F4N
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Airbus To Lead Civil Aviation By Mid-decade...

Sun Aug 18, 2002 10:37 pm

To all:

I've recently seen an interesting interview of John Leahy by the Seattle P-I as
well as a brief article in Yahoo News about the CEO of EADS in which both reiterated their belief that Airbus will be the leader in civil aviation by the middle of this decade based on the launch of A380, current market trends, problems at Boeing, blahblahblah,ect. While this is, of course, the sort of thing you expect to hear from CEO's about their businesses, the more I thought about it, the more I am inclined to agree. Here's why:

Current market parity: John Leahy stated in the P-I interview that his goal when he assumed his current position with Airbus was market parity with Boeing. By and large, he has achieved this. Order totals for the last 5 - 10 years roughly indicate this. More importantly though, Airbus has achieved more orders in 2 of the last three years and could well do so this year. The overall trending of these numbers has got to be disturbing for Boeing, regardless of how much word-smithing they do with "orders vs deliveries" crap.

Product line: With the possible exception of the 777 and maybe the 757, there is no arguement that the Airbus offerings are newer and more flexible than the Boeing counterparts. This is probably no more evident than in the 250-300 seat segment, where the A330 simply rules the roost. I suspect the A380 will do so in the 500+ seat segment in the very near future. If Airbus proliferates variants of these already successful themes(which I expect that they will), Boeing will come under considerably more pressure w/o any real means of addressing the competitive balance for ~ 10 years.

Management: However much you like or dislike Leahy and Forgeard, they have done their jobs; Airbus is here and now. Admittedly, they have it easier to some extent since Airbus makes a/c and nothing else, but they seem to have kept their company moving forward in accordance with a plan. Yeah, they've had a couple of flops, but they seem to have established a reputation for Airbus of quality, technical innovation, flexible pricing and service, all hallmarks of a market leader. To my way of thinking, market leaders do that, not just sell the most. This is probably(in my mind), the biggest difference between Boeing and Airbus management. Boeing has been fixated for some time now on 2 things: market leadership in terms of numbers and stock price.
The former lead to the rapid run-up in production in the early 90's without a comensurate investment in facilities. This lead to a rapid increase in labor costs and a series of disasterous PR issues involving quality(remember United's full-page article in the WSJ about the 777?). It also lead to a complacent attitude regarding product development that resulted in some spectacular losses of customers like BA, UA, and AC(does this sound familiar, Qantas, KLM?). The Condit years have witnessed the endless fixation on "shareholder value", which have essentially abdicated market share to Airbus as Boeing decided they wouldn't engage in money-losing deals. This however, leads one to wonder how those deals differed from Ryanair or the upcoming Easyjet order? They certainly seem willing to go "balls-out" there.
The 717 debacle is another Condit legacy. While I realize that it may have been the quid pro quo for the MD merger, the wholehearted lack of enthusiasm for the 717 has has led to keeping an entire facility on life-support without any real prospect of making money. I don't think that you have to be a business guru to realize that a stand-alone product in the a/c business will not prosper. Most commercial a/c products have variants for a reason. The notion that the 717 could obtain significant market share w/o development is simply ludicrous. If they don't want 717, the FD bankruptcy offered the potential for revitalizing the smaller segment of Boeing's product line but that opportunity was relinquished.

I don't see many near term positives for Boeing. They have effectively abdicated the entire VL market to A380 without any prospect of response and the endless vacillation over SC or a newer conventional jet means that Boeing's aging product line will have to continue on in a market where successes for 757/767/747 have been fewer and fewer. This hardly bodes well for the near-medium term future. While business is always a cycular affair where one gains ascendancy over the market for awhile at the expense of another, I think Boeing let things get to far away from them for too long
and I suspect Airbus will make them pay for that in the years ahead.

Just some thoughts...

regards,

F4N
 
backfire
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Sun Aug 18, 2002 10:45 pm

To be fair, John Leahy isn't the kind of guy who'll turn round and say that Airbus is going to sit comfortably in second-place behind Boeing. Leahy is the chief Airbus salesman -- hardly going to play the company down, is he?

Which CEO of EADS, anyway?
 
F4N
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 12:15 am

Backfire:

As I mentioned in my thread, Leahy was saying exactly what a top executive would say about his business; escpecially the top salesman.

Phillipe Camus, actually the co-CEO I believe.

F4N
 
Udo
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 12:39 am

I'm already looking forward to all the nasty comments...


Regards
Udo
Me & You & a Plane Named Blue...
 
F4N
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 1:08 am

Udo:

I guess I should have prefaced this post with the usual "this isn't meant to be an "A vs B" topic, but essentially that's what most will make of it. "A" has been doing alot of the things that "B" has been putting off, and it is starting to show. Obviously, "B" isn't going to go under; it's simply too good a company to do that. However, it has a lot of work to do; they are on the down side of the product cycle while "A" is on the up side. Unfortunately, product development is a long-term issue in the aviation business. To me, "B" will have to be very innovative and introduce some extreme pricing policies to keep in the game till they have some new jets to offer. The comments that Leahy and Camus made indicate to me that they are aware of that too(it also seems to me that goading Boeing is something of a hobby for these guys too).

regards,

F4N
 
Udo
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 2:12 am

Airbus certainly has some advantages at the moment. Some Boeing products (B757/B767) are slowly approaching the end of their life, indeed.
We have to wait if Boeing can really achieve its goals with the Sonic Cruiser. If they really can match their promises (what I doubt I must commit), well then Airbus will have to deal with a kind of a problem.



Regards
Udo
Me & You & a Plane Named Blue...
 
wingman
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 2:47 am

I have to agree with Leahy and Camus in many ways. They've done a great job and a lot of hard work has gone into achieving parity with Boeing. On the other hand, it is only natural in a competitive situation for a legitimate and proven supplier to achieve maarket parity with a long-time industry leader. This is especially true given the political sensitivity of the aerospace industry. In other words, monopolies are doomed to failure all things being relatively equal, it's an unsustainable position.

The other point I would make is that Leahy and EADS in general should be extremely careful in putting down Boeing leadership. EADS management do not have a clue what it must be like to manage the downsizing of such a massive operation. Growing a company like Airbus is a lot of headaches but thrilling. Downsizing on the other hand is just pure pain and heartache. Boeing hasn't done such a bad job given the complexity of the task. And I can guarantee that Leahy and Camus will regret the day they have their "Airbus is N.1" party in Toulouse because when US legislators see this mocking celebration they will hand Boeing the same 30 year deal Airbus got from the EU, billions in free "loans" and posssibly even partial nationalization to excuse all forms of taxation. This is not meant to start an A vs B, I'm just stating the plain fact that Airbus hasn't truly been tested yet. The 380 will be the first project they ever have to repay in full and on time. While they do that, Boeing gets to play one or two hands free and clear. Airbus simply will not have the cash to respond with an all new design after the 380 for another 7-10 years (unless of course they just admit that the 380 loans are pure bs).
 
