The stretched A340 would carry 375 passengers - 80 more than maximum now - have a range of 7,000 miles and enter service around the turn of the century.
Under an agreement announced yesterday General Electric of the US and Airbus are forming a joint team to study a new engine for the aircraft.
The current A340 range can carry between 260 and 295 passengers on "long thin routes" typically between second cities on different continents.
The new aircraft, known as the A340-600 would extend that capacity enabling Airbus to compete on routes such as London to Los Angeles.
An Airbus spokesman described the study as part of a pincer movement against Boeing with the A340-600 competing at the bottom end of the 747 market and its planned super-jumbo, the A3XX, attacking the 500-seater plus market.
Analysts believe the new A340 could cost between $500m and $1bn to develop since Airbus would need to extend the fuelage of the existing aircraft and carry out some modification to the wings. These are built by British Aerospace which has a 20 per cent stake in the consortium.
The Airbus A330-A340 family presently competes with the Boeing 777 range which was launched last year with United Airlines and British Airways as launch customers.
The 777-200 series can carry 305 passengers in 3-class or 375 in 2- class configuration and its range is 5,700 nautical miles. But a long- range version capable of 7,250 miles is due to enter service later this year.Reuse content