When Boeing announced its 787 Dreamliner project, it claimed the lower operating costs of this airplane would make it a serious threat to the Airbus A330. Publicly, Airbus initially rejected this claim, stating that the 787 was itself just a reaction to the A330, and that no response was needed to the 787.The airlines pushed Airbus to provide a competitor, as Boeing had committed the 787 to have 20% lower fuel consumption than today's equivalent types. Initially Airbus proposed a simple derivative of the A330, unofficially dubbed the 'A330-200Lite', with improved aerodynamics and engines similar to those on the 787. The airlines were not satisfied and Airbus committed €4 billion to a new design to be called the A350. The original version of the A350 superficially resembled the A330 due to its common fuselage cross-section and assembly. A new wing, engines and a horizontal stabilizer were to be coupled with new composite materials and production methods applied to the fuselage to make the A350 an almost all-new aircraft.
On 16 September 2004, then Airbus president and CEO Noël Forgeard confirmed that a new project was under consideration, but did not give a project name, and would not state whether it would be an entirely new design or a modification of an existing product. Forgeard indicated that Airbus would finalise its concept by the end of 2004, begin consulting with airlines in early 2005, and aim to launch the new development programme at the end of that year.
On 10 December 2004 the boards of EADS and BAE Systems, then the shareholders of Airbus, gave Airbus an "authorisation to offer (ATO)", and formally named it the A350.
On 6 October 2005 full industrial launch of the program was announced with an estimated development cost of around € 3.5 billion. This version of the A350 was planned to be a 250–300-seat twin-engined wide-body aircraft derived from the design of the existing A330. Under this plan, the A350 would have modified wings and new engines while sharing the same fuselage cross-section as its predecessor. Controversially, the fuselage was to consist primarily of Al-Li, rather than the CFRP fuselage on the 787. It was to see entry into service in 2010 in two versions; the A350-800 capable of flying 8,800 nautical miles (16,300 km) with typical passenger capacity of 253 in 3-class configuration and the 300-seat (3-class) A350-900 with 7,500 nautical mile (13,890 km) range. It was designed to be a direct competitor to the 787-9, and 777-200ER.
Almost immediately Airbus faced criticism on the A350 project by the heads of two of its largest customers, ILFC and GECAS. On 28 March 2006, in the presence of hundreds of top airline executives, Steven F. Udvar-Hazy, of ILFC lambasted Airbus' strategy in bringing to market what they saw as "a Band-aid reaction to the 787," a sentiment which was echoed by GECAS president Henry Hubschman. Udvar-Hazy called on Airbus to bring a clean-sheet design to the table, or risk losing most of the market to Boeing.
Several days later, similar comments were made by Chew Choon Seng, CEO of Singapore Airlines. Chew stated, "having gone to the trouble of designing a new wing, tail, cockpit" and adding advanced new materials, Airbus "should have gone the whole hog and designed a new fuselage." At the time, Singapore was reviewing bids for the 787 and A350.
Airbus responded by stating it was considering improvements for the A350 to satisfy customer demands. At the same time, Airbus then-CEO Gustav Humbert suggested that there would be no quick fixes, stating, "Our strategy isn't driven by the needs of the next one or two campaigns, but rather by a long-term view of the market and our ability to deliver on our promises."
On 14 June 2006, Singapore Airlines announced it had selected the 787 over the A350, ordering 20 787-9s. Emirates Airline decided against making an order for the initial version of the A350 because of weaknesses in the design.