MEA-707
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 2:52 am

Although I like both aircraft manufacturers, I have to put in some more credit to Boeing now and discuss the weak spots of the Airbus line
The 737ng line is just as successful and modern as the A-320 line. In a few years time, Boeing has amassed more than 2000 orders for it. OK, they lost some big customers of the earlier 737s to Airbus, like United, US Airways, Lufthansa and BA, but on the other hand they won orders of airlines who never were major 737 operators yet, like SAS and American.
The 777 will remain a strong seller for some years to come and has an enthousiast and faithful growing operator base.
Of the airbus production line; the A-330-200 is absolutely a hit, but the other aircraft are not exactly the successes Airbus would have liked. The A-340-300 is a bit slow, some airlines like Air France and Singapore actually have 777s take over part of its role, and factory new aircraft have now competition from 2nd hand aircraft disposed off by for instance Singapore Airlines. The new 500 and 600 series sell disastrously, the cancelled Swissair aircraft have only been reallocated due to great discounts, but it's unlikely both aircraft will ever sell in three digits.
The launch of the A-380 is of course impressive, but keep in mind Airbus offered bargain prices (hardly higher than a 747 I think) to gain some early orders, but it will be unlikely that there will be produced more than 250, of which only the later ones should cover the development costs.
Boeing might have been a tad conservative, but both manufacturers have two strong selling types (Airbus: A-320 family except A-318, A-332) Boeing (737ng family (except 736,739) and 777) and twice as many types and variants which sell sluggishly.
nobody has ever died from hard work, but why take the risk?
 
Scorpio
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 4:28 am

MEA-707,

The new 500 and 600 series sell disastrously

Uhm... Look at its competition (777-200LR/300ER). That's not exactly selling any better, is it?

 
Guest

RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 4:51 am

I fondly remember the times when 80% of all aircraft in the skies were Boeing aircraft. I also remember the days when you could guarantee that tons of giant 747's would be present at a major international airport. Nowadays, Boeing is coming up short and Airbus is running on all cylinders. However, as much as I like the Boeing 747 and 777, I agree with F4N, Airbus is doing well and Boeing is not.  Sad
 
ktliem@YVR
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 11:40 am

F4N
I have read your comments with great interest. Over the last few years I have wondered what exactly Boeing strategy is. I think Boeing is currently in a transition period, but unfortunately without much strategic vision as far as their civil program is concerned. If there is a strategy it is that it's all Airbus fault!

I think the Sonic Cruiser as a medium-term new line of aircraft is looking increasingly doubtful by the day. What else is there for the future? It takes a while to develop an aircraft & Boeing still has not announced any new program.

Boeing has currently no cash cows as the 747 is not selling well. I do not think the 737 can be considered Boeing new cash cow as it is selling with huge discounts. I don't know if the 777 is past break even, but it is the only bright light at Boeing.

Boeing missed the boat on the common cockpit pioneered by Airbus. It made mistakes when it change the 767 cockpit into a 777 type of cockpit in the 400 series. They made the 400 into a niche airplane instead of a replacement for the 300.

I think they are also behind with the implementation of more efficient production techniques. Making matters worst, they also have major labor woes that will impact hard on the whole company. In the last couple of days I read somewhere that Boeing may shut down their commercial division in case of a machinist strike.

I think in hindsight the takeover (not merger!) of McDonnell Douglas was not a good move. They may have more military business now, but I think they forgot civil airliners was & is still Boeing forte.

Instead of moving their headquarters to Chicago they should have spend the money on figuring out how to take their civil division in to the 21st century.

I hope they get their act together sooner than later. It's really a shame.
 
Hamlet69
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 1:44 pm

F4N,

I'd like to congratulate you on some very good analysis that tried to be fair and objective. Even if one doesn't agree with your conclusions, there is no doubt you put some thought into your post. Thank you for that!

Now, if you'll allow, I'd like to inject some of my own thoughts on the matter.

Market parity: Today, Airbus and Boeing are virtually splitting the large commercial airliner market. As Airbus' stated goal for most of the 1990's has been 50% of the market. While one may argue against their methods for obtaining this, one can not deny their success. F4N mentioned the fact that the last 3 years, Airbus has beaten Boeing on total orders. This is quite true. However, I'd also like to point out an interesting side note to the past 3 years of aircraft orders:

Every year has seen the launch of a new airplane program. In 1999, Airbus launched the A318 with 120 orders, besting the total order count 476 v. 385. In 2000, the 777LR program was launched (49 orders on the year), and Boeing regained the lead 611 v. 520. Then last year, the giant A380 was given the go ahead (85 orders), and Airbus again came out on top 375 v. 335. Program launches typically involve discounts that wouldn't otherwise be so large, and usually involve a rush of new orders followed by a slow trickle. One need look no further than the three programs just mentioned. Not only has the A318 failed to secure an order in the last year and a half, it has seen nearly half its orders cancelled or converted into other models. The 777LR has not sold a single frame since 2000. And the A380 only firm order a year after its launch is merely the confirmation of a previous launch commitment by FedEx.

Product line: Here is where I must disagree with your conclusions. Clearly the 757 and 767 need either updating or replacing. While the 767-400ER is actually a very modern aircraft, it suffers from the same shortcomings in battling with its competitor (the A330-200) that the A340-300 does with the much more successful 777-200ER. Boeing missed an opportunity by not completely updating the entire 767 line with -400ER advances IMHO.

Apart from that line, however, Boeing's product offerings are very competitive. The 737NG has proven it can either match or beat the A32X in performance and effeciency standards, while keeping its reknowned maintenance costs at astonishingly low levels. While it does and will lose customers for its lack of containerized cargo ability, there are just as many or more customers that either don't care, or consider that an unneeded and costly weight and complexity. And while PR from both Airbus and A320-dedicated airlines will publically extoll the virtues of the 6" of extra width - aircraft orders come down to the bean counters - which means price and performance. I believe the 777 has proven itself to be a superior product to the A340, which suffers from either lack of payload/performance (-300) or excessive weight (-500/-600). Where Airbus gains points is the newer A330-300s, which offer better economics over the heavier (and thus more costly) 777-200s for regional operations.

Management: Here I must agree with you wholeheartedly. Although I often find members of Airbus' senior mangement, especially Leahy, pompous and arrogant, that is exactly what they need to be.


One final note I'd like to make: Boeing and Airbus have very obvious philosophical differences. While most of these are apparent to the casual observer, there is one in particular I'd like to point out since the issue of product development has been raised several times. It has been my experience that Boeing keeps their developmental studies fairly close to the chest. For instance, most of the development for the 777 was done behind closed doors until its launch in 1990. I've been able to track down one internal article relating to the formation of the "767-X" program, but that's about it. In contrast, we heard about the A3XX nearly 10 years before its official launch. I imagine this relates back to Leahy & Co.'s efforts to promote Airbus' future intentions and development. My point is this: if Boeing decides on a course of action concerning its future product (now appears to be either S.C. or new 250-convential jet), know that its development is already in full swing and EIS is sooner than one would imagine.

Regards,

Hamlet69
Honor the warriors, not the war.
 
OO-AOG
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 8:01 pm

This competition between A and B has one important effect: both are building excellent planes and will keep to improve them. This is all benefit for operators, flying efficient and (often) discounted planes, and for passengers, with comfort and reliabilty improved. Competition is mandatory for quality.
Falcon....like a limo but with wings
 
Joni
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Mon Aug 19, 2002 11:40 pm


Hamlet69,

I agree that Boeing seems to have a shorter time from launch to EIS, which would give them an advantage since it gives the competition less time to respond. Having said that, both companies probably know a lot about each other that they haven't yet disclosed in press releases.

 
wingman
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Tue Aug 20, 2002 1:01 am

It is interesting to see that the only products either company sells with any real success are their narrow and widebody twins. Aside from that there really isn't much going on. It's very easy to put Boeing down in terms of new products and manufacturing efficiency, but I stand by my points that Airbus has a clear advantage being the new kid on the block. It was able to take easy advantage of new techniology without having to pay the true cost. All of the product launches Boeing has done, 737NG, 777, 764 etc, have been paid in full 100% by Boeing itself. That's something Airbus has happily been able to avoid these past 30 years. That leaves it in the enviable position of selecting the most expensive and highly engineered options out there without regard for a screaming and kicking shareholder. The 380 is their first strong dose of reality and the first 100 frames are going out the door at the price of 767s. And with the recent stings the US has taken in the WTO, they will be watching for the first missed payment like hawks. No more freebies like the 330/340 will be possible.

