|
The Leadership Battle
The first partially completed Airbus A380 emerged from a hangar in Toulouse recently as Airbus and Boeing prepared to continue their global battle for leadership in civil aviation and the prestige that goes with it.
Airbus is maintaining its lead in deliveries it established in the first half of this year after snatching the No. 1 honors from Boeing in 2003 for the first time. But the next few years will be telling as the new A380 mega-transport enters service and takes on Boeing's long-time cash cow, the venerable 747, which produces high profit margins in the commercial airplane realm. If Airbus is right that the market for the first jetliner in history with two decks running from nose to tail is as big as it thinks, the future will be bright for Toulouse.
Boeing doesn't think the market is as big in that category and has stated this publicly on many occasions. It is placing its bets on the emergence of point-to-point, long-distance flying that avoids the congestion of major hubs and relies on smaller aircraft than a super-jumbo. Thus the Boeing 7E7 Dreamliner is Boeing's answer to Airbus in a completely different size category.
The 7E7 is being designed for efficiency in the information age, relying on lightweight composites, significantly more fuel-efficient engines and extensive infotech automation to cut costs in an airline era in which even low-cost carriers are struggling to make robust profits. Notably, Southwest Airlines CEO James F. Parker departed abruptly on July 15 as the company reported missing quarterly earnings targets by just two cents per share (14 cents instead of the 16 cents expected by Wall Street). It is not clear what role if any the just slightly disappointing results played in Parker's departure. But Southwest has been one of the few airlines producing even modest profits in the U.S. industry after Sept. 11, 2001, during a time when most of the majors have been bleeding red ink at an alarming rate.
But the political argument over subsidies is reemerging as a big issue with Boeing's CEO Harry C. Stonecipher raising the volume on his company's complaints about the financial help Airbus is receiving from European nations on projects like the A380. It will be interesting to see how the dispute plays out here at Farnborough. U.S. Secretary of Commerce Donald Evans told reporters in Washington, D.C., on July 15, after a speech at the U.S. Chamber of Commerce, that the Bush administration is examining the subsidy issue and how best to respond. At issue is whether the U.S. government will push to renegotiate a 1992 agreement that allows Airbus to receive up to 33% of the cost of developing a new airplane from European governments. Airbus has long countered that Boeing receives a huge benefit from all of the money the U.S. Defense Dept. spends in the U.S. on research and development.
As Stonecipher told an international newspaper recently, "Just stay tuned."
—David Hughes
back
to ShowNews home
|
