Boeing Co is coming to this year's air show in Paris, the home turf of market leader Airbus SAS, with a pitch that customers may struggle to swallow: be patient.
The US manufacturer is still mulling whether to upgrade its 737, the most widely flown airliner, or offer a new single- aisle model for the largest segment of the civil jet industry. Airbus, by contrast, will use the event to advance the initial success of its refreshed A320neo, for which it has secured 434 orders or commitments ahead of planned introduction in 2015. Boeing's next move will shape the narrow-body market for decades as rivals in China, Russia, Canada and Brazil attack its duopoly with Airbus. Any decision will ripple to other programs because resources spent on one aircraft won't be available for others. That gives Airbus a shot at using its new A350 to usurp Boeing's dominance in wide-body planes.
"Boeing is under some pressure, but it's not going to rush," said Paul Edwards, managing director for aerospace and defense at Jefferies International Ltd. in London. "They are losing some orders at the moment but they need to get the decision right because when they do build a new plane it's going to be around for the next 20, 25, even 30 years."
With a price exceeding the current model by about $6 million, the A320neo will offer a choice of two new engines, and promises operating savings of as much as 15 per cent. That's attracting airlines at a time when fuel prices often account for 30 per cent of their costs.
Potential Orders
Asian discount carrier AirAsia Bhd., Air France SA and Lan of Chile are among companies that may place orders at the show, which starts on June 20 at the Le Bourget airfield outside Paris. Yesterday, Airbus won 102 A320neo orders from Go Airlines (India) Ltd. and Philippine budget carrier Cebu Pacific.
Last year at the Farnborough Air Show, which alternates with Paris, Airbus picked up 130 firm orders worth $13 billion, and Boeing secured 103 valued at $10 billion. Bombardier Inc.'s CSeries, a jet with 110 to 145 seats aimed at single-aisle customers and slated to enter service in 2013, won none.
The initial success of the aircraft has helped lift the stock of Airbus parent European Aeronautic, Defence & Space Co., which has gained 24 per cent so far this year. Boeing has advanced 14 per cent in the same period.
Airbus is offering either Pratt & Whitney's geared turbofan engines or the Leap-X by General Electric Co and Safran SA's CFM venture for the A320neo. CFM's Leap-X incorporates new materials in the engine's hot-section, or core, to cut fuel consumption, while Pratt & Whitney's geared turbofan uses a gear to slow the outer fan, adding efficency and reducing noise.
‘Revolutionary’
Making the engine switch may prove harder for Chicago-based Boeing because its 737 sits closer to the ground, requiring more modifications to the wing box and landing gear. Airbus has said it won't alter the A320neo beyond fixes needed for the engines. "Boeing is going to be forced to build a new airplane, a new 737," United Technologies Corp. Chief Financial Officer Greg Hayes said during a presentation to investors at a Deutsche Bank AG conference in New York yesterday. "The pressure from customers is going to force Boeing to do something now rather than later and I think it's going to be a new aircraft."
Customers are willing to wait for "something more revolutionary," said Jim Albaugh, Boeing's head of commercial aircraft. "We want to make sure we totally understand what a new small plane would look like" before committing either way.
Delayed Decision
"If they take too long they lose the momentum," said German Efromovich, chairman of Colombian carrier Avianca Taca Holding SA, which is shopping for 50 to 100 single-aisle planes by yearend. "If there is a manufacturer out there offering aircraft that are 15 per cent more efficient than the competition, then Boeing should move fast, otherwise they'll lose their opportunity."
The European manufacturer unveiled the decision for the A32neo at the end of last year.
