Airbus to announce upgraded A320 engines.
A Valuair Airbus A320 aircraft taxis on a runway at Changi Airport in Singapore May 13, 2009. Airbus has virtually finalised a decision to upgrade its best-selling A320 passenger jet with new engines and the $1-2 billion project could be announced as early as Wednesday, two sources familiar with the matter said. Reuters.

European plane-maker, Airbus, is expected to announce today its plans to upgrade its best-selling A320 passenger jets with new engines supplied by General Electric Co. and Pratt & Whitney, sources familiar with the plans informed Reuters.

The entire project is estimated to cost around $1 billion to $2 billion, promising significant developments in fuel efficiency.

The project is a direct response to competitors in the industry like the U.S.-based Boeing Co. and also a number of new entrees like Canada's Bombardier or China's Comac who have been challenging the supremacy of both Airbus and Boeing in the market for airliners with more than 100 seats.

With its upgrading program, Airbus hopes to boost sales and thereby take a step ahead in the war for leadership in the industry.

It is a necessary and smart move. It is not without risk, but the alternative of doing nothing and being outflanked by competitors is far worse, said Teal Group aerospace consultant Richard Aboulafia to Reuters.

Pondering over the future of its competing 737, Boeing has initiated a number of minor design changes to its power distribution panels and has also updated the system's software that will manage and protect the power distribution on the airplane.

On Tuesday, US-based Copa Airline announced an order for 22 Next-Generation 737-800s from Boeing at a signing ceremony at the U.S. Department of Commerce in Washington, D.C. The collaboration will be the largest aircraft order in Copa's history valued at approximately $1.7 billion at price list; as per company statements.

However, Boeing has no immediate plans to revamp its engines but may offer a new design in the single-aisle jet category by the end of the decade, he said.

I think Boeing will wait and see. The customers and the market are going to make the decision. Boeing will listen to customers and if there are any major defections then they will no longer have the luxury of time, said Aboulafia.

The upgrade decision came after a lengthy audit of resources ordered by Airbus Chief Executive Tom Enders to avoid poaching engineers needed for a bigger project, the next-generation A350.

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