New plane lifts Boeing in contest for top seller
Airbus countering 787 with big push for its new A350
By Michael Oneal
Tribune staff reporter
Published May 27, 2005
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John Leahy, the indefatigable chief commercial officer of Airbus SAS, wasn’t about to let a burst appendix prevent him from closing a crucial airplane deal.
His malady–“No doubt brought on by Boeing,” he quipped recently–required emergency surgery.
Yet even from his sickbed, Leahy managed to help negotiate last week’s deal to pump a $250 million loan into the US Airways-America West merger in return for a promise from the executives involved to help launch Airbus’ newest plane–the A350.
“There are always cell phones,” he said.
As the aerospace industry prepares for June’s lavish Paris Air Show, the competition between Chicago-based Boeing Co. and Airbus has never been keener. After watching Airbus soar to the industry lead in terms of commercial jet orders and deliveries in 2003, Boeing has cranked up its sales machine and is leading a spirited recovery that is putting enormous pressure on Airbus.
Both companies are taking more risk, pricing more aggressively and doling out more concessions to customers to win business, sources say.
And this year Boeing is winning. It has collected 243 firm orders for its airplanes, led by its newest model–the 787 Dreamliner. Through April (the latest numbers available), Airbus had garnered only 145 contracts and is struggling to launch the A350, its 787 competitor.
Boeing this week converted commitments for 20 737s into firm orders from the leasing arm of Singapore Airlines. And Indonesian budget carrier Lion Air announced plans to buy 60 737s for $3.9 billion to replace its aging fleet of small, narrow-body jets. Those conquests come on top of critical recent wins at Northwest Airlines, Air Canada and Air India, among others.
“Boeing appears to be on a roll,” said George Hamlin, a former Airbus marketing executive and now a consultant with MergeGlobal Inc.
By the end of this year, Airbus almost certainly will have delivered more airplanes, based on past orders, analysts said. But benefiting from the recent momentum for the 787, “Boeing will probably be ahead by a comfortable margin” in terms of new orders, said industry consultant Richard Aboulafia of the Teal Group.
Joseph Campbell, an industry analyst at Lehman Bros., thinks Boeing’s rebound will bring the industry closer to the 50-50 parity that most experts believe is where things should settle out once the two manufacturers begin to deliver all the new airplanes they are selling.
“An invigorated Boeing sales team with a new airplane to sell is working hard to regain market share lost to Airbus,” he told clients recently.
By: US Agent - 26th June 2005 at 16:44
Boeing takes the lead in sales
Flight International
21-June-05
Airbus may have accepted that it is being beaten by Boeing in sales terms this year, but the European manufacturer is confident it will retain its dominant share of airliner deliveries in the near term.
Airbus concedes that during the first five months of 2005 it has been beaten into second place by Boeing, having taken only 42% (196) of the total firm orders placed.
Airbus chief executive Noel Forgeard explains that Airbus’s stated target of averaging a 50% market share “would mean remaining in the 40-60% band”. He adds: “Let’s wait for the final score of 2005. We’ve been ahead for the last five years and the game is not over for this year. We take the challenge.”
Airbus will retain the output lead it took over Boeing in 2003 this year, with Forgeard confirming that Airbus will deliver “at least 360 aircraft – 40 aircraft more than last year”. This compares with Boeing’s planned 2005 output of 320 aircraft, which was confirmed by Boeing Commercial Airplanes president Alan Mulally.
Forgeard says that Airbus will boost production by at least 10% next year, “which means we should pass the waypoint of 400”. He adds that Airbus is increasing production of single-aisle aircraft to a record 30 units a month next year – with a further boost being studied – while A330/A340 output will increase to eight a month.
Mulally says that Boeing will increase output to 375-385 aircraft in 2006, with next year’s production already 86% sold out. “We will watch this and have more guidance [on production rates] in a couple of months. Production will go up again in 2007.”
Boeing has expressed confidence recently that it will overtake Airbus in output terms by 2008 when deliveries of the 787 kick in.
By: US Agent - 15th June 2005 at 17:25
Boeing goes on offense for midsize market
Trade suit on EU subsidies to rival Airbus raises stakes
Wednesday, June 15, 2005
By MARK LANDLER AND ELIZABETH BECKER
THE NEW YORK TIMES
LE BOURGET, France — When the Airbus A380 superjumbo jet took to the skies at the Paris Air Show, executives from The Boeing Co. crowded an observation deck here to gawk at the plane, the new flagship of a European company that is embroiled in a trade battle with Boeing.
