Boeing Prepared to Offer Cheaper 737s to Low Cost Airlines

SINGAPORE : US aerospace giant Boeing said it would aim to offer cheaper planes to low-cost airlines after losing a lucrative 40-jet contract with Malaysia’s AirAsia to European rival Airbus.

AirAsia announced Thursday it would buy 40 A320 jets for 2.5 billion US dollars from Airbus even though its current fleet of 26 aircraft was made up of Boeing 737s.

“We are very disappointed that Airbus was able to get the AirAsia deal,” Boeing Commercial Airplanes’ marketing vice president, Randy Baseler, told reporters in Asia via a conference call from the United States.

Baseler said Boeing had not been able to clinch the deal mainly because Airbus had undercut them.

“Airbus has been very aggressive on price … they have reduced their price significantly,” he said.

“You have probably seen it reported that AirAsia was offered airplanes for under 30 million dollars and these are 60 million dollar airplanes on catalogue price so that’s a big discount.”

However, Baseler said Boeing was prepared to meet the price challenge.

“We will continue to bring the cost down so we can continue to be competitive and not let the market share slide,” he said.

Baseler said that, despite the AirAsia deal, 88 percent of the 1,100 airplanes being run by low-cost carriers globally were 737s.

“The 737 is still dominant for big low-cost carriers,” he said.

Suppose Boeing and Airbus are both having to sell very cheap aircraft to attract buyers so shouldn’t really surprise us.