London: Boeing versus Airbus is one of the corporate world’s greatest and most visible corporate rivalries, a set-to between producers of world-class aircraft that transport millions of people around the globe every day.
The competition can be seen at any major airport on any given day: Boeing 747 jets take off while an A380 taxis in a few hundred metres away, or an easyJet-owned A320 comes into land while one of Ryanair’s Boeing 737s rapidly unloads its passengers in preparation for yet another return flight.
But the Farnborough airshow from Monday — an event shared biennially with the Paris show — will see that rivalry played out in terms of hard numbers: that is to say, in the race for aircraft orders.
Airbus enjoyed a record year in 2011, booking net orders for 1,419 craft worth $140 billion (Dh514 billion) compared with Boeing’s 805. The superiority over its American rival was rubbed in on Airbus’ home turf of Paris in 2011, as a blizzard of deals was announced for the A320neo, a revamped version of its A320 short-haul workhorse. This year, however, it will probably be Boeing’s turn to rule the skies, after Airbus admitted in January that it could not keep up the momentum for the neo, which is now being challenged by Boeing’s version — the 737 Max.
Speaking before Farnborough, Boeing’s chief executive, Jim McNerney, confirms he expects to wrest back the crown this year and next. “We have been ahead recently and I think there is a good chance that we will pull ahead for a number of years.”
Airbus admits that it too expects to see Boeing edge ahead in 2012. Its chief operating officer, John Leahy, said: “Our industry is a long-term one and we have outsold and outdelivered our competitor in nine out of the last ten years, so even if they do well this year, a 10:1 ratio would still be OK for us.”
Airbus finished last year with a 64 per cent market share, but Leahy says the company is “comfortable” with 50 per cent.
Boeing will be driven by orders for its 787 Dreamliner, a new long-haul aircraft to rival the Airbus A380 superjumbo, and the 737 Max. The latter’s late arrival is a source of regret for McNerney: in Paris last year, as A320neo orders took off, Boeing was indicating that it would push ahead with building an entirely new short-haul aircraft rather than copy the neo by offering the 737 with new engines. But customers’ demands for a more fuel-efficient aircraft to be delivered as soon as possible, and the success of the neo, changed Boeing’s mind.
He said: “I always look back and can find things we wish we had done six to 12 months earlier. That was the case with the Max. Airbus did get some advantages as the first mover. The good news is that the market share has not substantially changed as a result of that advantage.”
McNerney can afford to be relaxed about the waxing and waning of the Airbus versus Boeing battle, because there is plenty of room for growth, according to both companies’ forecasts. Airbus believes airlines will buy 26,900 more passenger jets by 2030 as the global fleet doubles from 15,000 to more than 31,500.
China and India will be the major sources of demand for new aircraft over the next two decades, says Airbus, with the Asia-Pacific region accounting for 34 per cent of deliveries, compared with 22 per cent each for the European Union and North America. This tilt in regional power makes the ongoing significance of Farnborough and Paris somewhat anachronistic, as the axis of power in the aerospace market, at least in customer terms, moves east.
The balance will not alter meaningfully until a major aircraft-maker emerges from the region. But that could come soon, with Commercial Aircraft Corporation of China (Comac) signing a jet-design agreement with Ryanair last year to help produce a rival to the 737. It is an advisory arrangement and could well be a classic example of brinkmanship by Michael O’Leary, Ryanair’s chief executive, to squeeze a better price out of Boeing for the Max, but McNerney says he expects China to shatter the current duopoly sooner or later.
“I think China will achieve success in the narrow-bodied world,” says McNerney. “Sometime in the next ten to 15 years, in my judgment, there will be a legitimate competitor in the narrow-body arena from China. They have the technical wherewithal and the [domestic] market to go it alone.”
In the meantime, rumours abound that Airbus is going to challenge Boeing on its own territory by opening a factory in Alabama. McNerney is sanguine. He said: “It would be a challenge for them. It’s not easy to do final assembly lines in different parts of the world.”
While it may look like corporate bravado on the part of Airbus, it could have implications for the UK. Airbus and its parent, EADS, are major employers in the UK, accounting for 17,000 jobs many of them highly skilled engineers. This is why the Airbus order-book matters here and why a move to Alabama might cause consternation. Some 15 per cent of Airbus production takes place in the UK, led by a world-class wing manufacturing plant in Broughton, north Wales, and at its design and testing facility in Filton near Bristol. This is a rivalry that matters.