As the A380 traced swooping circles above the airfield Monday, the Boeing delegation was plainly impressed. But after the giant plane touched down, the spell was broken. “Look for the dent in the runway,” one of the executives said in a dig at the A380’s chronic weight problems.
Boeing can afford a few wisecracks. After several years in which the company seemed in danger of being flattened by the Airbus juggernaut, it has stormed back into contention. Boeing’s new midsize plane, the 787, is selling briskly, while Airbus has been dogged by production problems with the A380 and questions about how it will finance its next new planes, particularly the A350, which is intended to go head-to-head with the 787.
The reversal of fortune comes just as the European Union is fighting a trade suit brought by the United States on aircraft subsidies.
“Boeing’s original strategy was purely defensive: to protect the 787 program,” said Richard Aboulafia, vice president of research at the Teal Group, an aerospace consulting firm in Fairfax, Va. “Now, it’s switched from defense to offense. They want to disrupt the A350.”
The stakes are enormous. Medium-size planes — those with 200 to 300 seats — will generate more revenue than any other category in the next two decades, according to industry forecasts. The segment is also one in which Airbus has chipped away at Boeing’s franchise, with its popular A330.
By: MSR777 - 29th May 2005 at 13:57
Point taken. 🙂
By: Grey Area - 29th May 2005 at 12:19
I agree that the analogy isn’t exact, Interflug, but the point I was making was that the Soviet airliner existed in a command economy with guaranteed large markets and long production runs so there was no incentive to “outdo the other side” or to come up with products that could compete in the world marketplace.
Designs that could, and should, have been superseded by more modern designs instead remained in production with minor tweaks here and there.
Once that command economy evaporated, the bulk of the market for Russian and Ukranian airliners evaporated along with it – apart from niche roles like heavy cargo transport where Antonov designs still reign supreme.
By: MSR777 - 29th May 2005 at 12:05
100% correct, 4 engines good. Without competition we would have stagnation – look at what happened to the airliner manufacturers in the Soviet Union for a perfect example of what you are saying.
Agree with first part of quote, but as the Soviet airliner industry existed purely to serve State decreed requirements, usually dictated by a current 5 year plan and not a commercial one, I’m not sure a direct comparison is accurate.
By: Grey Area - 28th May 2005 at 18:27
Now is Boeing’s term. And we should hope the cycle continues in this fashion. It can only be good for all concerned.
100% correct, 4 engines good. Without competition we would have stagnation – look at what happened to the airliner manufacturers in the Soviet Union for a perfect example of what you are saying.
By: US Agent - 28th May 2005 at 18:25
With regards to “commonality” being a factor…I think it plays a bigger role when you are considering different versions of the same aircraft model…ie, Air France’s recent decision to go with the 777-200F to replace its 747-200Fs…a major factor being the commonality with their existing passenger 777s.
By: Cliff Barnes - 28th May 2005 at 16:47
Airbus has had two or three years of dominace. Now is Boeing’s term. And we should hope the cycle continues in this fashion. It can only be good for all concerned.
I totally agree on what you say. But I would also like to add a comment; if A and B wouldn’t experience this kind of competition they would end up being fat cats. By that I mean that they would stop developing their products in the same speed as of today, giving new competitors from Brazil, Russia or even India the chance of getting into the market. That would be the fall of american and european aerospace industry.
regards,
Cliff
By: 4 engines good - 28th May 2005 at 16:27
Generally speaking there are no aircraft that are vastly superior to their competitors between the two companies. Some of them offer more performance- the others are more economical. Some of them are more advanced- the others use proven technology. Some of them offer lower costs per trip- the others lower manteneance costs. And so on.
And as such, some airlines will choose a certain model and others the competition’s. It is normal and expected for both A and B to leapfrog each other as new models come out. Airbus has had two or three years of dominace. Now is Boeing’s term. And we should hope the cycle continues in this fashion. It can only be good for all concerned.
By: Airline owner - 28th May 2005 at 15:35
But then you have easyJet, Air Berlin. Both until recently a one type operator… now both mixing Boeing and Airbus.
It would seem both were blinded from the commonality argument by the cannot refuse offer Airbus was handing out… literaly a “buy one, get one free” type affair.