One final point I'll make is that I disagree with some that that Boeing's MD purchase was a bad move. Just last Friday, the Pentagon announced a $9.7B follow on order for 60 C-17s. In addition, there is the order for 300+ NG F-18s, but the real key with this purchase was a long-held goal of creating more civilian/military balance in its business.
 
F4N
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Tue Aug 20, 2002 7:19 am

Hamlet69:

I have read your comments with great interest; as always they are very well thought-out and articulated. Some thoughts and follow-up:

Market parity: the idea that the large civil airframe market is split evenly is something of a moot point; how Airbus achieved that is far more interesting.
I deliberately avoided any discussion of their tactics and methods since that would inevitably open the Pandora's Box of "A" vs "B" or "US vs them" which is so near and dear to the hearts of the various factions here. To be honest, I'm surprised we've gotten this far without someone raising their flag.

I have noted your comments on the effect that new product launches have on the overall order picture in a given year, especially with regard to the last three years order totals. Some time ago, I did a very simple statistical analysis of the order totals from the last 12 years to try ands determine what, if any, trends could be determined from the order totals overall. The overall trend was essentially positive for Airbus(not surprising) while it was , at best, neutral or slightly negative for Boeing. If I remove those years where a new product launch was involved(considering those data points to be "outliers" or, invalid data points where some extraneous circumstance was involved), the overall trends change, but not significantly. The overall trend is of Airbus generally gaining momentum and presence while Boeing stays essentially in a negative mode. I believe that our friend Wingman correctly pointed out that it is part of every intense business relationship that a successful competitor will usually gain market share against an established leader; that is what Airbus seems to have achieved. What puzzles me is Boeing's pedestrian reaction to this. The 764 is a perfect example. Instead of making this a true replacement for the 763, they were content to offer a niche airframe which has found no favor with the international market. To me, Boeing seems to have accepted market share of 50% as an Airbus fait accompli and will move on from there. That, more than anything, is the most disturbing trend.

Product line: You are correct regarding the 777 as the superior a/c in that segment and that the 737NG has sold well. In most respects, the 737 is as good as the A320. That aside, what is there? The 747 appears to be a declining asset no matter how many suffixes Boeing applies to it. Yes, I agree it may sell more frames in the immediate years ahead, but I think that the competition between A380 and 747X was most telling in that no matter how attractive a deal Boeing offered, there were no takers. Once Airbus develops a 450 seat A380(which they have already said they will do), what does Boeing offer?

regards,

F4N
 
AvObserver
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Tue Aug 20, 2002 9:31 am

This analysis is correct and inevitable because Airbus has effectively deeper pockets than Boeing due to its' loan arrangement with the partners' respective governments. Airbus can consistently undercut Boeing where deals come down to pricing (when both companies' aircraft meet airline requirements. Since Boeing doesn't get loans from the U.S. government, it doesn't have the financial flexibility Airbus has in putting together attractive deals for airlines who'll go for the best deal when each makers products are equal in most other respects. As F4N related, the 747X was not only outclassed by the A380 but Airbus was able to price it below even a 747-400 for the launch customers due to its' greater financial leverage no doubt largely facilitated by its' government backing. Had the pricing been realistic, the 747X would've sold for about $28 million less than than the A380 and then Boeing would've had a share of the superjumbo market, perhaps 30 to 35% according to an analyst I heard quoted in Aviation Week. Most of these would probably would've been freighters where the 747X wasn't as badly outclassed. Nobody, however, would go for the older-tech 747X when they could get the new-tech, higher capacity A380 for less money. This is largely why Boeing will continue to lose market share even when its' planes are equally suitable to an airline's needs. It has stated it will no longer cut unprofitable deals to maintain market share. In effect, it's gradually handing the market to Airbus. There are other factors too, such as lack of cockpit commonality across its' product range but pricing is a big sticking point and Boeing just can't match Airbus. Unless the U.S. government cuts Boeing a loan arrangement to match what Airbus gets, this scenario is irreversible. Boeing doesn't use revenue from its' military contracts to support its' commercial transport division, that division must stand on its' own and increasingly, it's losing the battle with Airbus.
 
Hamlet69
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Tue Aug 20, 2002 2:51 pm

Joni,

Undoubtedly, you are right. However, I believe there is a limit to how much either competitor knows about the other. While it is guaranteed that they both know what projects the other is working on, the depth and focus of that research is what either tries to keep well hidden, in order to force the other company to play "catch-up" for as long as possible.


F4N,

First, thank you very much for the compliment. I appreciate your sentiments greatly.

When discussing the Market Parity topic, I intentionally left out either companies methods for the exact same reasons you did. Although I believe that any attempt at having a discussion like the current one will naturally lead itself to at least a brief but detailed overview of either company's philosophies, I'd like to delay the inevitable for as long as possible, so as to avoid the ignorant flame-wars so prevelant on this forum these days.

I'd be interested in more specifics on how you compared the last decade's worth of orders, but let's save that for another discussion. I am not surprised at your findings, as they seem to provide more evidence for trends in today's market. There is one other detail to point out in Airbus' rise and Boeing's negative trends - the demise of McDonnell Douglas. Put simply, there was no possible way for Boeing to maintain 75+% of the market. It would have been much too large a stress on the company's and its suppliers' resources. This is not meant to detract from Airbus' success, only to provide another topic of debate - Boeing could not have maintained both its' own market presence and McDD's.

Concerning the 767-400ER, I believe Boeing found itself was stuck between a rock and a hard place. Change the aircraft too much, and you alienate those 767 operators that would be looking for a simple step up from their current fleet. Don't change it enough, and you find yourself needed to update it as soon as it enters service. What is left is an unnatural (and mostly unpopular) compromise.

I intentionally left out discussing the A380 as my last message was running rather long, and I knew there was much more to say. So, let's have it out:

I remain neither for nor against the A380. While I can see the potential it could bring to some airlines, I remain doubtful of 2 things - A) that it will offer the kind of efficiency and passenger appeal Airbus is promising, B) that the need for an aircraft that size is apparent. I'll discuss the latter first - There was a recent article printed by and aviation analysist (sorry, I forgot his name) that was discussing the future once the industry is finally able to right itself. In it, his major point was that the devastation happening to airlines the world over is finally the catalyst the industry has needed to make the kind of changes necessary in order to ensure the future growth of the industry. Of course, this is just one analyst - but his interpretation of the airline industry closely resembled Boeing's - more point-to-point, less hub traffic. While there will always be a need for hub-to-hub super-airliners, just how big a need remains to be seen.

This leads to my former point mentioned. Originally, Airbus intended the A380 to benefit from operating costs 15-20% lower than the 747-400. However, if you looked inside the numbers, one would see that a full 12% of that came from the mere payload increase. Today, I've heard that the A380 will only be @ 14% more efficient as it has gained weight in the design. In other words, that leaves a legitimate 2-6% (did anyone seriously think it would reach 20%) benefit from being an "all-new" design. Think about that.

