Boeing to Airbus: We've got you boxed

The US plane maker asserts its rival's new A350 isn't a real threat.

By MSN Money Partner Jun 19, 2013 1:03PM

CNBCFile photo of a Boeing Co. 787 Dreamliner on display at Reagan National Airport in Washington, D.C. (© Andrew Harrer/Bloomberg via Getty Images)By Kiran Moodley


In a week that has seen Boeing's (BA) Dreamliner meet its new challenger in the form of the Airbus A350, the U.S. firm maintains that the new European aircraft will not affect its share of the wide body market, claiming: "We've got them boxed and bracketed."


Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, was speaking on a day that saw strong orders for Boeing's Dreamliner range, as well as the launch of a newer model of the range, the 787-10, a stretched version of the aircraft.


Air Lease Corporation purchased 33 airplanes on Tuesday, ordering three 787-9s and 30 787-10s. GE Capital Aviation Services, International Airlines Group, Singapore Airlines and United Airlines have also all opted for the Dreamliner.


For Tinseth, Boeing has forced Airbus into a corner it cannot escape when it comes to the wide body market. "They're trying to address this really broad market with one family of three types (A350)" he told CNBC. "We've been doing really well with the 787 and the 777. We have just extended our 787 line; were going to improve on the 777; we're going to have airplanes bigger than theirs and smaller than theirs.


"We're going to have direct competition across each of their products. We've got them boxed and bracketed. We have a greater opportunity because we can address more of the market. So I don't see how they grow their share."


Boeing believes its 787s can easily compete with Airbus' A350 when it comes to less seat numbers, and its 777 range can attack Airbus regarding higher seat figures.


Airbus: We like our box

However, John Leahy, Airbus's chief operating officer for customers, highlighted that the A350 had outsold the 787 by a 3:1 ratio over the last five years.


"That's a corner I want to stay boxed into," Leahy told CNBC.


Meanwhile, Airbus CEO Fabrice Bregier told CNBC that he expected Airbus to gain at least 50 percent of the wide body market over the next 20 years, and said that he believed Boeing's future upgrade of the 777 showed that the Americans were following them: "We have 3 members, and the A350-1000, the biggest one, which will enter service in 2017, forces Boeing to launch the upgraded version of its old 777. So I think that the battle will be tough, I have a lot of respect for our competitors, but we will no longer be the follower."


While Tinseth is confident that Boeing covers many grounds with its range of 787s and 777s, Emirates President Tim Clark told Bloomberg that the 787-10 may be too small for the popular airline.


Still, Tinseth also attacked Airbus A380 plan as particularly misguided, despite Doric Lease Corp ordering 20 of the large aircraft on Monday. Boeing announced late Tuesday that Korean Air had agreed to purchase five 747-8 Intercontinental airplanes and six 777-300 extended range jetliners.


"When you bring an airplane program to the market you have to see what the market is going to be for that airplane: what kind of technologies do I have to have; what size range capabilities does the airplane have to have. Frankly, as we look at the market we do see a market for a big airplane, but it's relatively small.


"We looked at that market segment and there are certain markets that need big airplanes, so that's why we bought our 747-8 Intercontinental. We invested the right amount of technology and we made the right investment for us to make sure that we had a product that would be successful in the market place. Airbus had a different view of the market. They launched their airplane in 2000, they said they'd be 1,225 A380 products in a 20 year period, and their estimates were just flat wrong. The airplane isn't performing that well, they made a huge investment to capture a very small market."


Tinseth also claimed that Bombardier's CSeries would not make a dent in Boeing or Airbus' share of the single aisle market, suggesting that Bombardier was struggling to meet its target of 300 orders by next year.


He did however say that the single aisle aircraft market was still an open-playing field in the years to come.


"If you look at Boeing and Airbus, we've done pretty darn well in the single aisle side. But if you also look at the single aisle side, there is still a lot of territory that has to be claimed.


"Since 2010, between Boeing and Airbus, we've sold roughly 3,500 Maxs and Neos. That means there's another 20,000 plus airplanes that have to be identified and manufactured, so there is room for us to grow and room for another competitor too."


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