Boeing lands first blow in tense air show battle
FARNBOROUGH, England |
FARNBOROUGH, England (Reuters) - U.S. planemaker Boeing landed the first blow at this week's Farnborough Airshow, winning an order worth up to $7.2 billion from U.S. Air Lease Corp, as a market share battle with its European rival Airbus plays out.
Flamboyant leasing entrepreneur and ALC (AL.N) founder Steven Udvar-Hazy marked the deal by ringing the opening bell for the New York Stock Exchange by satellite - underscoring the joy ride recently felt by many aerospace firms in the face of recession.
Boeing (BA.N) said on Monday the order was for 75 of its fuel-efficient 737 Max jets - a model that is key to its attempted fightback against Airbus's rival A320neo short-haul aircraft.
Although economies are stuttering, aircraft demand remains relatively strong as airlines modernize fleets to survive high fuel costs and the balance of growth shifts towards Asia, prompting Boeing to raise forecasts last week.
Nonetheless, Airbus (EAD.PA) and Boeing are locked in their fiercest battle for up to a decade, slashing prices to win orders for their latest narrowbody jets and storing up potential trouble for future profit margins.
And although jetmakers predict hundreds of orders this week, day one had an air of anti-climax amid suggestions that an unexpectedly strong order cycle may soon be peaking.
"There is a 'fin de siecle' quality about this show unless there truly is a raft of orders, although you do always see some surprises," said analyst Nick Cunningham of Agency Partners.
Boeing chief executive Jim McNerney has predicted the U.S. planemaker, helped by the 737 Max, will outsell Airbus for "a number of years" having trailed its European rival since 2006. Airbus also expects Boeing to make up ground this year.
Hazy's endorsement was a boost to the newly-appointed head of Boeing's commercial division, Ray Conner, a former sales chief thrust into the spotlight at his first high-profile event in the job after Jim Albaugh's unexpected decision to retire.
"We have a terrific machine now," said Conner, a laid-back former mechanic who worked his way up from the production floor to become chief executive of Boeing Commercial Airplanes.
NOT TIED TO NUMBERS
Conner wasted no time in tackling suggestions that Airbus, which beat Boeing by a record margin in 2011, could hold onto its gains and redraw a traditional 50-50 duopoly.
He said Boeing, which had some 40 percent of the market in 2011, was confident of increasing its market share, but refused to name a specific target.
"I am not going to be tied to market share numbers; ... we are focused on producing and winning," he told reporters at the event, which was attended by UK Prime Minister David Cameron.
Boeing flew its elegant stiletto-winged 787 Dreamliner, its upswept wings piercing a slate-grey sky, in its first civil air show display in over 20 years as a mark of renewed optimism.
But Airbus, which had 1,000 orders at last year's Paris air show, insisted it would not concede ground easily.
"Last year was exceptional as we had just announced the launch of the A320neo, but this year I believe will be a good show and will help us to achieve what we expect this year, which is around 650 new orders," Airbus Chief Executive Fabrice Bregier told Reuters Insider TV.
"I am pretty sure that, since we launched the neo (December 2010) by the end of 2012, we will still be ahead of Boeing with their product."
Conner and Bregier bring a relaxed, but steely, posture to the air show, a yearly jamboree alternating between Farnborough and Paris at which billions of dollars of jets and arms are promoted over glasses of champagne.
It was the first outing as commercial jet leaders for both men, pitting the ex-mechanic against a former French missiles boss - two publicity-shy figures who have made a significant mark on their organizations in the background.
Conner's decision to clamp down on specifics and make a little less noise than usual under the roar of jet fighters is meant to keep Airbus guessing on a number of fronts.
He also declined to repeat a date for making a decision on two key widebody plane developments, a stretched 787 Dreamliner and a redesign of its most profitable jet, the 777 mini-jumbo, but stressed Boeing was "absolutely committed" to the projects.
Airbus said it had improved the design of its A330 to increase its range, anticipating the possible new 787-10.
SHOPPING FOR WEAPONS
David Joyce, the president and chief executive of GE Aviation predicted there would not be as many orders as in previous years at Farnborough amid a faltering global economy.
"I think this show will be a little more subdued relative to 2011 but still a very, very positive outlook going forward. Production rates of airplanes on the commercial side are all on their way up. Our order books are full," he said.
Even in the arms chalets, budget cuts and economic uncertainty have not entirely put a damper on this year's show despite the absence of some U.S. contractors' senior officials. UAV contractor Northrop Grumman (NOC.N) is staying at home.
Delegates said defense companies were meeting international delegations who are shopping for a wide array of weapons.
Boeing was taking potential buyers of its V-22 tilt-rotor aircraft - which flies like a plane but takes off and lands like a helicopter - out for demonstration flights and reported continued interest in its F-15 and F/A-18 fighter jets.
Raytheon (RTN.N) Chief Executive William Swanson said he comes to the show every year to meet personally with foreign buyers, and can't understand why other defense companies are so focused on their domestic troubles.
"There's opportunities there. Don't sit there and go, 'Oh woe is me.' Look at it and say, 'Okay, where's the opportunity?" Swanson told Reuters in an interview.
Even the U.S. military market remained very rich, despite deep cuts in spending expected in coming years, he said. "They're still spending $500 billion dollars." (Additional reporting by Rhys Jones, Victoria Bryan, Karen Jacobs, Irene Klotz; Editing by Mark Potter)
- Tweet this
- Share this
- Digg this