Airbus turns screw on rival

Europeans consolidate lead over Boeing with emphatic win in 2004 order battle - but 7E7 spearheads US fightback

Airbus was in high spirits last week when it confirmed that it had out-delivered its US rival for the second successive year - and by a bigger margin than the watershed of 2003 when it beat Boeing for the first time ever. The Europeans also won the order battle, by a huge margin - but Boeing can take comfort from the fact that the arrival of its new 7E7 twinjet has been felt by Toulouse's A330 sales team.

The two manufacturers' combined production and net order tallies were up 3% and 30%, respectively, on the previous year, to 605 deliveries and 638 orders. This growth was driven mainly by Airbus, which had a strong year in both output and sales terms. The company's 320 shipments all but matched its personal best of 325 deliveries in 2001, as major production rate increases on the single-aisle line began to take effect. The result is that, having overtaken Boeing in the crucial output stakes in 2003, the gap widened last year so that Airbus ended with a 53% market share, worth "slightly more than €20 billion [$26 billion]".

As well as driving output growth, the A320 was largely responsible for Airbus's net orders increasing by 44% to 366, as it beat Boeing in some important low-cost carrier (LCC) campaigns. Significantly, this figure does not include AirAsia's December order for 40 A320s, as it will not be firmed up until this year. Responding to accusations that the manufacturer was "buying" deals through lower pricing, Airbus chief executive Noel Forgeard said: "We have not 'bought' market share: our orderbook this year carries higher price tags in each category."

Boeing's output increased by just four units, to 285. The arrival of the 7E7 helped propel net orders up by 14% to 272, but sales of the 737 declined, due partly to Boeing's failure in key LCC campaigns. Given the company's mid-year predictions of triple-digit 7E7 orders in 2004, it must have been surprised and disappointed to end the year trailing Airbus 43% to 57% in the share of 2004 net orders. The combined order backlog has grown slightly and Airbus dominated with a 58% market share.

The timing of Airbus's latest triumph could not have been better, coming in the build-up to the A380's formal unveiling in Toulouse and in the year that Forgeard hands over the reins to his as-yet unnamed successor as he moves on to be co-head of EADS.

But as Forgeard boasted about Airbus's market dominance in the single-aisle and large (300- to 375- seat) widebody categories, he was reticent in acknowledging the inroads that the 7E7 made last year into what had been one of Airbus's strongest products - the A330-200.

When pushed, chief commercial officer John Leahy conceded that the 7E7's arrival had given Boeing the lead in that sector: "Their 65 orders for 767s and 777s, against our 25 for the A300 and A330-200, gives them a 72% share," he said.

This development, which was clearly not in the Airbus script, serves to underline the significance of the new Boeing twinjet in the ongoing battle between the manufacturers. But Leahy points out that Airbus's response to the 7E7 - the A350 - did not get its commercial launch until the end of the year, and its 10 commitments from Air Europa, and other deals, "won't go into the backlog until we fully launch the A350", he says. "I expect to have launched with 50-60 orders by June's Paris air show".

Airbus is relieved that it has managed to see off the potential onslaught of 7E7 order announcements that looked likely last year, through the creation of the A350. "Airbus put a hole in Boeing's Christmas stocking," says Leahy, adding that it is talking to "most of the airlines that have commitments for the 7E7" about the A350.

The outlook for 2005 is for another significant increase in combined output, to around 680 aircraft. Airbus should maintain its lead by delivering 350-360 aircraft, against Boeing's forecast of 320. By the end of this year, Airbus's monthly shipments should be running at around 24-26 single-aisle aircraft and seven to 7.5 A330/A340s, which would put the 2006 rate close to 400 aircraft. Executive vice-president programmes Gerard Blanc says Airbus aims to deliver 12 A380s next year and 31 in 2007.

Leahy expects Airbus's 2005 orders will be down slightly "in the 300-350 range", as 2004's strong sales have pushed slot availability out several years and may discourage large orders, like Air Berlin's 70 A320s. Leahy aims to retain Airbus's 55% market share, but concedes Boeing has the same ambition. "We won't know where we really are until towards year end".

Notes: *Airbus 2004 values based on its published figures, except backlog, which is estimated. Airbus says the value of deliveries were "slightly more than g20 billion" ($26.1 billion at current exchange rates). **Boeing 2004 delivery value estimated from an extrapolation of 2003 revenue. Other 2004 values based on 2004 list prices, while previous year deliveries are based on 2003 revenue and 2003 net order value estimated from 2003 list prices. Data includes A319CJ and Boeing BBJ. Changes: negative = cancellations; positive = an order has been converted from one model to another but no "new" order has taken place

MAX KINGSLEY-JONES / PARIS

Source: Flight International