Airbus takes on Boeing in battle for orders
Sunday, June 19, 2011
PARIS (AP) — Airbus is striking a positive pose ahead of the aviation industry's premier event, promising to sign billions in new aircraft orders despite the rapidly deteriorating international air transport market.
The head of Airbus parent company EADS NV Louis Gallois says Europe's rival to Boeing Co. is "stronger than before the crisis and has every reason to be optimistic for the future."
Gallois' comments Saturday to reporters came ahead of the start of the Paris Air Show on Monday. Airbus' top salesman John Leahy boasted he'd spent three of the last five nights sleeping on airplanes, "so you know we're still negotiating orders."
The Toulouse, France-based manufacturer's optimism clashed with a forecast earlier this month by the International Air Transport Association, which warned that natural disasters in Japan, unrest in the Middle East and rising fuel prices would cause airline industry profits to collapse only a year after they'd begun to recover from the global economic crisis.
More than 2,100 exhibitors from 45 countries have signed up to take part in the weeklong event showcasing both commercial and defense aircraft. Airbus expects to bag bountiful orders for a new more fuel efficient version of its workhorse A320 shorthaul jet, while Boeing is spotlighting its new mid-range 787 Dreamliner and 747-8 intercontinental passenger jets.
Gallois said the airshow, at Le Bourget airport outside Paris, "will confirm the success of the A320neo," a revamped version of the standard A320 reengineered to be 15 percent more fuel efficient.
Airbus has booked more than 330 orders and committments for the A320neo since its commercial launch last December, including from airlines IndiGo, Virgin American, Brazil's TAM and airplane leasing company ILFC.
Airlines squeezed by higher fuel prices are rushing to order the jet, which isn't scheduled to come into service until late 2015. Boeing hasn't yet chosen how it will respond, but top marketing executive Randy Tinseth said last week it would decide in the coming months whether to upgrade its existing 737 model or design a whole new plane, which wouldn't be in the air until the end of the decade.
The search for a more environmentally friendly way to fly is shaping up as one of the major themes of this year's Paris Air Show, the world's oldest and largest aviation showcase.
Boeing and Honeywell are both boasting of having the first biofuel-powered trans-Atlantic flight, with Boeing flying in its 747-8 freighter from Seattle on a mix of biofuel and jet fuel, while Honeywell touts the "green jet fuel" it developed to power a Gulfstream business jet on its way from New Jersey to Le Bourget just in time for the air show kickoff.
Skyrocketing fuel costs are a major issue for Airbus and Boeing customers, who will see their profits plunge to $4 billion this year from $18 billion in 2010, according to an IATA forecast released earlier this month.
An industry trade body says however that even with higher fares, more people will fly this summer than last year, especially overseas.
The Air Transport Association said last month that it expects 206 million passengers will travel on U.S. airlines in June, July and August, a 1.5 percent increase over the same months in 2010.
If the forecast is right, travel will remain below pre-recession levels. In 2007, U.S. airlines carried a record 217 million summer travelers.
Major airlines have increased fares seven times since the start of the year as fuel prices rose.
Airbus also said it is pushing back first delivery of two modified versions of its A350 widebody jet by two years, to 2016 and 2017. The flagship version of the plane will still be delivered as currently planned in 2013, Gallois said. The extra time is needed for engine supplier Rolls Royce to develop a more powerful motor for an extended-range version of the aircraft, while customers' growing preference for the standard version means Airbus can delay the launch of the smallest iteration of the aircraft without problem.
EADS will also demonstrate the world's first diesel-electric hybrid aircraft at the show, another leg in its strategy of cutting its fleet's carbon dioxide emissions by 50 percent by 2050.
The airshow will also be the battleground in the traditional yearly showdown between Boeing and Airbus for dominance in booking new orders. Airlines in fast-growing Asian and Middle Eastern countries have been ordering hundreds of new aircraft to meet skyrocketing air traffic in those regions.
Airbus edged out Boeing at last year's Farnborough International Airshow, racking up deals totaling $13.2 billion, while Chicago-based Boeing's commitments came in at $12.8 billion.
Those results were both a big improvement over the results of the last Paris Air Show in 2009, when many airlines closed their checkbooks in the wake of the global financial meltdown.
Last week Boeing Co. upped its forecast for aircraft demand over the next 20 years, saying airlines will need $4 trillion worth of new planes to meet a pickup in passenger numbers, particularly in the Asia-Pacific region.
Airlines will need 33,500 new jets from now through 2030, Boeing said, to meet market demand that is expected to be "resilient" in the coming years, with 5 percent average annual passenger traffic growth.
The largest market will be for single-aisle jets like Airbus' A320 and Boeing's 737, seating between 90 and 240 passengers.
Going into next week's event, Airbus has taken in 176 gross orders this year, compared to Boeing's 183 gross orders.
Boeing is the world's No. 2 commercial jet maker after Airbus, based on 2010 deliveries. Airbus delivered 510 commercial planes last year, compared with 462 for Boeing.
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