* Maiden flight for new A330neo jetliner
* To help Airbus challenge Boeing's 787 Dreamliner (Recasts after landing, adds background)
TOULOUSE, France, Oct 19 (Reuters) - Airbus on Thursday staged the delayed maiden flight of its A330neo jetliner, an upgraded version of its profitable A330 series designed to buttress European sales against the latest model of the Boeing 787 Dreamliner.
The wide-bodied, long-distance jet took off from the planemaker's Toulouse headquarters under overcast skies, watched by top executives from Airbus and Britain's Rolls-Royce, which supplies the engines.
In service since the 1990s, the A330 family is Airbus's biggest-selling wide-body jet but the arrival of Boeing's composite-body Dreamliner has eroded that position.
Airbus hopes the A330neo's refreshed design with new engines will help it defend its position in the lucrative 250-300 seat market, as a second honeymoon in the market and a burst of orders caused by production delays at Boeing start to peter out.
Chief Operating Officer Fabrice Bregier said Airbus had decided to improve the plane's maximum take-off weight by around 4 percent to 251 tonnes so that the A330neo can serve longer routes such as Kuala Lumpur to London from 2020.
Separately, Bregier said Airbus still expected to deliver "around 200" of the smaller A320neo aircraft in 2017, but added that meeting this previously stated target would be tough.
Bregier said Pratt & Whitney, whose industrial problems have delayed deliveries of Airbus jets, was testing re-designed parts for its engines and expected to start delivering the modified version at the end of this year.
That suggests Airbus hopes to end an 18-month crisis over Pratt & Whitney engine delays some time next year.
For now, undelivered jets continue to crowd the tarmac in Toulouse as Pratt & Whitney diverts engines from the production line to a pool of spares to supply airlines that are having to take engines out of service for early maintenance.
The majority of the delayed jets are destined for airlines that have selected Pratt & Whitneys new Geared Turbofan engine. CFM International, co-owned by General Electric and Safran, is also supplying engines for the A320neo.
The A330neo's debut flight was also delayed by the late completion of Trent 7000 engines from Rolls-Royce, which has been juggling demands with two other development projects.
Rolls-Royce says the bigger new engines are 10 percent more efficient and half as noisy as the previous generation.
Airbus said the A330neo would enter service in the middle of next year compared with an original target of fourth quarter this year, when the project was launched in 2014.
The A330neo and A320neo are examples of relatively cheap upgrades being carried out by Airbus and Boeing to take advantage of a leap forward in engine design, while also bringing out costlier all-new models like the A350 and 787.
Airbus earlier this week announced plans to absorb the high-tech but financially troubled CSeries aircraft of Canadian rival Bombardier in a deal that offers it new technology and a wider geographic presence in exchange for lending its marketing clout.
Airbus is now touting Canada as its "fifth home nation" after Britain, France, Germany and Spain where it was founded.
Once the deal is completed in around a year's time, the new-generation CSeries is expected to fill a gap below Airbus's current portfolio in the market for 100-150 seats. (Reporting by Tim Hepher; Writing by Richard Lough; Editing by David Holmes and Adrian Croft)