IMO, you'll never see a 450-seat A380. I say this because for the first time in its history, Airbus is employing the rather "Boeing" approach to designing the aircraft - it is being built for growth. Airbus has always envisioned a larger A380, and the base model is being built with that in mind. It is therefore going to be beefier and thus heavier than it might otherwise be. While this is good news for the economics of an A380-900X, it sounds the death-knell of a shrink version. Airbus would run into the same terrible economics of scale that plagues the 737-600 and the A318, and killed the A330-500X and the 777-100X. In other words, the 450-seat A380-700X would have no better econmics than the current 747-400, let alone a possible -400XQLR or other possible updates.

So, if I may respond to this last quote:

"You are correct regarding the 777 as the superior a/c in that segment and that the 737NG has sold well. In most respects, the 737 is as good as the A320. That aside, what is there?"

One could turn the question around - Airbus is getting strong sales from the A32X line and the A330. But as the A300/310 end their production life, the A340-300 remains dominated by the 777-200ER, and the A340NG & A380 face uncertain futures, what else is there?

Please note I'm not trying to be either pro-Boeing nor anti-Airbus (although my appreciation for the 777 sometimes shadows my writing) but merely trying to "flip the coin."

Regards,

Hamlet69
Honor the warriors, not the war.
 
SailorOrion
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Tue Aug 20, 2002 3:48 pm

Discounts:
The main reason why airbus offers (or: can offer) better deals is not some loan arrangement, it is the strong dollar. The cheaper the Euro is compared to the dollar, the cheaper Airbus can manufacture, and the more discount they can offer without even touching the profits.

737NG: It is really a very good aircraft and it sells well, but the containerized cargo capability of the A320 is quite an important factor. Cargo is the fastest growing sector in aviation and belly freight will always play the most important role there. Boeing should have a look that their new aircraft get decent cargo capablity. I dont think the roomier cabin is an important factor. I have flown both types a lot, since LH is my main airline and they operate them side-by-side (LH's policy of not relying on one supplier), and I feel little difference.

A380-700: While I think that Airbus will offer this model, I have doubts that there will be many orders, it would not be a good aircraft since it is way too short and way too heavy (the A380-800 is already extremly heavy I am told (source: A380 chief engineer)) Let's face it: between the A340-600 and the A380-700 there is still a large gap, and that is where a B747NG (slightly streched, overhead crew rest, increased cargo) would fit perfectly.

Hamlet69:
I do certainly agree that most of the A380's "superior economics" are due to the increased payload (size effect) and that the real "all-new" technology does a very minor effect. In fact, what new technology does Airbus offer on the A380? GLARE as structural material) No. Carbon-fibre outer wing box? No. Ultra high bypass engines? No. Power-by-wire? No. Hybrid laminar flow? No. There is not technological advance in the A380. Even the A380-800 is a very short aircraft compared to its fuselage diameter. She will not be a real money saver until the stretched version -900 comes out. (Be there demand of 650 seat airliners or not I do not want to guess).

Just some thoughts,

SailorOrion
 
Hamlet69
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 3:18 am

SailorOrion,

As I mentioned before, there are always going to be campaigns out there that the 737 will lose because of its lack of containerized cargo holds. However, I believe you'll find there are more that that issue is not nearly as big as it is portrayed. Indeed, if the growing trends continue, and low-fare carriers gain more and more market share away from the "full-service" lines, then I believe the issue will become somewhat moot. One reason for the 737's continued success in the low-fare market is its simplicity - and capabilities to take on containers only adds complexion to the aircraft's design and systems. It also increases the possibilities, however remote, of further maintenance delays and/or slower turn around times.

My own thoughts, of course.

Hamlet69
Honor the warriors, not the war.
 
SailorOrion
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 6:08 am

Hamlet69:
Ok, I surely admit that for many many airlines the cargo is a non-issue, especially the low cost carriers; but there are several big airlines for whom it matters. The A320 is a more modern airliner than the 737, which makes it more difficult and expensive to maintain, but the pros and cons can only be compared for a single airline, or maybe for a single route only. There must be a reason why several (successful) airlines operated both types and see no reason to change that.

SailorOrion
 
N79969
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 6:29 am

This has been a very good thread. I think the writing is now clearly on the wall: Boeing is in real danger of being eclipsed by Airbus. In earlier posts in many threads, I have made similar points to those of Wingman above. Basically, Airbus's behavior for most of its existence has been the product of moral hazard. It faced little or no downside risk from its projects. However, complaining about Airbus will not help Boeing solve its problems. Boeing must deal with Airbus as it exists. It seems that Airbus is scooping up most of the fleet renewal/replacement orders and Boeing is getting most of the scraps as of late. The trend lines are clear.

As far as the competition goes, I think Boeing and Airbus objectively speaking are about even. The 777 beats the 330/340 and 332 beats the 764. This has been stated. I think Boeing is going to wait until the 380 gets airborne before responding to it. The 380 will almost inevitably have some issues given the engineering challenge that it will be. I think Boeing will use the 380's shortcomings as a basis for updating the 747 and chop the price on 747 to undermine the 380's economics.

Keep the posts coming, this thread has been cool.
 
ScottB
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 6:42 am

I'm not sure I understand why people feel it is necessary for Boeing to "compete" with Airbus for orders. Certainly, it's important for both companies to offer desirable products to their airline customers at competitive prices, but I must agree with Boeing management that it makes little sense to pursue unprofitable orders (unless there's a future upside, such as significant additional orders). I mean, it's great to be able to sell another 100 airliners, but if you lose $5 million on each one, that doesn't look so great in the profit-and-loss statement.

F4N-

At one point, you state that Boeing abdicated market share to Airbus by refusing to engage in money-losing deals, yet just a few sentences earlier, you state that Boeing was fixated on market leadership in numbers. So, which one is it?

As for the A330 "ruling the roost" -- it seems to mostly rule the market to leasing companies, with over 1/3 of its orders being placed by the large aircraft lessors. Granted, it has carved out a market for itself which Boeing still does not address fully.

As to why Boeing "abdicated" the VLA market to Airbus; it's based on market analysis. Boeing's projections indicated a market for roughly 500 airframes over the next 20 years. Airbus's projections were higher, and it's not meaningful to second-guess which company was right, since each made its decision based on its own projections. Airbus also projects its break-even point to be 250 airframes with government-subsidized financing, consequently, Boeing's break-even point would be higher. If Boeing's market projections were to be correct, and the two airlines were to split the VLA market evenly at 250 airframes apiece, there is no way Boeing could make a profit. It would be completely irresponsible to embark on a project which would be doomed to lose money AND cannibalize sales of another of the company's products. If the VLA market appears to be larger in 5-10 years, Boeing can enter the market with its own newly-developed product (and grab the mantle of "ours is bigger" from Airbus).

The 717 project is something Boeing never really wanted, but was somewhat forced to continue since it was nearly complete and had a decent number of orders from two customers which Boeing wanted to keep (TWA and AirTran). The major problem with the 717 is that it competes with the 737 product line; the 717-200 steals sales from the 737-600, while a hypothetical 717-300 cannibalizes 737-700 sales.

