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Old 04-15-2007, 04:22 AM   #1  
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Default Big USAir order?

Airbus is pushing its redesigned A350 XWB as it goes after 60-plane order from US Airways
in bid to cut into Boeing's midsize dominance.
By Julie Johnsson
Chicago Tribune staff reporter
April 15, 2007

US Airways is about to place one of the largest aircraft orders made by any U.S. carrier since the industry collapsed in 2001, a decision critically important to the future of Airbus SAS as it tries to catch up with Boeing Co.

The carrier's choice for its 60-airplane purchase will be closely watched by American Airlines, Delta Air Lines, Northwest Airlines and United Airlines, all of which are expected to buy planes over the next two years as their finances strengthen.

US Airways is the first major airline to pit the hot-selling 787 Dreamliner manufactured by Chicago-based Boeing against Airbus' new midsize jet, the A350 XWB.

For Airbus, the stakes are especially high. It must start winning such head-to-head competitions if it is to catch Boeing in the highly profitable market for larger, long-range jets priced from $118 million to $334 million apiece.

"If they want to compete in the 200- to 400-seat segment, this is their future," aerospace analyst Richard Aboulafia said of Airbus. "This is the strongest wide-body [airplane] market ever, and it's largely Boeing's."

US Airways is one of a handful of key sales campaigns under way that could determine which manufacturer will hold the upper hand well into the next decade, analysts say.

Airlines typically spend months deciding on major aircraft purchases, carefully matching planes to routes and growth projections. The process also involves complicated horse-trading. Boeing and Airbus may throw in special deals on planes already on the market -- the 737 or A330, for example -- if carriers commit to new jets that might not be available for years, say people familiar with such dealmaking.

The task of wooing a given airline usually starts with lower-level marketing and sales executives, then moves to the manufacturers' supersalesmen, John Leahy at Airbus and Larry Dickenson at Boeing, as the campaign heats up, insiders say.

Senior leaders at the two companies often close big sales. In fact, Boeing Chief Executive James McNerney Jr. recently called on top executives at British Airways, another high-profile carrier mulling a big aircraft purchase. A US Airways spokesman declined to comment on the sales process or whether McNerney has participated.

For Boeing, its biggest challenge is not becoming complacent after dominating this segment in recent years. With the 787 selling briskly, Boeing landed 73 percent of the $94 billion in orders placed in 2006 for twin-aisle planes.

Airbus, which faltered amid management turmoil and manufacturing mishaps, is fighting back. The European manufacturer is aiming the A350 at two popular midsize Boeing planes: the 787, due to be delivered to the first customer next year, and the 777, which was rolled out in the 1990s and recently overhauled so it could fly halfway around the world.

"They need to show that they have a strong product they can bring to the market, and with very competitive pricing," said Scott Daniels, vice president of asset management for Back Aviation Solutions, a Connecticut-based consulting firm.

While Boeing has tallied 514 orders for the Dreamliner, Airbus has struggled with both the design and sales of its competing offering.

The two largest wins Airbus has notched for the A350 XWB are sales to Finnair and Russia's Aeroflot, lesser players in the global market. Singapore Airlines, considered an industry trendsetter, signed a letter of intent to purchase 20 A350 XWBs last summer but has not converted that into a firm order.

"I think they need to get their A350 either in the game or out in a big way," said Jon Bogaard, partner in the equipment-finance group at Chicago law firm Vedder Price Kaufman and Kammholz. "The jury's still out on whether they are going to do that."

Airbus' executives are optimistic that momentum will swing their way.

"This year, yes, there's a lot to play for," said Chris Jones, vice president of marketing with Airbus North America. "There's a big wave of [aircraft] replacement coming up in the next two to three years, which positions us well."

Indeed, Airbus' prospects are looking up. Qatar Airways has said it plans to announce an order for 80 A350s at a major air show in Paris this summer, becoming the launch customer for the jet. Airbus won't comment on the reports.

Dubai-based Emirates Airline, the largest customer for the Airbus' superjumbo A380 and a vocal critic of earlier designs of the A350, appears to be leaning toward the new model for an order of between 60 and 100 planes. Emirates is also considering the Boeing 787, an airline spokeswoman said.

After taking a closer look at the new Airbus jet, Tim Clark, Emirates' outspoken president, declared it much improved and approaching the technical brilliance of the 787.

"That gap has closed. Airbus listened," Clark told Bloomberg.