Its not so much buy one get one free.Airbus do sell their Single Aisle planes cheaper on the larger bulk orders. The only reason why people say ththis is because (I imagine):
If you said to Boeing that you want 75 B737-800’s, you’d pay for 75 whereas if you asked Airbus for 75 A319’s then you’d only pay for 65-70. Am I right in saying this. If so then you have to admit its a good marketing strategy.
If am completely wrong then tell me and I’ll delete this post
By: Grey Area - 28th May 2005 at 15:21
Fanboy Numero Uno you remain, whether you bite or not, pal.
Remember, I read everything that gets posted on here…….. :D:D:D
By: Bmused55 - 28th May 2005 at 15:16
Who are you trying to kid, Sandy?
You’re far and away the biggest Fanboy on this Forum!!! :D:D:D:D
I’m not biting :p
By: Bmused55 - 28th May 2005 at 15:14
– I believe it depens upon which carrier we are speaking of. Some carriers, preferably low fare carriers, needs to lower all the cost they can. For these fleet commonality means a lot while for the more exclusive carriers it doesn’t really matter. For comparison; check out SAS fleet versus Ryan Air to get my point.
regards,
Cliff
But then you have easyJet, Air Berlin. Both until recently a one type operator… now both mixing Boeing and Airbus.
It would seem both were blinded from the commonality argument by the cannot refuse offer Airbus was handing out… literaly a “buy one, get one free” type affair.
By: Grey Area - 28th May 2005 at 15:14
Thats been my argument since the day I joined this forum.
Its marketing PR. Something a lot of fans have swallowed and taken to heart.
Who are you trying to kid, Sandy?
You’re far and away the biggest Fanboy on this Forum!!! :D:D:D:D
By: Cliff Barnes - 28th May 2005 at 15:11
Too many people think this is a huge advantage, I agree it is an advantage but only a very small one. Not large enough to decide on an aircraft to purchase or lease.
I have spoken to many management types who decide on future aircraft and it really doesn’t have much input into the decision of adding more/new aircraft too a fleet. 😉
– I believe it depens upon which carrier we are speaking of. Some carriers, preferably low fare carriers, needs to lower all the cost they can. For these fleet commonality means a lot while for the more exclusive carriers it doesn’t really matter. For comparison; check out SAS fleet versus Ryan Air to get my point.
regards,
Cliff
By: Bmused55 - 28th May 2005 at 14:48
Too many people think this is a huge advantage, I agree it is an advantage but only a very small one. Not large enough to decide on an aircraft to purchase or lease.
I have spoken to many management types who decide on future aircraft and it really doesn’t have much input into the decision of adding more/new aircraft too a fleet. 😉
Thats been my argument since the day I joined this forum.
Its marketing PR. Something a lot of fans have swallowed and taken to heart.
By: skycruiser - 28th May 2005 at 14:42
I think you’re wrong.
If you’re an all out Airbus customer it might be interesting to add an airplane who will benefit from fleet commonality with other Airbuses. The cockpit design and function are virtually the same making it a small step to move pilots from A320/A330-or whatever to A350.
Too many people think this is a huge advantage, I agree it is an advantage but only a very small one. Not large enough to decide on an aircraft to purchase or lease.
I have spoken to many management types who decide on future aircraft and it really doesn’t have much input into the decision of adding more/new aircraft too a fleet. 😉
By: Bmused55 - 28th May 2005 at 13:37
– Much of what Leahy says is marketing bs.
regards,
Cliff
agreed!
By: Cliff Barnes - 28th May 2005 at 13:36
upon evaluation I can see how my reply to you may have seemed a little forcefull or arrogant. My apologies that wasn’t my intention.
– No hard feelings mate!
As to the commonality… all I know is what I’ve read in various new articles about the Leahy interview in which he was confident, almost to the point of arrogance, that Airbus will announce many orders for the A350.
– Much of what Leahy says is marketing bs.
regards,
Cliff
By: Bmused55 - 28th May 2005 at 13:21
upon evaluation I can see how my reply to you may have seemed a little forcefull or arrogant. My apologies that wasn’t my intention.
As to the commonality… all I know is what I’ve read in various new articles about the Leahy interview in which he was confident, almost to the point of arrogance, that Airbus will announce many orders for the A350.
It was noted the A350 might not share all that much commonality with the A330, thus the commonality argument, which lets face it is all the a350 realy has going for it right now, is mooted.
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May 27, 2005 at 5:10 pm