Boeing Versus Airbus: The Inside Story of the Greatest International Competition in Business
The commercial airline industry is one of the most volatile, dog-eat-dog enterprises in the world, and in the late 1990s, Europe’s Airbus overtook America’s Boeing as the preeminent aircraft manufacturer. However, Airbus quickly succumbed to the same complacency it once challenged, and Boeing regained its precarious place on top. Now, after years of heated battle and mismanagement, both companies face the challenge of serving burgeoning Asian markets and stiff competition from China and Japan. Combining insider knowledge with vivid prose and insight, John Newhouse delivers a riveting story of these two titans of the sky and their struggles to stay in the air.
a deal—as others [older customers], but we expected to be within shouting distance. We wanted to shake hands on it that day. “They said our price was too low, not an aggressive price. We then began talking with Airbus. The Boeing people smirked and said, ‘You will never buy those airplanes.’ And the Airbus people thought we weren’t serious and said we were using them as a foil [to drive down the price of the 737’s]. “We sent operating teams to airlines that were using both aircraft—United,
States) until the Chinese market matures—has become a Boeing preserve. The two principal airlines, Japan Airlines (JAL) and All Nippon Airways (ANA), have fleets composed almost entirely of Boeing aircraft. Offset, it’s worth noting, is in direct conflict with WTO rules. In return, Japan’s three heavies built about 15 percent of the Boeing 767 and 20 percent of the 777. Now the three are designing and building a substantial part of the 787, including the wing, the clever part of any airframe; it
the fastest growing segment in the trade. The purchase of a new airplane typically means paying a third of the cost in the two years prior to delivery. The plane may cost $45 million, meaning a progress payment of $15 million. That is a lot of cash for many airlines. But with a lease, the pressure is greatly reduced. A cash payment covering the first three months of the lease may be all that is required. And that might be no more than, say, $900,000, or about $300,000 per month. Airlines lease
became available via the Internet; in steadily greater numbers, air travelers were surfing the net for the best prices. Internet travel sites, such as Expedia, Travelocity, and Orbitz, took hold. Also acquiring greater transparency were the encrusted problems of the airlines. The financial pressure got heavy. Lenders who had helped the industry by softening loans after the events of 9/11 restored the stiffer terms. Over the next four years U.S. airlines cut capital spending by 62 percent while
business sectors are concentrated in Los Angeles, as are the major ethnic population groups that travel long distances with some regularity. That explains why KAL, after hesitating, has decided to operate its A380’s from LAX. A380 users who decide against the airport could fly the airplane instead into San Francisco. The city has worked hard at being chosen to receive A380 operators and thereby begin to displace Los Angeles as the major gateway. Its new international terminal is ready. Four of