Other campaigns in the spotlight include British Airways, which is looking at a variety of jets to replace 14 midsize Boeing 767s and 20 Boeing 747 jumbo jets, a spokeswoman said. CEO Willie Walsh told a German newspaper last week that Europe's third-largest airline is studying ordering 10 to 15 A380s, as well as the A350 and a variety of Boeing aircraft.

Lufthansa AG, meanwhile, is looking closely at both the A350 and 787 but isn't in any hurry to make a decision, a spokeswoman said. The German airline last fall became the first carrier to buy the 747-8, the updated version of Boeing's venerable jumbo jet.

"If they ordered the 747 but not the 787, it makes you wonder if they're holding off for the A350," said Daniels.

Airbus fell behind Boeing because it made the wrong bet on the industry nearly a decade ago, analysts say. It spent heavily to build the A380, a plane that would be the largest on the market, capable of hauling 500 to 700 people between giant hubs.

Boeing, instead, focused its resources on a smaller, fuel-efficient plane that could fly as far as its 747 jumbo jets or farther. Boeing also gambled that market liberalization would open more overseas cities to international travel, and that passengers would prefer to fly directly to these locations rather than connecting through giant hubs like Tokyo, London or Frankfurt.

While the A380 has been lauded for its groundbreaking design, including a surprisingly quiet and smooth ride, it has racked up only 156 orders amid production problems that have delayed initial deliveries by two years. Airbus, in the meantime, has scrambled to come up with a midsize offering to keep pace with Boeing, which has controlled more than 70 percent of wide-body planes for the past two years.

"That's what you look for in confirming your strategy," said Randy Baseler, vice president for marketing with Boeing Commercial Airplanes. "The icing on the cake is to see Airbus basically panic."

After customers complained that earlier versions of the A350 lacked the groundbreaking engineering found in the Dreamliner, Airbus in December decided to push ahead with a model boasting a composite frame like the 787, a wider girth that will give passengers more headroom than the Boeing model, and improved aerodynamics that, Airbus claims, will make its offering more fuel-efficient.

But Airbus hasn't produced detailed engineering plans for the new jet, causing some to question whether it has resolved its design issues.

"I think they are probably having difficulty taking a single aircraft and coming up with three models that will stretch from the smallest 787 to the largest 777," said Paul Nisbet, aerospace analyst with JSA Research Inc.

Baseler said the larger wingspan and powerful engines Airbus would need for the largest A350, capable of seating 350 passengers, would weigh down the smallest model, designed to seat 270 people, making it uneconomical for airlines to operate.

"They have a big dilemma here, and I'm sure they're trying to solve it," he said. "The problem is that physics gets in the way here."

Jones of Airbus counters that Boeing conquered a similar design challenge with its popular Boeing 737 narrow-body jet, which uses the same wing design for its smallest model, which seats 110 people, as well its largest jet, seating 180 passengers.

"There is no reason why we cannot accommodate an almost 30 percent increase in capacity on the A350 XWB," he said.

One customer of both Boeing and Airbus models thinks Airbus will resolve the design issues.

"For them to be a viable company going forward, they've got to have an airplane in this segment, and so it's got to be a good one," said Toby Bright, chief marketing officer for Pegasus Aviation, a leasing company that has ordered two of the new A350s and six 787s. "They're listening to customers."

Airbus can ill-afford another delay with the model, since it is counting on sales to help pay for the billions of dollars it will cost to develop the new plane. Another distraction could cause Airbus to fall behind Boeing in designing the next generation of the narrow-body jets that airlines use for shorter trips.

Boeing already is talking to suppliers about potential designs for the jet, which would replace its 737, but probably wouldn't hit the market until the middle of the next decade, analysts and industry sources say.

"We do have a strategic advantage, whether that's two years or four years or whatever in terms of resources," Baseler said. "The real key to capitalizing on that potential advantage is really understanding this market, knowing what it is."

Unlike the wide-body jets, there is no obvious new market niche to be exploited, so Boeing is proceeding cautiously, Baseler said. Touting a new design before it is sure of the market opportunity would needlessly hurt sales of the 737, the best-selling plane in the company's history.

Airbus thinks the market breakthrough for the next generation of smaller aircraft will be tied to advances in jet-engine technology that produce substantial savings on fuel bills for airlines.

