Airbus to Sell US Airways Up to 30 Jets
Europe’s Airbus Industrie scored another victory over archrival Boeing Co., winning a major order from US Airways Group Inc. in a deal that reopened the debate over whether Airbus really is making significant inroads against Boeing.
Airbus said Thursday that US Airways ordered up to 30 of its A330 wide-body jetliners, a deal that could be worth more than $3 billion. Because the order was the first by a U.S. airline for wide-body Airbus jets, and comes amid reports that Airbus may soon break Boeing’s lock on sales to British Airways, it was seen as a notable coup for the European consortium.
Noel Forgeard, Airbus’ chief executive, used the announcement here to tout Airbus’ apparent success at grabbing a bigger chunk of the commercial airliner market, with the four-nation consortium taking 52% of all orders placed in the first half of 1998.
But some analysts said that Seattle-based Boeing--which produces some airliners in Long Beach--continues to enjoy a strong lead in the industry, although Airbus is mounting a much more serious threat.
Analysts agreed that Airbus, based in Toulouse, France, is not only scoring more orders at Boeing’s expense, but also is a much more efficient, aggressive competitor that’s serious about its goal to sit atop half of the global jetliner market early in the next century.
“For too many years, people, particularly in America, have thought Airbus was not really a company, that it was really a French employment agency for engineers and an excuse to keep an unprofitable aerospace industry alive,” said analyst Joseph F. Campbell Jr. of investment firm Lehman Bros. in New York.
“Now, they are right at the point where the statistics people at both Boeing and Airbus can claim to have slightly more than half the market, depending on what they are counting,” he said.
But Boeing, while “disappointed” that it didn’t win the US Airways order, discounted Airbus’ market-share claims. “When you’re second, you grasp at every straw that becomes available,” said Boeing spokesman Craig Martin. “If you look at a three-year rolling average, Boeing has well over half of the market, and that will continue.”
And other analysts agreed that, while Airbus deserves credit for selling more airplanes lately and providing Boeing with stronger competition, it’s an overstatement to say Airbus is seriously eroding Boeing’s dominance.
“Let’s not get carried away,” said Richard Aboulafia, an analyst at Teal Group, an aerospace consulting and research firm in Fairfax, Va. Boeing easily remains the bigger player “and there’s no sign of that changing,” he said.
He said that the best measure of market share is the dollar value of airplanes actually delivered each year, because that’s when cash changes hands. In contrast, orders can be delayed or canceled, and their price terms can be altered before delivery.
And in terms of deliveries, Boeing will continue to hold 60% to 65% of the market in the early 2000s, he predicted. By that measure, it also helps that Boeing still dominates the market for the largest, most-expensive wide-bodies with its 777 and 747 models.
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To be sure, Airbus’ share of deliveries has soared from 14% to nearly 30% in the 1990s, but the gain has come almost entirely at the expense of struggling Douglas Aircraft, which Boeing acquired last year when it bought McDonnell Douglas Corp., Aboulafia said.
US Airways Chairman Stephen M. Wolf, who announced the deal with Forgeard, said his carrier placed firm orders for seven A330-300s, orders subject to reconfirmation for seven others, and options for an additional 16 of the aircraft.
The Arlington, Va.-based airline--which in late 1996 placed a huge order for up to 400 of Airbus’ smaller A320 planes--plans to use the wide-bodies for its expanded service between the United States and Europe, Wolf said.
US Airways’ decision to buy Airbus and reject Boeing’s 767 jetliner was the latest of several setbacks for Boeing. Production snags forced Boeing to post a $178-million loss for 1997--its first in 50 years--and a 90% plunge in this year’s first-quarter profit.
Boeing said Wednesday that it has largely overcome its production bottlenecks, and is on track to deliver about 550 planes this year, up from 374 in 1997. But Asia’s economic woes have forced some of that region’s airlines to delay taking delivery of Boeing jets, and Boeing continues to fight a savage price war with Airbus.
And this week, media leaks indicated that the Europeans were on the verge of landing one of the most coveted contracts in their history--involving 100 short-haul jets for British Airways.
The BA order, worth as much as $3.8 billion, would be the first ever from a carrier that has been so loyal to Boeing over the years that its initials have been said by some to stand for “Boeing Airways.”
“There is ongoing, very tough competition in BA between Boeing and ourselves, and the airline at this point has not made any decision,” Forgeard told reporters.
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Airbus--founded in 1970 and composed of France’s Aerospatiale, British Aerospace, Germany’s Daimler-Benz Aerospace and Spain’s CASA--already has racked up a string of successes this year, including a 76-plane order from Iberia Airlines of Spain, a 30-aircraft order from UAL Corp.’s United Airlines, and a tentative pact for 100 jetliners for three Latin American carriers.
Forgeard said that in the first half of this year, Airbus had taken firm orders for 287 planes--or 52% of the market for 100-seaters and up.
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Dahlburg reported from Paris and Peltz from Los Angeles.
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Adding Up Orders
Airbus Industrie says it’s pulling even with rival Boeing Co. for new airplane orders. Research firm Teal Group says that the best gauge of market share is the dollar value of actual deliveries--which shows Boeing still ahead but projected to lose share in the next two years.
Share of Dollar Value of Total Deliveries
Year: 2000**
Boeing: 63.8%
Airbus: 33.0%
Other*: 3.2%
*Includes McDonnell Douglas before it was purchased by Boeing in 1997.
**Estimate
Note: May not add up to 100% due to rounding.
Source: Teal Group
