Boeing Bounces Back in Commercial Jet Race
RENEE MONTAGNE, host:
Time now for business news. For airplane makers Boeing and Airbus, this has been a banner year with a record number of new orders. Though America's airline industry is struggling financially, foreign carriers are modernizing their fleets and expanding. In many cases, Boeing and Airbus competed head to head for new orders. And for the first time in five years, Boeing has won more orders than its rival. As NPR's Wendy Kaufman reports, it's a major turnaround for the company.
WENDY KAUFMAN reporting:
Randy Baseler is a happy man. As Boeing's vice president for airplane marketing, he has watched the tally of new Boeing orders climb to 870 airplanes. That's just seven short of a company record and is especially impressive when you consider that Boeing had been on a downward spiral for the last few years. The company had no new models whereas its European rival, Airbus, did. Airbus was outselling and outdelivering Boeing, and as Baseler knew all too well, the American share of the market was steadily eroding.
Mr. RANDY BASELER (Boeing): One of the most often and first-asked questions in the forums that I would be attending, the question was, is Boeing going to stay in the commercial airplane business? And it seemed really weird that I'd have to stand up here as a vice president of marketing and say we still have an open sign that's lit. Nobody asks that question anymore.
KAUFMAN: Baseler says while it may have seemed as though the company wasn't investing in the future, it was. So it's no accident that Boeing is back stronger than ever.
(Soundbite of production line work)
KAUFMAN: Here at this 737 factory in Renton, Washington, they're adding a second production line to keep up with swelling demand. The manufacturing process itself has been streamlined. The planes move forward at the rate of two inches a minute from one assembly area to the next. It has enhanced quality, reduced inventory levels, and cut the number of days needed to build a plane. But it's Boeing's brand-new jetliner, the 787, that's largely responsible for the company's turnaround. The plane will carry between 200 and 300 passengers on non-stop flights from places such as Los Angeles to Sydney and New York to Hong Kong. Boeing says the jet will use 20 percent less fuel than any plane in its size. For airlines, that's critical because the price of jet fuel is up nearly a third over a year ago.
While Boeing was putting much of its research and development dollars into the 787, says Baseler, Airbus was pursuing a different strategy, focusing on a new superjumbo, the 550-seat A380.
Mr. BASELER: They're expecting a significant shift in airplane size, in fact, a 20 percent increase in average airplane size, and we just don't see that. In fact, at the very top of the segment where the A380 is, which is over, you know, 500-seat category, they're projecting about 1,200 airplanes. We would project about 300 in that category. So this is a big, big difference.
KAUFMAN: The Boeing vice president says this year's robust sales for the 787 and the somewhat lackluster sales for Airbus' superjumbo demonstrates that Boeing got it right.
Mr. BARRY ECCLESTON (CEO, Airbus North America): I think it's great that Boeing is back.
KAUFMAN: Barry Eccleston is the CEO of Airbus North America.
Mr. ECCLESTON: I think a few years ago, the general feeling in the industry was that the 787 was really Boeing's last best hope to stay competitive in the marketplace. Well, Boeing has done it and it looks like it's going to be a successful airplane. And as far as Airbus is concerned, we think that's great because competition is what spurs our industry to produce better, more fuel-efficient, more passenger-pleasing airplanes.
KAUFMAN: But Eccleston is quick to add that Airbus is not sitting back and sulking.
Mr. ECCLESTON: Far from it. We'll sell more airplanes than we ever sold than the year before. We'll make more airplanes than we ever made in the year before. Our production rate's going up this year, it's going up next year. It'll probably go up in 2007. I don't know how much better we can have it.
KAUFMAN: As this year draws to a close, the stock prices for both Airbus and Boeing are extremely strong. Addressing the question which company's long-term strategy is better, aviation industry consultant Scott Hamilton gives the edge to Boeing.
Mr. SCOTT HAMILTON (Aviation Industry Consultant): I think that Boeing is probably a little bit more right than Airbus. I got to tell you, I sure don't want to get in an airplane with 555 or 800 people.
KAUFMAN: Over the next 20 years, the number of airplanes worldwide is expected to double. Much of that growth will come from Asia. Industry analyst Richard Aboulafia calls Boeing's comeback the strongest industrial counterattack in US economic history and he suggests the comeback transcends the company.
Mr. RICHARD ABOULAFIA (Aviation Industry Analyst): This is a key part of the economy. There's a lot of jobs here and of course it's the most important manufactured export for the US. So Boeing's return to success is fairly important in terms of the broader economic picture.
KAUFMAN: Industry experts believe that 2006 will be another strong year for airplane makers, though not as strong as this year. Meanwhile, both Boeing and Airbus are hoping that jet fuel prices moderate, that foreign carriers continue to expand and modernize, and that the US airline industry rebounds.
Wendy Kaufman, NPR News, Seattle.
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