Boe­ing clings to lead over Air­bus in long-haul jets


Boe­ing is fight­ing tough ef­forts by ri­val Air­bus to score big gains in the mar­ket for long-haul jets, a seg­ment of the mas­sive air­craft mar­ket that the U.S. gi­ant has dom­i­nated.

Neck- and- neck with Boe­ing in sales of sin­gle-aisle, 150-200 pas­sen­ger jets, Air­bus has badly lagged its U.S. archri­val in wide­body air­craft with 250-450 seats.

But Air­bus has high hopes for its new A350, which it says is “set­ting a new stan­dard of ef­fi­ciency in its class” with a light­weight, car­bon fiber com­po­si­tion that can save up to 25 per­cent in fuel con­sump­tion.

Air­bus be­lieves the A350 can com­pete with Boe­ing’s clas­sic 777 air­craft as well as the its heav­i­lytouted 787 Dream­liner, which also boasts car­bon fiber con­struc­tion to cut weight.

But Boe­ing ex­ec­u­tives say they are con­fi­dent the U.S. com­pany’s lead will stick.

Air­bus “still don’t have the mar­ket cov­er­age we do, es­pe­cially on the up­per end of the mar­ket,” said Boe­ing mar­ket­ing vice pres­i­dent Randy Tin­seth.

“You see it with the or­ders. You see it with the mar­ket share. They are just not do­ing that well.”

Tin­seth said Air­bus would need to de­velop a new ver­sion of its A350 with 450 seats to com­pete with the Boe­ing 777-9X.

But some an­a­lysts see a more com­pet­i­tive land­scape than Boe­ing is let­ting on.

“If you ex­clude the 777-9X, the other mod­els can run the same routes with the same ca­pac­ity and a sim­i­lar level of per­for­mance,” said Michel Mer­luzeau, an an­a­lyst at Frost & Sul­li­van.

Air­bus has “got a foot in the mar­ket of the 787 and a foot in the mar­ket of the 777,” Mer­luzeau added.

Jumbo Jet De­mand Ris­ing

The ap­peal of long-haul air­craft is the same for both of the worldlead­ing air­craft mak­ers: greater prof­its.

Whereas Boe­ing’s smaller 737 line sells for US$78-113 mil­lion, the 787 is listed at US$218-297 mil­lion and the 777 at US$269-388 mil­lion.

A new round of jumbo plane or­ders is ex­pected from car­ri­ers seek­ing to cut their fuel costs. De­mand for the big­ger planes will reach 7,800 units worth about US$1 tril­lion in the com­ing 20 years, ac­cord­ing to Air­bus.

Boe­ing cur­rently leads with about 55 per­cent of the mar­ket. It has logged 1,105 or­ders for the 787 against 780 for the Air­bus 350, ac­cord­ing to the most re­cent fig­ures.

But Air­bus has had some ma­jor wins of late. In Novem­ber, U.S. car­rier Delta Air Lines an­nounced a firm or­der for 25 new A350 wide­bod­ies.

“You can’t de­bate the fact that it is a mas­sive en­dorse­ment of your prod­uct line,” said Air­bus chief op­er­at­ing of­fi­cer for cus­tomers, John Leahy.

Air­bus Chief Ex­ec­u­tive Fabrice Bregier has set a goal of win­ning more than half the global mar­ket.

To win mar­ket share, it is of­fer­ing ag­gres­sive com­mer­cial terms to car­ri­ers, as sug­gested by Air­bus ac­counts: in 2014, Boe­ing had a profit mar­gin of 10.7 per­cent per or­der com­pared with 6 per­cent at Air­bus.

Boe­ing re­mains a step ahead in the race for de­liv­er­ing large planes, pro­duc­ing 10 787s per month since the mid­dle of 2014 with plans to reach 12 per month in 2016.

Air­bus plans to pro­duce 15 of the A350 in 2015 with out­put reach­ing 10 per month in 2018.

“Boe­ing should be able to main­tain its mar­ket share through the end of this decade,” said an an­a­lyst note from Tre­fis.

Re­cent suc­cess­ful launches by Boe­ing in the 777 and 787 lines should al­low it to “main­tain its lead over Air­bus in the wide-body air­plane seg­ment,” Tre­fis added.

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