Saturday, April 24, 2010

Some say Airbus is Worried

Airbus surprised everyone by announcing that they were going to build an A350 plane to challenge Boeing's apparently-quite-successful 200-seat 7E7 Dreamliner. Is that a good sign for Boeing or a bad sign?

Some seem to think it proves Airbus is worried. They don't think Airbus can really afford to build such a plane at the same time as they are developing the A380 (which has already cost them more than $10 billion), but they want to disrupt orders from customers for the 7E7. This seems to be standard operating procedure in the industry to do underhanded things like that - it seems Boeing said they were going to make a stretch 747 as a diversion from Airbus' new A380. Then they said they would build a Sonic Cruiser to fly at near the speed of sound. But those plans got dropped.

Airbus bet that the market would be for huge planes, while Boeing thought saving fuel would be the main idea. Now, Airbus wants to cover all bases. But getting financing would mean getting loans from European government backers. There is already a hot trade dispute with Boeing over unfair practices. Boeing says Airbus has received $15 billion in government aid over the past 30 years.

Boeing says they don't see what would surely be an A330 clone (yawn) as much of a threat - it'll use more fuel (it will weigh more plus the 7E7 has "fuel-chugging" engines), won't fly as far, won't be available as quickly, and won't be as comfortable. But, some say, they are desperate. The A380 isn't selling as well as they had planned - some airlines opted for more, smaller, long-range planes instead. And the number of orders for the 7E7 made them wonder if they had jumped aboard the wrong train.

Airbus said they had always planned to build a mid-sized plane. They said their customers had urged them to do it. They say their plane will be more economical than the 7E7 overall because flight crews will be interchangeable.

Right now, Airbus is selling more planes but Boeing is making more money - but that could change. Both companies unsurprisingly say theirs will be the one to come out on top.