Karen Walker
With Boeing's troubles piling up, Airbus threats to become market share leader are no longer the war cries of the underdog. This year, Airbus is likely to take at least 50 per cent of the world market.
As Boeing announces another depressing set of results - first quarter net profits were down by over 90 per cent from $540 million in 1997 to $50 million this year, the company's chairman Phil Condit admits that pricing pressures have become acute. Boeing is faced with not only tackling its production delay problems, but must also work out if it is prepared to continue slashing prices just to maintain a dominant market share.
Boeing recently lost out to Airbus on a US$4 billion deal in Latin America. LanChile, Taca Group and TAM joined forces for the purchase so they could get the best deal, ordering 88 A319s and A320s with 87 options.
Boeing's ongoing woes now have analysts feeling jittery about the company's ability to turn its fortunes around before the next industry downturn. 'Simply put, pricing, which is now being increasingly mentioned by Boeing's management as a key concern, has in our opinion secularly changed the profitability of Boeing's commercial airline business this cycle,' says Prudential Securities' Nicholas Heymann and Lawrence Feller. They add that, while Boeing will overcome its challenges in the long run, too much has 'gone askew' for everything to be made up by 1999.
Meanwhile, a British Airways spokesman declares there is no 'truth at all' in suggestions that BA favours Airbus over Boeing. BA is 'still waiting' for proposals from both manufacturers and 'no decision' will be made before mid-year.
Source: Airline Business