"To date, we have not seen anything that suggests this engine technology will be available anytime before the 2015 time frame," Jones said. "In the meantime, the A320 family of aircraft continues to sell very well, with almost 2,000 units on backlog."

http://www.chicagotribune.com/busine...i-business-hed
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Old 04-15-2007, 02:52 PM   #2  
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http://www.amtonline.com/article/art...tion=1&id=3866

Emirates looking to place a 100 plane order for the A350, looks like Airbus is starting to make some progress
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Old 04-15-2007, 09:32 PM   #3  
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VERY BAD DECISION ON THEIR PART! That 350-xtra-delay is not even going to compare to the 787. H3ll, it won't even be able to hold the jock of the 777...and its 12 years old!
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Old 04-16-2007, 08:35 AM   #4  
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Originally Posted by Tomct View Post
VERY BAD DECISION ON THEIR PART! That 350-xtra-delay is not even going to compare to the 787. H3ll, it won't even be able to hold the jock of the 777...and its 12 years old!
What makes you say that? Do you have any reasoning behind that comment? For starters the large A350 will be far more advanced then the 777, simply because the A350 will utililze technology almost 2 decades more modern then the 777(Emirates is looking at already replacing their 777 fleet with... A350s!).

THe A350 may have a production delay which may infact help its cause. Airbus will have had 3-5 years extra time to utilize newer technologies(even a year makes a big differance when it comes to technology)
This delay wont hurt it sells to much I dont think. It is timed perfectly with the fleet renewels of US carriers who wernt ready when the 787 was initialy offered. Even though the 787 is being released sooner, the 787 production line is backed up for sometime, carriers ordering now can choose a 787 with slightly older technology or become a early customer for the A350 and still recieve their planes around the same time.(Though Im not totaly sure on the time table for rolling the 787 off the production line)

I have said it before Ill say it again. Boeing is so proud of their composite construction, while airbus said they will not use this new composite technique. Guess what the composite construction was what cost Boeing the JSF contract. Lockheed mainted traditional techniques.
Airbus has claimed the 787 is taking to many big leaps at once, similar to what they did with their JSF plane. Lockheed and Airbus took the Stick to what you know aproach, it paid off for locheed and I believe it will pay off for Airbus
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Old 04-16-2007, 08:55 AM   #5  
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Originally Posted by Tomct View Post
VERY BAD DECISION ON THEIR PART! That 350-xtra-delay is not even going to compare to the 787. H3ll, it won't even be able to hold the jock of the 777...and its 12 years old!

What if it has the same Type rating as the A330 that USAir already flies?.......think of the scheduling/ training and Maint flexibility.
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Old 04-16-2007, 09:38 AM   #6  
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They have to look at it because the 787 is getting booked up on orders!
You can't buy what you want... You buy what you can!
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Old 04-16-2007, 09:42 AM   #7  
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They have to look at it because the 787 is getting booked up on orders!
You can't buy what you want... You buy what you can!
Exactly, unless they want to lease some 787's form GECAS or ILFAC(sp) then they won't be getting any 787's any time soon.
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Old 04-16-2007, 10:42 AM   #8  
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Exactly, unless they want to lease some 787's form GECAS or ILFAC(sp) then they won't be getting any 787's any time soon.
Yeah, and anybody who's going to lease the 787 is going to be paying a premium for it, since the backlog is so long.
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Old 04-16-2007, 11:20 AM   #9  
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Boeing is already having to redesign due to the A350! the 787-10 is a response to the A350. Which will not be out until 2012.

The A350 is a real threat now to the 787!

The possible 60-100 US air order, possible 100 order for Emirates, Qatar plans on 80+ A350's, Sinapore has 40 on order, amoung others

The A350 is mainly competing with the 777's and the 787-9.
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Old 04-16-2007, 12:17 PM   #10  
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Originally Posted by Linebacker35 View Post
Boeing is already having to redesign due to the A350! the 787-10 is a response to the A350. Which will not be out until 2012.

The A350 is a real threat now to the 787!

The possible 60-100 US air order, possible 100 order for Emirates, Qatar plans on 80+ A350's, Sinapore has 40 on order, amoung others
The 787-10 is a market response to two major Boeing customers, Emirates and Singapore, who wanted longer range and higher seating capacity, not as a response to the A350, which is still a paper airplane.

USAirways will probably order many A350s because Airbus paid dearly to help them exit from bankruptcy, in exchange for being an A350 launch customer, since noone else would step up.

The only advantage the A350 has over the B-787 is that it will be built 4 years afterwards, and may incorporate better technology since it will be newer. I wouldn;t expect it to either outsell the 787 or be a better product.
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