Is the launch of A330neo the consequence or is the cause of the A350-800 cancellation?

As airlines evolve with changing times, they are pushing aircraft makers for more modern and fuel-efficient planes. The A330neo is Airbus' attempt to rejuvenate demand for its highly successful but aging A330 jet. With one of the best dispatch reliability rates of 99.4%, the A330 has been one of Airbus' best-selling models and the company has delivered more than 1.100 planes so far to more than 100 operators. But with the advent of new technology, the 20-year-old model is failing to attract buyers the way it used to. Let's find out how the successor to A330 can help Airbus gain more traction in the wide-body segment.

The wide-body segment is witnessing a major shift in technology brought about by Boeing's 787 Dreamliner. Dreamliner's arrival delay boosted A330 sales significantly as many of the airlines ran out of patience and started opting for models in service. According to Adam Pilarski, senior VP at aviation consultancy firm Avitas, "Airbus has been doing fine with the A330 because Boeing was late, but it is becoming painfully obvious that Boeing has newer technology than the A330."

With Boeing rolling out 10 Dreamliners a month at present, the scenario has obviously changed for the A330 and the plane is witnessing a predictable decline in demand. In the Q2/2014, Airbus landed just 6 new orders for A330 compared with 23 in the previous quarter and 47 in the Q4/2013. So, it was imperative for Airbus to come up with a new strategy to boost demand for this plane. 

Airbus had yet another reason to upgrade the A330. It was finding it difficult to sell the smallest version of the new A350 jets that it's building from scratch. The 276-seat A350-800 has managed to receive only 34 orders. So it made sense for Airbus to scrap this model and fill the gap with an upgraded A330. This way the larger A350 models would take on the larger versions of the 787, while the new A330 would compete with smaller 787s, much more advanced and expensive.

Based on the article “Why Did Airbus Build the A330neo?” published in The Motley Fool.