I don't see where Boeing has "let things get too far away." They have the newest products in the 100-200 seat narrowbody market (717, 737NG); they have the 200-250 seat market to themselves (757, 767); they dominate the 300-450 seat markets (777, 747).
 
wingman
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 8:29 am

This is an interesting debate. Things can only look bad for Boeing as marketshare equalizes while looking postively rosy for Airbus. Yet not all is bad news for many of the reasons pointed out above. Costs are down, operating margins are over 10% (this point in particular must worry Airbus because despite all of the arguments about their superior manufacturing process, they just barely matched this in 2001-source is Camus speaking at recent results briefing for H1 I believe) and they are moving 737s and 777s out the door. Add to that an upcoming order for 100 fresh 767 tankers, and it won't be a bad year. And again ,t the 3 year difference in order totals going back to 1999 is +45 for Airbus. They sell 320s and 332s, Boeing sells 737s and 777s. In all other categories each manufacturer is sucking wind. Just like Boeing can't seem to sell 767s or 747s lately, Airbus must be kicking itself in the teeth for ever embarking on the 340 gameplan. The MAJOR difference is that Airbus doesn't suffer the consequences of airframe flops...but it will with the 380. To me, real comparisons between these two companies only started last year when the EU agreed to absolutely transparent loans on the 380 with legally binding proof of repayment via independent auditors. Leahy can trash talk Boeing all he wants but I'd bet Camus and the accountants in Toulouse aren't quite so flippant. Now they're playing with real money.

I do agree that Boeing is struggling with its response to Airbus, either an unsexy new medium widebody or something riskier and bolder in the SC. I think 9/11 will see Boeing end up with the former 757/767 replacement at $5-6B and then a decision, depending on the success of the 380, whether to go with speed or brutish size (SC vs. BWB). I'm not sure when the next 737 upgrade will come but as long as they keep churning these little guys out there can't be much concern with the bottom of the line.
 
AvObserver
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 9:00 am

As SailorOrion noted, the strong dollar is a big advantage in Airbus pricing but I maintain that the 'loan' arrangement has greatly facilitated its' ability to discount. In this week's Aviation Week (Aug. 19 issue), there's a column on the liklihood of a strike by the Int'l. Assn. of Machinists and Aerospace Workers and one of the questions to chief negotiator Jerry Calhoun was why Airbus is winning more sales than Boeing. He states:"It really gets down to their ability to offer products at levels we believe are highly subsidized. At the end of the day, they can offer their products at highly discounted rates." He added it was unclear how Airbus could afford to do it, saying:"I can't make heads or tails of EADS' financials. It's a mystery until they have to play by the same financials and [account reporting] rules we do". He concluded by saying Boeing has considered filing a complaint with the World Trade Organization over Airbus "subsidies" but added "we haven't concluded what to do." This speaks volumes about what is going on and shows the U.S. must get tough with the E.U. and demand accountability from Airbus and EADS on exactly how their programs are funded.
 
F4N
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Wed Aug 21, 2002 9:23 am

Hamlet69:

It would seem that you managed to pre-empt what would have been the next part of my discussion about market parity, which was Airbus being the beneficiary of MD's demise. It would seem that a number of carriers which had been loyal proponents of the DAC/MDC line of jets began to take a long and hard look at Airbus as a viable alternative to Boeing. I suspect that with MD out of the picture, there had to be a serious concern over a market totally dominated by 1 frame-maker. To be sure, this is not intended to take away from what Airbus has done right, but only to confirm that we are apparently thinking along the same lines here.

It is still difficult to envisage the strategy behind A380. By their own admission, Airbus has confirmed that the A380 was intended to be stretched, not shrunk. I understand that shrinks do not have a long or prosperous history in this business. However, Airbus must certainly recognize the potential for putting the screws to Boeing in the 400-450 segment if the A380 can be reduced with even modest success. The current operators of A388 also operate the 747. If Airbus can market a common version of an A380 shrink, Boeing would potentially be hard-pressed IMO to offer a 747 variant with comparable economics unless they opt to overhaul the design and provide it with the newer, more modern features they have been reluctant to commit to so far. Of course, it is easy to speculate from here...Nonetheless, it would appear that this would be the only way for Airbus to go after the 744.

ScottB;

I find some of your comments puzzling. In general, airlines issue requests for proposals when it comes to buying new a/c. If you want the business, you make a proposal; so does the other guy. So begins the offer/counter-offer sequence which results in someone getting the business(I realize that this is a gross over-simplification). If you elect not to do this, how much business do you expect to get? Boeing has found out that even though a carrier might prefer the 777, they would opt for the A340 based on affordability.

The comments regarding market leadership and abdicating marketshare have to be taken in the historical context of the last 12 years. Boeing wants to have its' cake and eat it too. In essence, it sums up my belief that Boeing has not addressed its' rivals challenge with any sort of consistent or coherent policy. It seems at one point Boeing attempted to lump up Airbus through pricing and increased output, but failed because they did not address the economics of either through capital investment and cost-control. Some of Boeing's best order totals resulted in money-losing balance sheets. Those poor showings resulted in Condit's promotion to CEO and the implementation of "shareholder value" as a corporate religion. However, shareholder value requires that Boeing walk a very fine line about pricing, which in turn requires a serious review of how badly Boeing wants/needs the order and the customer. They cannot afford to go all out to get every order(like they are for Easyjet). Consequently(IMO), they will selectively opt to lose a customer if they have to. Effectively, this abdicates market share.
Good for stock price, but not market share. Yes, this is responsible policy, but it eventually means the other guys' going to meet you at the top, which is what I believe this thread is all about.

A330 seems to be beating up the 767 with everybody, not just the lessors. When was the last order for a 764 that you saw?

You seem to look at things differently than I do. The 717 is modern, but is struggling to find acceptance in a market segment where the 100 seat RJ's will come to dominate. After all, if a carrier flies 50/70 seat RJ's, the common features of a 100 seat RJ make more sense than a one dimensional 717.

Boeing has the 200-250 seat segment to themselves? Where are the orders?
And who is buying the 321's and all those 332's? The 777 dominates the 300-450 seat market. How many 744 passenger models have been bought in the last few years?

Just some thoughts...

F4N
 
ScottB
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 8:51 am

F4N-

I don't think I ever stated that Boeing was unwilling to make proposals to airlines (or leasing companies) in response to requests for quotes. When I said that it makes little sense to pursue unprofitable orders, the point was that Boeing shouldn't be making proposals in which they're selling for below cost. And I suspect that this has been played out in large part at the leasing companies, who are notorious for playing A and B against one another, to the point of holding meetings with both in different conference rooms on the same day (there was a Wall Street Journal article about ILFC's use of that tactic). I think Boeing *is* more willing to be aggressive about pricing to an airline, especially if they believe the order will lead to additional future orders or if they can bundle value-added services to make the financial picture look better down the line. For example, going all-out for Ryanair or EasyJet makes sense since it's likely that both carriers will be buying large quantities of airliners in the future. Selling at or below cost to the lessors, though, is pretty much money down the drain for them (since lessors don't have to worry about commonality in their fleets).

I fail to see your point about marketshare. Boeing's leading share of the market in the early-to-mid-1990's resulted in large part from minimal competition. The A300 and A310 were beginning to show their age and were unsuitable for longer transatlantic or transpacific routes. The A320-100 wasn't a market success. The A330 and A340 only entered service in 1993. McDonnell-Douglas wasn't willing/able to devote enough resources to its commercial airliner product line and was consequently continuing to develop derivatives of a 30-year-old design (the DC-9/MD-80/MD-90/MD-95 family) or a 20-year-old design (the DC-10/MD-11). They have more competition now, and it seems reasonable that their marketshare would decline when faced with more viable, competitively-priced alternatives. I think that production and labor disruptions were more likely the cause of Boeing's financial problems, rather than an attempt to grow market share unprofitably (though weakening MDD might have been part of the goal). And certainly, Airbus may well become the leader in marketshare down the road; if I were running the company, though, I'd prefer to be the leader in operating margins.

