Boeing sees vindication in strategy against Airbus

WASHINGTON: Top executives at US aerospace giant Boeing say the latest developments in the industry have vindicated their strategy against European rival Airbus.         

Boeing, which has been betting heavily on its new mid-size, long-range 787 "Dreamliner" jet, appears poised to catch or overtake its European counterpart in the highly competitive civil aviation marketplace.      

"This is where Airbus and Boeing have differences: not so much on the number of people traveling, but how airlines will accommodate passengers," Randy Baseler, vice-president of marketing at Boeing, told a recent gathering in the Washington area.       

While Airbus has been sputtering in its efforts to bring to market the super-jumbo A380 -- which will be the world's biggest passenger plane -- Boeing has set its sights on smaller, more flexible planes like the 787.              

Unlike the A380, which can carry up to 800 passengers, the 787 is designed for 210 to 330 people. Deliveries are set to begin in 2008.     

Boeing, which up to now had dominated the jumbo jet market with its 747, appears ready to yield that segment to Airbus, suggesting that growth will be elsewhere.             

The US firm is planning only one new version of its 747 that can carry more than 500 passengers, the 747-8 "Intercontinental."            

"The 747 and larger airplane market is forecast to be about 990 airplanes over the next 20 years," Baseler said.   

"About 325 of them will be in the over-500 seat category where the A380 is positioned and about 325 will be in the 400-500 seat category where the 747-8 Intercontinental is positioned."           

Baseler said Boeing's forecast is far different from that of Airbus, which sees a market of up to 1,250 super-jumbos.        

"As a result, Airbus has been putting all of their resources into the A380, leaving a 200-seat gap between the much larger 350- and 550-seat market segments," he said.     

Another forecast disparity exists in the 200- to 300-seat category.           

"Boeing forecasts significantly more airplanes than our competitor to serve this market," the Boeing executive said.            

"This is based on our conviction that passengers want to fly where they want to go, when they want to go. That is, people want to fly nonstop with more frequency choices."           

While Boeing has been increasing its market share, Airbus has been struggling with delays in its A380 program and has been trying to play catch up against the 787 with the new A350.          

Baseler said the moves by Airbus show Boeing made the right choice.     

"Airbus has recognized they can no longer ignore the 787," he said.          

"They also know today’s A330s and A340s cannot compete with the Dreamliner or the 777. As a result of this and the poor market response to their previous A350s, Airbus is in the middle of revising their offering which will be at least four years late to challenge the 787."      

Baseler argued that Airbus has not yet perfected the use of composite materials for the fuselage as Boeing has for its 787, helping improve fuel economy. Another detail is that the 787 will have larger windows, made possible by the increased strength of the fuselage.   

Although each manufacturer has been touting the value of their planes, Boeing has been the clear leader to date, with 545 firm orders for passenger jets so far this year to 222 for Airbus.   

Analyst David Strauss at UBS said all the good news about Boeing appears to be factored into its share price, and cautioned investors that the company may suffer as global economic conditions cool.        

"At current levels we see an unfavorable risk-reward given a slowing macro environment," Strauss said in a research note. "We expect orders to soften further into 2007."