Boeing plays catch-up with Airbus as aircraft ordering season takes off
Tim Hepher A SEASONAL battle for orders is under way in the global jet industry, which was set to gather in Beijing yesterday for the first of two crucial events in two months, pitting the largest aircraft makers against each other in a race for deals worth $50 billion (R417bn) at catalogue prices.
The potential deals span all continents and every pattern of powered flight from the largest airliners to war planes and luxury business jets, shielding aerospace workers from the worst effects of a slowdown spreading from Europe’s debt crisis.
But analysts say Airbus and Boeing are having to offer hefty discounts to ride out economic uncertainty, especially for older models or early batches of new ones like the 787 Dreamliner.
Boeing is expected to win the fiercely contested annual order race for the first time since 2006 as it catches up with a decision by Airbus to revamp medium-haul jets, resulting in big fuel savings for airlines on the Airbus A320 and Boeing 737.
The dominant civil aircraft makers are also positioning themselves early ahead of next month’s Farnborough air show, with deals worth $14 billion announced in the past few days.
Both companies have accused each other of waging a price war to win hundreds of orders for the revamped A320neo and 737 MAX. Several industry analysts say pricing is under pressure. “Both sides are heavily discounting,” said Richard Aboulafia, an aerospace analyst at Teal Group.
Although the revamped medium-haul jets offer airlines a reduction of 15 percent in fuel, most carriers remain under financial pressure.
Airlines meeting in Beijing are expected to hear that their industry body, the International Air Transport Association (Iata), has left its forecast for 2012 sector profit unchanged at $3 billion, but unease is growing as Europe discusses a new bailout and China’s economy slows.
Major characters in the aerospace industry are in the Chinese capital negotiating on the sidelines of Iata’s Beijing summit, which comes weeks before the Farnborough air show in Britain.
Boeing was relegated to the background during most of last year’s equivalent event as Airbus broke records with sales of the A320neo. This year will be different. Boeing is preparing to hit back with a spree that could soon include an order from United Continental for 100 narrowbody jets plus some 70 options, according to industry sources.
If all goes as some in the industry expect, Boeing could double the number of orders for its revamped 737 MAX to as high as 1 000 by the end of Farnborough.
The industry’s arch-rivals are also facing off indirectly in the global arms market with a competition to supply dozens of fighters to South Korea. – Reuters