Boeing turns up heat on Airbus with Emirates deal

Boeing turns up heat on Airbus with Emirates deal
Tue Jul 18, 2006 12:36 PM ET

FARNBOROUGH, England, July 18 (Reuters) - Boeing Co. ratcheted up the pressure on European rival Airbus on Tuesday, unveiling a $3.3 billion plane order and forecasting a pick-up in demand for its already hot-selling 787 mid-sized jet.

Boeing Chief Executive James McNerney also sounded relaxed about Airbus's plans, announced on Monday, to spend $10 billion on redesigning its A350 mid-sized rival to the 787 "Dreamliner".

"The definition of the (A350) plane is really not anywhere near concrete," he told Reuters in an interview on the sidelines of the Farnborough International Airshow near London.

"If you read between the lines, they still have months to go before they can get a concrete definition or even put parameters around what they can offer in comparison to us."

The $3.3-billion order from Dubai-based airline Emirates [EMAIR.UL] for 10 of Boeing's 747-8 freighter planes was the largest yet announced at the airshow.

The deal, confirming a Reuters report from Sunday, was also a blow for Airbus, as Emirates recently walked away from plans to buy the freighter version of its A380 superjumbo.

After five straight years of losing the race for plane orders, Boeing has pulled far ahead so far in 2006, outselling Airbus by 4-to-1 in the first six months of the year.

Airbus, 80-percent-owned by European aerospace group EADS <EAD.PA>, has been hit hard by delays to the A380, the world's biggest passenger plane, as well as by customer complaints about its inconsistency over plans for the A350.

The $10-billion redesign was a bid to address these concerns and, while Airbus won more support from its existing customers on Tuesday, not everyone was convinced.

"We thought they might call it the 360," quipped one industry executive, teasing Airbus about the spin it is in.

Airbus has a long way to catch up with Boeing's 787 which is due for delivery in 2008, four years ahead of the new A350.

"There's a lot more in the hopper," said Boeing's Mike Bair, general manager of the 787 program, when asked about orders at a news briefing on Tuesday. "We've got a lot of activity going on still...if anything the pace is picking up."

MID-SIZED BATTLEGROUND

Bair said Boeing would probably increase production rates for the 787, which is already the U.S. group's most successful launch on record, racking up more than 360 firm orders in two years on the market.

He declined to say by how much production might be increased or when a decision would be made. The plane is sold out for delivery through the first half of 2012.

Airbus, meantime, won more support for its A350 redesign from customers, though buyers were quick to point out they don't expect to pay more for getting what will be a bigger plane.

"I think it is going to be a better aircraft," Marco Antonio Bologna, chief executive of TAM, Brazil's largest airline, said in an interview.

"We don't believe we should pay more but there are other things to take into account, such as payload, and I would expect to keep the same net present value for the aircraft."

TAM, Airbus's largest South American customer, was a launch customer for the 300-seat A350-900. This is the larger of two original models and will be replaced by a 314-seat longer-range version under what is now a range of three aircraft.

Vijay Mallya, chief executive of India's Kingfisher Airlines, struck a similar tone.

"Our 350s are going to come to us in 2012 and if we are getting a brand new aircraft for the same price, something that is a lot better than the old 350s, then it is a reason to celebrate," he told Reuters in an interview.