If Airbus Industrie's managers find the heights to which they climbed in 1999 overwhelming, they show no signs of vertigo or of concern about whether they will be able to sustain their market lead. Now is the time to relish the transition from underdog to top dog.
"Much has been said about our success in 1999," says Airbus president and chief executive Noel Forgeard. "However, I would like to emphasise that this was not a one-year wonder, but rather a continuation of a sustained trend which has seen our order intake steadily increase over the last decade, to the point where we have been consistently winning around half of all new business for the last three years in a row."
But snatching lead place from Boeing will rack up the pressure on Airbus. Having captured 55% of all new orders for aircraft with more than 100 seats in 1999 - 52% of the market in dollar terms - the manufacturer is committed to ramping up production just as its US rival takes a breather. While Boeing plans to deliver 491 aircraft this year, compared with 620 in 1999 and 559 in 1998, Airbus will be increasing production from a record 294 in 1999 to around 350 a year towards the middle of this decade.
Airbus' success is also likely to make it an easier political target in Washington. John Leahy, senior vice-president, commercial, at Airbus, admits that political activity has become more heated in recent months. "There is a lot of 'subsidies' lobbying going on in DC. We need to get better at lobbying ourselves," says Leahy. "They are lobbying to just about anyone who will listen; it's what I would call Airbus bashing. For instance, they are lobbying heavily against the A3XX, when this aircraft will have 40% of its content from 600 US suppliers."
Boeing responded swiftly to the UK Government's announcement that it will provide $840 million in loans towards A3XX development, calling for the US Government to intervene and saying the UK agreed to end such practices in its 1994 World Trade Organisation subsidies agreement. Boeing Commercial Airplanes' president Alan Mulally denies, however, that the stepped-up lobbying is personal or is about fighting back for its lead place in the market "We are supportive of free trade with common, healthy rules. It's nothing to do with Boeing or Airbus; it's about governments agreeing to some rules for global free trade and following through on those rules," he says.
Airbus has clearly had luck on its side over the past couple of years. The Asian crisis was far more damaging to Boeing's widebody sales than to the Airbus A320 single-aisle family. The production crisis in Seattle also played in favour of Airbus at a crucial time. But there is credence too in the Airbus argument that its newer aircraft types, especially the highly successful A320, have become the preferred choice. "Airbus now has an excellent line-up," says one US analyst. "Their aircraft are more modern, more comfortable and offer more space."
And Airbus intends to keep expanding that line-up. In addition to its anticipated launch of the A3XX at the end of the year, it also is targeting 2003 for service-entry of its proposed A330-100 as a replacement for the A310 and A300-600 for short- to medium-range routes. Singapore Airlines has issued a request for proposals to Airbus and Boeing to replace its 16 A310-300s and Airbus believes the A330-100, a hybrid of the A300-600 and the A330, will fit the bill.
In 2001, therefore, Airbus is likely to be ramping up production of its existing products while simultaneously developing two new aircraft types. That is a heavy workload while also defending a lead market position that Boeing is keen to take back. But, having finally worn the crown of market leader, this is a position that Airbus is unlikely to relinquish without a fight.
Source: Airline Business
