Airbus is betting that in increasingly crowded skies, airlines will want to be able to pack as many people as possible in their planes and that customers will be attracted by the extra space and comfort available on a flying "cruiser" -- a bet a Boeing spokesman dismissed as contrary to the company's market research.
The four-nation European consortium will also be converted into a corporation -- Airbus Integrated Company -- in a long-expected move that its backers hope will help it compete more effectively with Boeing and crack its monopoly on long-haul jets.
The Airbus decision to go ahead with the $12 billion project to build the world's largest plane promises to intensify competition between the rivals with their opposing strategies for the future.
Boeing has decided to modernize its trustworthy 747 family of planes rather than build its own mammoth jet.
A decision on whether to proceed with a stretch version of the 747 at an estimated cost of $3 billion to $4 billion will depend on interest from the airlines and airplane leasing companies that would buy them, said John Dern, a Boeing spokesman in Seattle.
The main deck of the A3XX will be the widest in the world. Each seat has its own armrest, and a lower deck can accommodate sleeper cabins, a business center with a bar and library, and even a nursery. The plane will have a range of 8,150 miles.
Airbus's announcement was clearly the opening salvo in what promises to be a fierce fight for clients.
"There will be a tremendous competition, a fair-play match between Boeing and Airbus," Jean-Luc Lagardere, co-CEO of the new company, said at a news conference in Paris.
"It will not be a war," he added, but an "imaginative contest."
The new company will be 80 percent-owned by the European Aeronautics Defense and Space Co., formed last year from the merger of France's Aerospatiale Matra, Germany's DaimlerChrysler Aerospace and Spain's Casa. British Aerospace Systems, the fourth partner in Airbus Industrie, will hold the remaining 20 percent.
EADS said it believes there will be demand for 1,500 A3XX over the next two decades, and it intends to capture half that market. It said eight leading customers have expressed interest acquiring 52 planes in the A3XX family.
The European aerospace giant said authorization to offer the superjumbo is expected to "lead to a full industrial launch of the program at the turn of the year." The first planes are slated for delivery by 2005.
"Our landmark agreement and the authorization to offer for the A3XX are tremendous news for the European aerospace industry and testimony to the faith and commitment of those who founded Airbus Industrie so many years ago," said Philippe Camus, co-CEO of EAD.
A joint statement by the French, German, British and Spanish heads of government said the launch of the A3XX propelled the European aerospace industry into "first rank" internationally.
But Boeing's Dern said Airbus still has a long way to go "before they begin cutting metal."
"It's just one step in the process. This is something that has been expected for some time," he said.
Boeing estimates the market for an A3XX-size plane is only about 360 aircraft, because "most passengers, whenever possible, want to avoid congested hubs and want more point-to-point service" that can be handled with existing jetliners, Dern said.
The European superjumbo project had been held up by internal squabbling about where the A3XX would be assembled, with France and Germany vying for the prestige of assembling it.
Physical assembly will take place at Airbus' headquarters in Toulouse, France, while interior furnishing and customization will be carried out in Hamburg, Germany.
The conversion of Airbus, which was founded in 1972, into a corporation is expected to generate savings of $329 million by 2004. The new company is expected to have a consolidated annual turnover of $14.7 billion.
Last year, Airbus surpassed Boeing in commercial airline orders with 476 to the American company's 391.