I don't think you can call either the 767 (5 orders in '02) or the A330 (7 orders in '02) real quick sellers at the present time.

Everyone keeps saying that "100-seat RJ's will dominate," but there's no evidence that this is the case yet. The CRJ-900 has 30 orders so far. The ERJ-190/195 have 30 orders so far. FaiDor is insolvent, and BAE has abandoned the Avro. Orders for the A318 and 737-600 have been disappointing. Fokker went out of business and well over half the fleet will have been grounded by two years from now. The only thing which *may* tip the balance towards the RJ's is the fact that some airlines may be able to operate them with lower-paid regional pilots, rather than highly-paid mainline pilots. Again, much of the problem in this segment is that demand at present is quite weak.

The A321 doesn't seat 200 for most airlines. The A332 really sits in the 250-300 seat segment. And actually, over 50 passenger 747-400's have been ordered in the past 5 years.
 
AvObserver
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 10:17 am

F4N, thanks for starting this thread; the analysis of yourself and others was very thorough and I believe accurate. I've seen this trend for a number of years but seemingly nobody has really talked about it until now. I believe it bodes ill for the future of the U.S. commercial aviation industry. I'm sure many will scoff at my assertion that Airbus can eventually put Boeing out of this business, though not out of business altogether, but consider that Airbus went from nothing to market parity with Boeing in just 30 short years. In another 30 it might well displace Boeing from civil jetliner production at the rate it's going. As long as it can consistently undercut Boeing pricing as well as offering equally good or sometimes better products and outstanding customer service as it's been doing, I see it as having a good shot at becoming an eventual monopoly unless something at Boeing drastically changes or the U.S. has a showdown with the E.U. about Airbus loans. In any case, the best scenario is continued market parity between the 2 giants; we'd never want either to become a monopoly because airlines and travelers would both suffer from the higher jetliner prices that sole maker would demand.
 
F4N
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 11:04 am

AvObserver:

While the current trends seem somewhat negative for Boeing, I believe that they are probably more cognizant now than ever before of the threat Airbus
poses to their leadership in civil aviation. If the information coming from various sources is true, Boeing will field either the dramatic Sonic Cruiser(unlikely) or the more pragmatic(and probable)250 seat "conventional" jet later in the decade. Newer technologies developed by the international team Boeing has put together for the SC will undoubtedly result in a vastly improved a/c over the 757/767 of today. If they take the family approach, larger and smaller models may result. By that time, Airbus may well be in the position Boeing is currently in. Only time will tell...

I do not see Airbus becoming the monolith that you fear. Soon they will have to do business independent of subsidies and will have the shareholder to answer to. The leverage that they have now they may not have in the future.
There are other possibilities; the Russians may get serious about selling jetliners or the RJ makers may push forward into larger craft. Who knows...
As you stated, the biggest constraints on either framemaker will be the airlines themselves. They certainly have the most to lose if 1 side gets TOO big and too influential.

Best regards,

F4N
 
United Airline
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 11:27 am

Udo,


I agree with you except with the B 757. The B 757 is a very reliable aircraft and orders have been secured by Northwest. I do believe that the B 757 has a future and do expect airlines like United, Northwest etc MIGHT order a few.

The B 767... I am not sure.

I think Boeing will win in the long run. The B 737/777 family will continue to be a great success. As for the B 747, if they continue to improve it, there is a future if not a golden path ahead.

Airbus is not quite a tested product.......... Look at the A 320/330/340... They are fairly new. Only time will tell whether or not they will take over Boeing as the leader in the Commercial Market

Remember, Airbus is ahead of Boeing in terms of ORDERS, NOT DELIVERIES. One more thing, why on earth should Boeing go ahead with something that is likely to lose money? In the long run, this is not good for the P&L side at all. They won't have enough cash for further development.

Just my 2 cents.


-Desmond
 
Hamlet69
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 2:51 pm

F4N,

In regards to your comments about MD, I agree. In fact, it was McDonnell Douglas who suffered first from Airbus' growing prominence. Even before they got into "trouble", MD was losing business, especially in the NB arena, to Airbus. Although obviously a gradual process, I believe the truest signal came when SQ cancelled their MD-11 order in favor of the A340, after the former could not meet the manufacturer's promises. Interesting to note that it took several years and numerous delays for the A340-300X to finally meet SQ's requirements - at which time they were ready to switch again.

As per the A380 and a proposed shrink, I think you missed what I was trying to say. When you carry through with the analysis behind the A380's economics vs. the 747-400, you'll notice that the super-jumbo's strength lies in it's size. Hence the focus on a stretch, not a shrink. Take away the A380's size, and you have an aircraft the 747, even in its current form, can take on head to head. If Boeing is successful in launching a newer version of the -400, even the proposed QLR, Airbus would be hard pressed to be able to trim the weight off any A380-700X to match the operating economics of a newer 747. For this reason, I still believe you'll never see the A380 shrunk.


AvObserver,

I'm sorry, but you're missing the overall context of the argument. Airbus and Boeing are nearing market parity because that is how the market has determined it. Airbus will no sooner put Boeing out of the commercial airliner buisness than vice versa. Simply put - it can't happen. Now, other things could happen that would force one or the other out of the industry. Financial mismanagement, severe labor problems, even an extended war (thus refocusing resources) are just a few I could think of off the top of my head. But none of these will be forced on one by the other. As F4N pointed out, this decade will see Airbus become a more financially accountable entity, which will "level" the playing field a little, and also force Boeing into maintaining their own standards (a 10% margin) to keep shareholders happy.

Regards,

Hamlet69
Honor the warriors, not the war.
 
artsyman
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 2:52 pm

What I think a lot of people forget when a topic like this comes up is that Boeing helped to create an industry for air travel, and airbus came into an industry that had room for growth. Competition is healthy and people want alternatives. When my mother had me, she was 26 years old. At that time she was 26 times older than me. When I had my second birthday, she was only 13 times older than me, and now with my 33rd birthday just passed, she is not even twice my age. When Boeing had thousands of planes out there, and airbus brought out their first plane, boeing were thousands of times larger, but 2 planes, 10 planes, 1000's of planes later, they are more or less the same. Same applies with companies like Jetblue, their growth is massive, going from 1 route to 2 routes is 100% growth, and so on, but when they have 100 routes and go to 120, the growth is only 20%.

keep this in mind

Jeremy
 
Udo
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 2:52 pm

I know the B737NG is a great success, but you forgot that the A320 family hasn't been modified in a similar way so far. Only the A318 has some really new features, but the design itself has not been turned into a "New Generation". Airbus can still take that option while Boeing will face problems to renew the NG again.

The B757 is still very popular, but new orders are only likely for the B753. And only holiday and US carriers seem to be potential customers. But regarding the situation of some US carriers, large orders are questionable.
Airbus can update/stretch the A321 and turn it into a more competitive aircraft against the B757. I think we could get a similar development as we are currently seeing the B763 being replaced by A332s.


Regards
Udo
Me & You & a Plane Named Blue...
 
