.