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Airbus vs Boeing: New Round

SuperFrenchie:
So Airbus had its best day ever yesterday, with an astounding $45 billion single day list of orders [fr] (Boeing: 1.4 billion…) Interestingly enough, the Wall Street Journal editorial page, which loves predicting Airbus’ demise, has not commented yet…
Bloomberg about the plane makers' order books:
Boeing's total for the year as of May was 417, more than double the orders at Airbus, which said on June 7 it had a total of 201 contracts through the end of May. Yesterday Airbus won a total of 219 firm orders at the show. Shares of EADS fell 16 cents, or 0.7 percent, to 24.12 euros yesterday in Paris. Boeing dropped 75 cents, or 0.8 percent, to $97.40 in New York. The stock of the European planemaker's parent rose just 0.8 percent over the last two years, while Boeing surged 51 percent.
See Airbus Military regarding European military transport capacity building.

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Don S on :

I rather doubt that Airbus will go out of business. It's hard to tell what the big announcement at the Paris air show actually means, though. The following is an interesting link about what is going on: http://www.realclearpolitics.com/articles/2007/06/airbus_struts_its_stuff_in_par.html Airbus seems to have two 'bet the company' initiatives going on; the late to market hypercarrier 380 and a second try at the mid-sized 350 XWB, which is positioned against Boeing's 787 Dreamliner. They are both desperately needed, the 380 because so many resources have been used and the 350 to protect Airbus core market in midsize aircraft. The trouble is that the needs of the 380 project are hurting the 350. Another potential problem is that the 350 XWB project may not be an adventerous enough design to prevail against the 787. Strategically Airbus and Boeing seem to have made opposite decisions in the late 90's. Airbus was in a very strong position and Boeing a weak one at the time, and Airbus seemed to decide to go for a knockout blow against Boeing's 747 large jet. Boeing had it's own superlarge project but decided to bin it in favor of the highly efficient 787 midsize design. At the same time Airbus and Boeing also launched update projects for the 330 (the 350 project) and for the 747, respectively. The skyrocketing of fuel prices (which made the 787 a huge order-book hit) and the long delay in the 380 launch have strengthened Boeing's hand a great deal. A number of potential 380 customers have gone instead to updated 747 designs. The original design for the 3590 failed and was withdrawn a year ago in favor of the new 350 XWB design, but some very influential critics trash even that as too much of a compromise. Apparently the 787 is an all-carbon airframe wherease the 350 XWB is an aluminium airframe with carbon panels bolted on to save weight. There may be difficulties manufacturing the all-carbon frame which the hybrid approach aleviates, but the latter appraoch is heavier and less fuel-efficient plus there are questions raised on how well it will work in service due to different cooefficients of expansion/retraction between the different materials. Right now it appears that Boeing has hit a home run while Airbus is trying to survive - but it's hard to know. We'll know more in a year. If Boeing can get the 787 Dreamliner launched on time or without major delay (less than a year) they should be in an enviable position. But Airbus appeared to be in a similarly enviable position in 2003 before the 380 debacle came out - so that is reason for caution.

Don S on :

Here's another interesting link with specific numbers of aircraft on order. http://www.chron.com/disp/story.mpl/ap/fn/4904992.html One thing of interest is that the Airbus 350 XWB seesm to be more than 4 years behind the 787, with initial deliveries of the 350 in 2013 with the first 787 scheduled for delivery in 2008. A cautionary fact is that there are usually major delays with *all-new* aircraft. Good examples were the delays on the Boeing 747 (which almost bankrupted the company) and the A380 debacle. The 787 is an *all-new* aircraft..... I'll believe the tales (for both the A380 and the 787) when I see an actual customer take deliver and begin flying on regular routse.....

Don S on :

One thing to consider is profitability. The like I posted in the first post (http://www.realclearpolitics.com/articles/2007/06/airbus_struts_its_stuff_in_par.html) said that Airbus were selling a lot of the existing 320 and 330 midsize designs at fairly steep discounts. This makes sense because they still make money even with the discounts and can use the cash to pay for the concessions they are having to give to keep some of the Airbus A380 orderers on board. But profits from the A380 look ever further away. They needed 400 plus A380 sales to break even - but that was the figure a while ago. The additional costs of the debacle and the concession pricing they are having to give on the A380 are probably pushing that figure up quite a bit. Another heavy rumor is that the cargo congiguration of the A380 may be binned at least for now. They had 25 orders on a projected demand of 50 of these (from a big leasing company, UPS, and FedEx, but apparently UPS is the only active order left - for only 10 units. So the speculation was that the cargo version would take too much engineering talent for only 10 aircraft; talent which would be better-used on the A350 XWB project (which apparently is hurting due to the A380 delays). One point in Airbus' favor is that customers LIKE having more than one supplier as it tends to keep the current leader honest. I suspect that many carriers will buy from Airbus everything else equal - at least until Embraer (Brazil) grows up a little more.

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