Hamlet69
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 3:24 pm

Udo,

Airbus can certainly update the A32X line, but they would be hard-pressed to stretch it without an all-new wing. As I mentioned previously, when it came time to build a wing, Boeing and Airbus had two differing approaches. Boeing's approach has always been to build in growth potential. While this adds a little unneeded weight to the base models, it easily facilitate both MTOW increases ('ER' models) and stretched airframes. It also makes any type of shrink model immediately uneconomical. Airbus, OTOH, built their wings to maximize the potential of the base model. This creates a very effecient initial design, and makes shrink aircraft excellent performers. However, it leaves any potential stretch either lacking in performance or needing expensive upgrades. The A321 is a perfect example of the former, as it lacked range and payload capabilities until its most recent incantation. The A340NG is an example of the latter, where Airbus spent an estimated $3.5B to upgrade, while Boeing will spend not even 1/3 of that on the 777LR.


I believe what we are seeing across the board is an underlying theme that not many are willing to recognize: The design of commercial jetliners has "hit the wall." The manufacturers have taken the basic design of commercial airliners and minutely refined them as much as possible, to the point that a newer design is only going to gain marginal benefits from newer technology. We are now in an era when it is the manufacturing costs and efficiencies, and the materials technology that are determining the factors in producing a "cutting-edge" jetliner. The actual design of the aircraft takes a back seat as we've reached a limit on how much can be done. I know many on this forum have criticized Boeing for pursuing derivative designs. However, these same members balk when the likes of a Sonic Cruiser or a Blended-Wing Body design is proposed. To rehash a previous question from this discussion: "What else is there?"

Regards,

Mike
Honor the warriors, not the war.
 
United Airline
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 7:46 pm

The A340NG is an example of the latter, where Airbus spent an estimated $3.5B to upgrade, while Boeing will spend not even 1/3 of that on the 777LR

The B 777 is a VERY new program. Why do they need an upgrade?

Udo, the B 757 is a bigger success than the A 321 I must say.... Look at the deliveries. I hope they will upgrade their B 757-200 and come up with an improved version.

Boeing DOES spend money on their airliners.
 
na
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 9:19 pm

Very good and objective discussion so far.

Good point, N79969:
As far as the competition goes, I think Boeing and Airbus objectively speaking are about even. The 777 beats the 330/340 and 332 beats the 764. This has been stated. I think Boeing is going to wait until the 380 gets airborne before responding to it. The 380 will almost inevitably have some issues given the engineering challenge that it will be. I think Boeing will use the 380's shortcomings as a basis for updating the 747 and chop the price on 747 to undermine the 380's economics.

I bet that that will happen. They did that with the 777 already - and were successful. Boeing reacted to the A340/330 shortcomings and together with close client contact launched a product thats a bit more successful.
Another reason why I think that the 747 has a good chance of recovering from the current sales slump is twofold: Even with the A380 flying there is no one-to-one competitor in sight. The 744 gets sqeezed between the A380 and the 773LR and A346, right, but a gap for decent sales numbers will be there for the forseeable future. The 773 is too small and its range still a bit too short on one side to have the potential to grap more than 20% of the market share of the 744. Almost the same can be said about the A346. The A380 on the other side is too big too take over. Weight problems seem to eat up much of the proposed advantages (their is lots of trouble at the moment in Toulouse because excessive weight issues seem to be almost unsolvable). Even if Airbus comes near to expectations I bet that a shrunk A380 won´t be considerably more economic than a modernised B744.
Therefore I see that a updated B747 will be good enough to retain about 50% of the current marketshare of the B744 by the end of this decade. Thats not bad at all.
And don´t forget that the current low sales figures for the 744 are mainly due to periodic reasons (its almost the same situation as in the early to mid-80s). The market is saturated, world´s economy is down, no need for airlines to replace the 744 because they´re still quite new (remember only the first one´s have just passed the first half of their service life). That´ll certainly be different in 5-10 years.
On the other hand in 5 years the market for 777s and A340/330s will be highly saturated and the sales for these types go down because most airlines will have fleets of new aircraft of this size that don´t need replacement before 2010-15. 777 sales in particular were/are so high in the last years because all the DC-10s, Tristars and now also MD-11s have to be replaced.
Nobody has mentioned these wave-patterned dynamics in the market so far here.

 
eugdog
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 9:25 pm

Is not part of the Boeing problem the fact that its product cycle is at a different period of time. The next generation of Boeing short to medium range planes will come out towards the end of the decade and will be a totally new design - whilst Airbus will want to squeeze out another generation from their 80s designed A320 frame in order to save development cost.

It rather like cars - as they get to the end of their life they are tarted up, extra gadgets put in and are sold cheaper then their newly designed competitor product.

But it it was not for political consideration I would have great doubts about the future of airline manufacturing in either the US or Europe - In 20-30 years time these products will be manufactured in Asia or India - only political consideration will prevent this (ie the insistence that the US and European airlines buy planes made in the US or Europe respectively)

 
na
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 10:43 pm

"In 20-30 years time these products will be manufactured in Asia or India". (btw India is located in Asia)

Don´t think so. And not even for political reasons. I don´t think that any country outside Europe and the US will be able to built high-end high-tech products like airliners within the next 50 years. Its too complex. Think alone about reliability. Would you expect a Indian company to garantee same-quality part supply for product for 30 or 40 years? I don´t mean to be chauvinistic, but...
Otherwise all our cars would be built there already - still after 30 years its almost impossible for any brand outside Europe to produce a more than adequate car in the market higher than middle-class - not to talk about image even. And thats only cars (and I´m not talking about Indian cars here which struggle to reach the quality of a European car of the late 50s).
 
go canada!
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 10:54 pm

Private Eye in the uk reported that Airbus was a bit catty at the farnbourgh airshow, it had an advert saying" Airbus A340.4 engines.4 transatlantic", basically implying that a 777 might not get there!
It is amazing what can be accomplised when nobody takes the credit
 
eugdog
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 10:55 pm

The trouble is that these products are not really high tech - also it is increasingly more difficult to improve upon current airframe design designs (except engines and avionics).

Also look at Embraer of Brazil - if they can do it so can India or Malaysia, Also unlike cars you delivery is not a serious factor - they can be flown straight to the customer!

Of course political stability and poor economic infra structure hold back the enormous capital investment but I think the writing on the wall!
 
N79969
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Thu Aug 22, 2002 11:35 pm

I hope that Boeing gets back in the saddle within the next two or three years to start developing a family of 737/757/767 successors. I don't think they can launch full-scale development work for a while but I think they have to formulate the concepts so they will be ready when the time comes.

I think there will be a time when Airbus will be out ahead of Boeing while the latter is updating its product line. Boeing might bet its existence yet again to pull it off.

Finally, I do not see India as a place to manufacture anything but minor components for aircraft. For a number of reasons, India is not a good place to manufacture but is a great place for the service industries. It is interesting to see the large amount and wide variety of consumer goods that are made in China while virtually nothing (other than textiles and metal work) is made in India and is exported.
 
pmk
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 12:17 am

1. The leader in civil aviation is Cessna, a Textron company.
2. its almost impossible for any brand outside Europe to produce a more than adequate car in the market higher than middle-class
There are _NO_ large european automobile companies. The largest european company is Bavarian Motor Works (BMW)

Ford owns:
Jaguar, Rover, Volvo, Aston Martin, Mazda

Daimler Chrysler (an American/German Joint venture) owns:
Maybach, Mercedes-Benz, Smart, Dodge, Chrysler, Jeep, Mitsubishi

General Motors owns:
Fiat, Fuji/Subaru, Holden, Opel, Saab, Vauxhall

BMW owns:
The defunct Rolls Royce

Volkswagen owns:
Bentley

Toyota (Japanese) owns Lexus
Nissan (Japanese) owns Infinity
Honda (Japanese) owns Acura

So if it's not an OLD Rolls Royce, A Bentley, or a BMW it's not an "adequate higher than middle class car"?

