* Boeing jets chief tells staff winning key to funding
* Airbus aims to hold 60 pct of sales of new single-aisle
* Boeing seen pushing to restore equal market share vs
By Tim Hepher and Alwyn Scott
PARIS/SEATTLE, Dec 15 A few months ago Boeing
Commercial Airplanes Chief Executive Ray Conner launched an
internal campaign to urge the company's staff to fight for every
sale following a series of defeats to European rival Airbus.
Its slogan: "We're in it to win it."
No longer would Boeing let Airbus walk away with a larger
share of the market with competitive deals. In the new campaign,
Boeing would redouble efforts to recapture customers without
sacrificing profitable growth.
On Wednesday, Conner's counter-offensive paid off with a
$6.5 billion deal to sell up to 109 jets to Air Canada.
His long-time rival, Airbus's sales chief John Leahy,
shrugged off the defeat, indirectly accusing Boeing of slashing
prices aggressively to win the deal.
"It takes two to have a war," he told Reuters.
Privately, Airbus officials were said to be shocked by the
symbolic loss of one of the first North American carriers to buy
their planes 25 years ago - jets that Leahy himself had sold
when making a name for himself with flexible deals.
Despite dominating last month's Dubai Airshow with sales of
one of its biggest jets, the 777X, Boeing is lagging well behind
Airbus in sales of the latest generation of smaller single-aisle
jets - the best-sellers for both companies.
In 2010, Airbus went to the market nine months earlier than
its rival with fuel savings on a new version of its A320 made
possible by new engines. The revamped A320neo continues to upset
the traditional balance in sales of medium-haul jets between the
In just six weeks between September and October this year,
Airbus successfully wooed Delta Airlines, supplanted Boeing at
Mexican budget carrier VivaAerobus and ended its monopoly at
Japan Airlines for larger models.
By end-November, the A320neo had a cumulative total of 2,523
orders, or 61 percent of the market, compared with 1,639 for
Boeing's competing 737 MAX, according to Airbus data.
"They always compete for market share, but there has been a
change of pace in the battle between the A320neo and 737 MAX,"
said Teal Group aerospace analyst Richard Aboulafia.
Conner, promoted from sales chief in June 2012, had already
brought in a more direct approach, keeping up the habit of
negotiating personally with airline bosses to clinch big deals
and achieving the number one spot in overall sales last year.
But amid recent losses, the former high school football
player decided to win back territory with a coaching effort
based on unvarnished talk about the archrival's strengths, rare
for an internal communication.
The new campaign reminded employees that Airbus had beaten
them in net orders for much of the last decade and was now
sitting on a bigger backlog. It was seen as a bold move in an
industry where executives diligently stay on message.
By putting sales at the heart of company culture, and
conducting frank post-mortems on losses like JAL, Conner has
shifted Boeing's airplane division towards market results and
away from the engineering-driven focus of his predecessors.
It also highlighted another burning topic: to regain market
share and fund the company's future growth, Boeing first needed
to put itself in a position to win by improving service and
lowering costs, including the cost of its union labour. Boeing
is currently locked in a dispute with workers over where to
build its next jet.
Boeing says it does not target a specific market share, but
is widely said to be looking to restore a broadly equal split in
the single-aisle medium-haul jets seen in the past decade.
"We think about winning campaigns, not about accepting a
certain market share," Boeing Chairman and Chief Executive Jim
McNerney said at last month's Dubai Airshow.
Analysts say market share is, however, a key concern in a
duopoly such as that between the world's largest planemakers.
Failing to keep up volumes risks allowing a competitor to
run away with advantages in costs, increasing its power to offer
better prices and win even more share.
Industry analysts say Boeing's 40-percent share of the new
single-aisle sales is getting close to a point of no return.
Furthermore, losing ground in the single-aisle market
restricts the supply of cash needed to maintain the attack on
other fronts, notably the higher-margin long-distance jets.
"Don't make any mistake; in this business market share is
extremely important," said a top executive who has done business
with both companies said. "You don't do stupid deals, but
everyone thinks about it to some extent."
Although its underlying strategy has not changed, at some
point in recent months, according to industry officials,
suppliers and buyers, Boeing drew a line in the sand and put
more emphasis on regaining share in the single-aisle market.
It flagged its intentions with a surprise decision to
increase 737-family production by 23 percent in four years,
leap-frogging Airbus and freeing up more planes to be sold.
Under Conner's latest winter offensive, people in both camps
say Boeing has stepped up an already vigorous sales effort,
identifying key campaigns it wants to win.
Some say the 58-year-old has taken a page out of his rival's
playbook by racing to close deals at the end of the year when
the industry is totting up annual wins and losses.
Air Canada was therefore seen as a sales contest to watch.
Planemakers compete by blocking and tackling each other with
the help of price cuts and other sweeteners like training, but
winning Air Canada also called for an audacious throw.
The airline wanted to get rid of elderly planes sitting at
high values on its balance sheet and had made that a key part of
any deal, according to a person familiar with the talks.
Boeing agreed to buy back up to 20 Embraer 190s as
trade-ins, the airline said. Industry sources said Boeing may
also buy two of its competitor's jets: Airbus A340s that Air
Canada had leased to a Brazilian airline, but were sitting idle.
"The Air Canada win implies that Boeing might actually break
out of a 40-percent market share and hit back onto Airbus
territory," Aboulafia said.
Despite Boeing's focus on winning new sales, Leahy said he
was confident of keeping 60 percent of the market for
single-aisle jets because the A320's makeover is more extensive,
widening a relative gap in performance against the 737.
Boeing disputes the Airbus performance claims and insists
its 737 workhorse jet is, and will remain, more efficient.
Most airlines say the aircraft are broadly similar.
From Canada, the contest shifts to the UK, where Boeing aims
to overturn Airbus at Monarch Airlines, and China, the world's
fastest-growing market, which is looking at revamped jets.
Boeing's top sales executive, who took over Conner's old job
last year, says it is a long-term struggle he aims to win.
"There are 23,000 single-aisle airplanes forecast to be
delivered in the next 20 years, and so far we and Airbus have
sold just 4,000 of those," John Wojick told Reuters.
"Airbus is declaring a decisive victory when only the first
quarter of the game has been played. We plan to win our fair
market share," he said in an interview at the Dubai Airshow.