Emirates helped rescue June's Paris airshow with a huge signing for the Airbus A380, while Boeing gave shape to the 7E7 dreamliner. Elsewhere the regional sector got back into its stride
The 46th Paris airshow was never likely to be a dynamic affair. With the air transport industry in crisis, the show was already taking place against a gloomy backdrop, dampened even further by the political rift between the USA and France over opposition to the Iraq war.
There were large holes in the flying display left by the absent US fighters. The top tier of executives from the big US aerospace manufacturers excused themselves too. With little new civil business in prospect, airline chief executives from anywhere were as scarce as the few orders likely to be signed.
Much of the interest at the show came more from the continuing battle between Airbus and Boeing over the future size and shape of airline fleets.
Boeing is still pushing hard on the theme of fragmentation, now with its 7E7 mid-market aircraft. The manufacturer hopes to gain board approval to launch the model even as early as the first quarter of 2004. An increasingly confident Airbus seemed unworried by this potential future offering. Chief executive Noel Forgeard opened the show by simply pointing out that: "The A380 is reality. Today."
As the show progressed, his confidence seemed well placed. The biggest buzz of a hot and humid week in Paris came when Emirates signed a $19 billion order with Airbus - the largest ever placed - to include 21 new 550-seat A380s alongside 20 A340-500/-600s. These are on top of an additional two A380s it will lease from ILFC and an earlier order for 22 placed at the last Dubai airshow late last year.
Later in the day, Boeing held another Emirates press conference to mark the placement of 26 of its 365-seat, longer-range 777-300ER. Admittedly none of these represented new orders, and 22 would come out of the existing fleets of lessors ILFC and GECAS.
Subsequently, Korean Air signed a memorandum of understanding (MoU) for seven 777s and two 747 freighters. However, even that was swiftly followed by an announcement that this long-time Boeing widebody customer - which operates 54 Boeing widebodies - had signed an MoU for five Airbus A380s, plus three options. This takes the A380 orderbook to a total of 129 commitments, of which 116 are firm orders, from 11 customers.
But despite the growing A380 orderbook Boeing still insists that fragmentation is the way ahead, with smaller aircraft on point-to-point services. Two years ago at Paris, Boeing had unveiled its exotic Sonic Cruiser concept. That has since given way to the more practical need for efficiency over speed and evolved into the less futuristic 7E7.
Boeing says the 767 replacement - officially dubbed "the Dreamliner" at Paris - will feature 8-10% lower unit operating costs and 20% lower fuel burn than the Airbus A320-200, the competition's entrant in the 250-seat range. Some 8% of the fuel burn gain will come from future more efficient engines; 6% will come from the lighter all-composite airframe and aerodynamic improvements; while a further 6% will come from the design gains opened up by these core improvements. Another important benefit could be flight deck commonality with the 777, which is being considered.
Powerplant discussions centred on the degree to which the aircraft's cost improvements would accrue from new engine technology, and which manufacturers would be making the 7E7 powerplant. Boeing has said it will not repeat the experience of the 777 engine competition, when all three of the big engine manufacturers invested in new powerplants only to find themselves in a vicious three-way price war. Instead, it will either limit the field to two makers or award a sole-source position.
Mike Benzakein, general manager of advanced engineering with GE Aircraft Engines, says that "no question, the 7E7 is important for us", adding that "we feel confident that we will be part of the game, whether it's a sole-source or dual-source game." Pratt & Whitney and Rolls-Royce too are keen to stay in the game, and are due to find out by the end of the year.
For its part, Airbus is content to point out that both the engines and the aircraft are still only on the drawing board. Chief commercial officer John Leahy added to speculation over whether the Boeing board would be willing to underwrite a multi-billion dollar campaign to reclaim the mid-size civil aircraft market, rather than invest in defence.
Toby Bright, executive vice-president sales, Leahy's counterpart at Boeing, asserted that the company would have the 7E7 in the market by its planned 2008 entry into service. He adds with genuine sincerity: "They've got to let us build this plane."
Airbus vice-president marketing Colin Stuart also questions the size of the aircraft market that Boeing has identified in the 200-250-seat aircraft segment. Although Airbus does not argue with the overall number of 2-3,000 aircraft in the next 20 years, Stuart says that its research has identified two quite distinct markets:one for a long-range type serving routes of 3-6,000nm, and a shorter-range version typically serving inter-regional routes of around 400nm. He questions whether the faster, long-range 7E7 design will be able to compete successful in both sectors.
Regional return
Meanwhile, the regional aircraft makers were back at Paris with better news than of late, with a few major orders now on the books and more expected to follow. Bombardier president Pierre Beaudoin says the company still has to be "prudent" in its planning but recent and potential orders and the loosening of pilot scope clauses in the USA allow it to "see the future with a lot of confidence".
Mauricio Botelho, Embraer's chief executive, is also upbeat about the future despite a glitch in the plan to certificate and deliver its new 70-seat Embraer 170 this summer. Both will now take place in November. Luis Affonso, Embraer senior vice-president engineering, says the task of integrating a new generation Honeywell avionics system is "taking longer than expected". Since Embraer had planned two separate 170 certifications - with additional functionality in the second - it has decided to combine them into one, he says.
Embraer now expects to deliver 110 regional aircraft this year, some 22 less than planned but aims to make that up with 160 deliveries in 2004. The company is accelerating development and first delivery of the 190 to 2005 to accommodate a large order received prior to the show from JetBlue Airways. This will put it ahead of the 195, ordered by launch customer Swiss, which wanted a one-year deferral of delivery.
Paul Tellier, Bombardier's president of five months, used the Paris air show for an entente cordiale between his company and Embraer, by paying Botelho a visit. "I believe in getting to know your competitor," he says. "On some issues, we'll be on the same side."
Referring to years of contentious proceedings before the World Trade Organization over aircraft financing, Tellier said he was pleased that the case is over; that the large US Airways order was split equally between the two companies; and that financing was not an issue.
Both companies, he said, would compete vigorously in the future "on the basis of our products and not on financing". Botelho, responding in kind, later made a courtesy call to Tellier.
Source: Airline Business
