Sales of the 20-year-old long-haul plane have enjoyed an unexpected boom in recent years after three years of delays in Boeing's radically new 787 Dreamliner drove many airlines to invest in the cheaper and proven Airbus model.
But momentum is fading and analysts say Airbus faces questions over whether it can maintain current A330 production rates in the second half of the decade without something else of its size to offer airlines tempted by the chic new jets.
"They have been doing fine with the A330 because Boeing was late, but it is becoming painfully obvious that Boeing has newer technology than the A330," said Adam Pilarski, senior vice president at U.S.-based aviation consultancy Avitas.
Officially, Airbus is happy with the way sales of its most popular big jet are holding up, following a steady pattern of design tweaks that have increased range and capability. Last month it sold 25 A330s worth $6 billion to AirAsiaX.
But behind the scenes, suppliers and industry experts say Airbus is looking seriously at whether to re-engine the A330 to cut fuel consumption, something AirAsiaX is also pushing for.
"It is being discussed. It is one of the options in the mix," said an industry source briefed on the plans.
Airbus said it had nothing to add to recent comments made by a senior marketing executive, Crawford Hamilton, who told Air Insight website there was no immediate need to revamp the A330.
Airbus holds its annual news conference on Monday.
The idea of a facelift for the A330 is not new.
Airbus originally planned to answer Boeing's carbon-fibre 787 with a modest makeover of the A330, but abandoned the idea to take the same leap in technology as its rival and come out with the all-new A350, which is due to enter service this year.
Now, after a decade of ambitious and challenging plane developments, the world's largest aircraft manufacturers are once again focusing on derivatives of existing models.
Experts say Airbus's decision could have an impact on the broader battle between planemakers.
Sharper competition from the A330 could, at least for a while, sap margins for the 787 by forcing Boeing to offer bigger discounts. For Airbus, it could keep open a lifeline of cash for other projects.
CONCERNS OVER RESOURCES
The proposal must first overcome growing industry concerns about engineering resources and satisfy Airbus bosses that it can make an adequate return without cutting into A350 sales.
With execution risk uppermost in the minds of investors, Airbus is heavily focused on testing and preparing the A350 for first delivery, expected in the last quarter of this year.
At the same time, it is flirting with the idea of adding a bigger version to the A350 series to compete with Boeing's new 406-seat 777X mini-jumbo. The current A350-1000 seats 350.
Industry experts said that on paper, Airbus could tackle a A330 re-engining project as well as a potential larger A350 at the same time, as engineers start coming off other projects.
But the business case would have to stack up first. After a decade of costly developments and roller-coaster share prices, Airbus has pledged to focus on doubling its margins by 2015.
Shares in parent EADS, recently renamed Airbus Group, have doubled in the past year on the success of the re-engined A320.
But unlike the A320 and rival 737, the threat facing the A330 comes from a radically different generation of aircraft, the high-tech carbon-fibre jets offered by both planemakers.
It would hit market at about the same time as the 787, recovering from last year's grounding crisis, and the A350 are both expected to be hitting their stride in deliveries -- potentially making older planes harder to sell and finance.
"The A330 sells on availability. Once you get to parity in availability, then people tend to say 'I'll take the better widget' because it is better value," an industry source said.
Analysts say an A330 engine upgrade would cost at least $1 billion, much of which could be picked up by engine makers Rolls-Royce or General Electric. Modifications needed to carry the latest engines, which need more room and weigh more while using less fuel, could treble that cost.
With so many pieces to the jigsaw in such a decision, the industry source briefed on the situation said Airbus was not expected to make a decision for at least a year.
That might leave time for Airbus to resolve yet another dilemma - what to do about the smallest member of the A350 family as buyers of the A350-800 switch to a larger model.
A re-engined A330 could plug a gap for Airbus at the lower end of the wide-body market around 250 seats, where analysts say its portfolio appears most vulnerable over the long term.
But some analysts say Airbus cannot afford to wait.
"The most likely entry-to-service date (for a re-engined A330) would be 2018, but for that they would need to make a decision pretty soon," said Leeham Co analyst Scott Hamilton, who has blogged actively about the A330 re-engining idea.
"A re-engining would give the A330 another 10 years of life but it would accelerate the demise of the A350-800 which is likely to fall away as customers upgrade," he said.
(Tim Hepher - Reuters)