I am certain that most Aston Martin, and Jaguar owners would disagree. Funny, the most powerful leader in the world, according to 'Na' is driven in a less than adequate middle class car; I'll try to keep that in mind.

BTW Most regional jets are made in Brazil (a third world country, by definition), and Canada makes the rest. Germany makes how many???



 
Udo
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 12:29 am

What are you talking about? BMW the largest European car manufacturer? Did you find that info in your last McDonald's value meal?

And what do you mean with you X owns Y examples? German cars are still the leading ones in the luxury class or higher middle class, Mercedes S-Class or BMW 7er Series have set standards for decades and that will go on.
Others have always copied almost all innovations invented by Mercedes, BMW, Porsche or Audi. And that tells me enough about leadership in that business...
Aston-Martin or Jaguar don't play such a big role. Their worldwide sales figures are just poor in comparison.


Regards
Udo
Me & You & a Plane Named Blue...
 
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 12:34 am

who is the major shareholder in nissan? Renault!!!!

Rolls royce isnt defunct. Volkswagan(oh look another large european car marker, owns SEAT as well) bought the rolls royce group, it forgot however to purchase the rolls royce names, which bmw bought. volkswagan is now left with the bentley name, bmw as far as im aware willbe allowed to manufacture cars under the rolls royce name.
It is amazing what can be accomplised when nobody takes the credit
 
na
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 12:50 am

OK, this is also off-topic, but I need to correct you, Pmk.
Your list includes some errors and misunderstandings.

There is no real large European manufacturer? Never heard about Volkswagen and PSA?

Daimler-Chrysler is ruled by the German partner. The money-making high-value products of this company are mostly Mercedes cars, the loss comes from Chryslers side (Chrysler-cars are in last place of all brands when it comes to reliability statistics for some years now).

Fiat is not owned by GM (only partly, maybe they will be GM-owned completely in future).

Almost ALL serious prestigious car brands are from Europe, may their owner be US or not, they are still European.
Jaguar, Porsche, BMW, Mercedes, Audi, not even mentioning the real luxury brands you name. Lexus may be technically there, imagewise definitely not. Infinity and Acura are brands not even sold in Europe (because their chance would be even less than niche-brand Lexus), Cadillac and Lincoln are technically not among the leaders.
And please don´t bring a one-off like the Lincoln-tank of the POTUS into this list. I think that´s what you meant by saying "Funny, the most powerful leader in the world, according to 'Na' is driven in a less than adequate middle class car; I'll try to keep that in mind." A Lincoln is a less-than adequate luxury car.


Btw, I´m not driving a German car. And that not for money reasons.
 
N79969
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 12:58 am

I think an interesting aspect of the aircraft commonality concept that Airbus pioneered and Boeing has adopted is that it increases the barrier to entry for any new aircraft manufacturers. It was extremely difficult to enter the transport aircraft market to begin with because of the sky-high capital costs and formidable competition. Now any new entrant cannot realistically enter the transport aircraft market with a single model. They have to plan a family of aircraft. I don't see a country or company out there with the wherewithal and know-how to conceivably start building transports for a very long time.
 
RickB
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 1:58 am

One other minor correction is that Rover is a UK company - its not owned by Ford !!!

Land Rover is owned by Ford - which is now an entirely different company to Rover.

The Japanese companies are slightly different - they where brand names created purely for prestige in the US where they have been very successful - they where never seperate companies that are no owned by the big Japanese companies (with the exception of Infinity which is mostly French owned). The sad thing is that in Japanese market - some cars produced by these companies are available under the parent companies brand name rather than the prestige brand (i.e. the Lexus IS200, IS 300 is called a Toyota Altezza in Japan - it was rebranded as a Lexus for the US and Europe).

Back to the main topic - I can see in the future that both Boeing and Airbus would outsource more production work to cheaper countries - however this could be the time when the tables are turned on Airbus - Airbus would be advised to remain with production facilities within Germany, France and the UK - whereas as Boeing could have no such contraints (other than Unions) as long as they didn't move military production outside the US. This could lead to a turnaround where Boeing's labour is more cost effective than Airbus's which is the reverse of the truth at present. Which would put Boeing back in the driving seat.

Can't see it happening though !!

RickB

 
pmk
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 7:25 am

I never said BMW was the largest, it is the largest with a record for making large up scale cars. I won't get into the raping of Chrysler. I noticed nobody has challenged the Japanese presence in American Luxury cars. In anycase the American auto industry is the largest in the world and won't change.

However, having said that....

I can see China not producing aircraft, however I can see them producing major components and assembling them in Korea.

Peter
 
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 8:46 am

So, who'll lead by mid-decade?

Airbus? Boeing? BMW? Ford? GM? or Toyota?

 Confused
 
AvObserver
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RE: Airbus To Lead Civil Aviation By Mid-decade...

Fri Aug 23, 2002 10:48 am

What an amazing thread! I hope it keeps going, though I'm not sure how it digressed into cars. Anyway, to F4N and Hamlet69, my projection of possible total Airbus dominance was based on the findings of a U.S. House of Representatives Subcommittee on Aviation hearing of a little over a year ago. I posted the jist of an Aviation Week article on it, recently. The subcommittee warned of a cohesive European government/industry strategy to undermine the U.S. dominance of commercial aviation, only part of which was the continued 'subsidization' of Airbus, including drawn out certification of U.S. made aircraft by European authorities, 'hushkit' regulations targeting U.S. made airplanes that allowed as noisy European planes to forgo modification, preferred landing rights at European airports granted the operators of Airbus planes and corruption including corporate bribery. The subcommittee warned that if this pattern continued, the U.S. could become little more than a bit player in commercial aviation. A U.S. undersecretary of foreign commerce, Grant Aldonas, was quoted in the Aviation Week article warning about these possibilities. The article can still be found on the AvWeek website but the links to the hearings transcript to the U.S. House of Representatives website no longer reference the transcript. Perhaps political pressure forced it to be withdrawn, I've heard no more about it in the year since. I printed out the transcript at the time and will scan a copy to email someone who'd really like to read it. This will force me to finally buy a scanner! If there's any interest, I'll provide my email address for requests. I'm sure many will decry it as U.S. protectionism rhetoric but as a U.S. citizen, I know the decline of Boeing would have serious impact on the national economy. I'm hoping that the Airbus loans do completely end and that they compete totally on the merits of their products, which are considerable. I've nothing but admiration for the design and technical excellence of Airbus aircraft, I'm not anti-Airbus but I'm pro-Boeing largely because it's in my interest to be. I'm glad this thread has remained civil despite the variety of opinions. Frankly, F4N and Hamlet69, I'd prefer you to be correct about what's happening because I'd breathe a lot easier. I can't, however, ignore what I've read on this subject, so much of it boding ill for Boeing. There's no getting around the fact that they can't currently compete with Airbus on price, whether it be on loans to Airbus or the strength of the dollar or whatever-they've been losing too many campaigns recently. Boeing spokespeople say they believe Airbus can discount more due to subsidies (their words, not mine). If this is just a temporary trend, great, but if not, I see a long-term decline for Boeing, relegating it to also-ran status or worse. The best possible scenario, of course, would be permanent market parity for both companies which is what I pray for. Airbus AND Boeing, forever!

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