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The Honolulu Advertiser
Posted on: Tuesday, June 19, 2007

Airbus outshines Boeing, but only temporarily

By Jane Wardell
Associated Press

Hawaii news photo - The Honolulu Advertiser

French Prime Minister Francois Fillon, second left, listens to Airbus chief Louis Gallois, left, as French Defense Minister Herve Morin, third from left, looks on, while looking at a model of an Airbus A350-XWB during the inauguration of the 47th Paris Air Show.

PASCAL ROSSIGNOL | Associated Press

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LE BOURGET, France — Airbus stole the spotlight from U.S. rival Boeing Co. on the opening day of the world's largest air show yesterday, announcing deals worth around $43 billion.

Boeing, in contrast, tallied up orders worth $4.4 billion. Some, but not all, of the Airbus orders were new — Qatar Airlines confirmed a purchase of 80 of Airbus' problem-plagued A350 jets, worth more than $18 billion.

However, despite its early lead in the traditional trans-Atlantic rivalry at the weeklong Paris Air Show in Le Bourget, Airbus still has a long way to go to match Boeing's superselling Dreamliner 787.

Heading into the fair, Chicago-based Boeing had already pocketed 584 orders for the Dreamliner, compared with Airbus' total of 13 firm orders and 142 non-final commitments for its A350.

The Toulouse-based planemaker added 114 new firm orders for the A350 yesterday, including the 80 from Qatar and 12 from Kuwait Aviation Lease. US Airways also announced plans to add two to its previous order of 20. Including firm orders and future commitments, Airbus said it received orders for a total of 339 aircraft, valued at $43.3 billion, based on average list prices.

The success of the A350 is by no means assured. Airbus' decision to redesign the jet after customer complaints — resulting in the extra-wide-body, or XWB, model — has pushed back its delivery date until 2013, years behind the first deliveries of Boeing's rival Dreamliner 787 due in May.

Critics also remain outspoken, among them Steve Udvar-Hazy, the founder and chief executive of Los Angeles-based International Lease Finance Corp., the world's largest airline leasing company.

Udvar-Hazy has said that the A350 is no match for the Dreamliner and has hinted that he will sign a deal for a significant number of Boeing's Dreamliners in the coming days at Le Bourget.

EMIRATES BIDING TIME

Emirates, which yesterday ordered an additional eight Airbus double-decker A380s in a deal estimated to be worth about $2.5 billion, remained ambivalent about its future choice between the A350 and the Dreamliner.

"We've got some talking to do to both Boeing and Airbus with regard to the commercial terms of the deal, but I think we're in a good position to make an aircraft decision in the next few months," said Emirates President Tim Clark.

Clark said the carrier would select only one of the aircraft, rather than buying some of each.

Airbus has been renegotiating existing orders for the A350 since the redesign. The US Airways total planned deal for 92 Airbus jets worth $10 billion — including the A350s, 60 planes of the A320 single-aisle family and 10 A330s — reportedly came at a heavy discount.

The deal means that US Airways will eventually eliminate Boeing 737-300/400s from its fleet.

DELAYED DELIVERIES

Among other Airbus orders, GE Commercial Aviation Services ordered 60 of the A320 family aircraft in a deal worth around $4.4 billion at list prices; Kuwait's Aviation Lease & Finance bought seven A320s; Russia's Sibir Airlines placed a firm order for 25 A320s, and Qatar booked three double-decker A380s.

Airbus' decision to focus on the 525-seat A380 is the reason it lost its position as the world's dominant planemaker. Wiring and other technical problems have led to a two-year delay in delivery of the plane, which is expected to wipe 4.8 billion euros ($6.2 billion) off the profit of parent company European Aeronautic Defense & Space Co. NV over the next four years.

Emirates, the biggest single customer for the A380, is believed to have obtained significantly improved financial terms for these aircraft and the latest batch of eight announced yesterday.

Planemakers often reserve big announcements for the air shows held in alternate years in Le Bourget, north of Paris, and Farnborough, on the outskirts of London, to ensure maximum impact.

Boeing is scheduled to provide an update on the Dreamliner, the first commercial jet made of light, sturdy, carbon-fiber composites instead of aluminum, today — when it is also likely to announce more orders for the plane.

Scott Carson, the head of Boeing Commercial Airplanes, said yesterday the Dreamliner was on track for test flights in August or September, and delivery to its first customers in May.

Carson also announced yesterday that GE Commercial Aviation Services had ordered six of its 777 freighters, worth $1.42 billion at list prices. The order takes the number of 777s ordered by GECAS to 39, including 14 freighters.

In another deal for Boeing, Jakarta-based Lion Air ordered an additional 40 737-900ER planes. Valued at more than $3 billion at list prices, that brings Lion Air's combined orders for the 737-900ER to 100.

INDUSTRY IN THE BLACK

The Paris show comes amid revived fortunes for the commercial airline industry. After two years in the red, the industry will make a profit of just over $5 billion this year, despite rising fuel costs, says the International Air Transport Association, whose 250 members claim to represent 94 percent of international air traffic.

Away from the rivalry between Boeing and Airbus, Rolls-Royce PLC said yesterday it had received the largest-ever firm engine order for its civil aerospace business from Qatar. The $5.6 billion order is for Trent XWB engines to power Qatar's new fleet of 80 Airbus A350 XWB twinjets, with deliveries beginning in 2013.

Brazilian aircraft manufacturer Embraer SA said it has cut deals to sell 30 jets to Germany's Deutsche Lufthansa AG and another 10 planes to Japan Airlines, firming up previously announced deals.