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Last Updated: Monday, 17 July 2006, 15:18 GMT 16:18 UK
Airbus struggles as Boeing crows
By Jorn Madslien
Business reporter, BBC News, Farnborough Airshow

Airbus chief executive Christian Streiff faces the media scrum
Airbus boss Christian Streiff has been on the defensive

For Christian Streiff the Farnborough International Airshow is proving to be a crisis management exercise at the highest level.

Only two weeks into his job as chief executive of Airbus, the Frenchman boldly faced a massive scrum of journalists, armed with little more than a promise to both customers and investors.

"We will overcome the difficulties we face today," he said. "We will regain your confidence."

That is not an easy task, given the problems that have faced Airbus in recent months.

These difficulties range from costly production delays to its A380 superjumbo launch plan, to storms raging over executives' sales of shares before the delays were known, and a multi-million euro pay-off for ousted chief Noel Forgeard.

Not approved yet

There had been high hopes that Mr Streiff would tackle the crisis head-on by giving the formal go-ahead for the development of a redesigned Airbus A350 wide body jet - an already long overdue response to the challenge posed by arch rival Boeing's 787 and 777 aircraft.

Boeing boss Alan Mulally
We have a lot of compassion for what they're [Airbus] going through, new aeroplanes are hard
Alan Mulally, President, Boeing Commercial Airplanes

And in a roundabout way he did.

"I am pleased to present to you the A350 XWB, extra wide body," he declared.

But he then went on to add, cryptically: "We need to move fast, but without haste.

"I will seek approval from shareholders for an industrial launch in October."

Right formula?

Rival chief executive Alan Mulally, of Boeing Commercial Airplane, could hardly contain his glee at this additional delay to the A350's launch.

Airbus A380
Despite delays, the A380 remains an impressive sight

"Don't give up," was his advice to Mr Streiff.

"We have a lot of compassion for what they're going through.

"New aeroplanes are hard."

Yet Mr Mulally is convinced Boeing has cracked it.

Its 787, which is due to hit the runways a full three years before the new A350, should answer airlines' cries for reduced fuel bills, at a time when jet fuel costs are going through the roof, he insisted.

"Bypassing the hub, going point-to-point, is the real saver," Mr Mulally said.

Yet, Boeing is not giving up on the hub-to-hub market either, where it is rivalling the A380 with its own slightly smaller new jumbo, the 747-8.

"The 787 promise is to make a significant improvement in fuel burn," he crowed.

"We're so pleased with the response from the airlines' orders for the entire range of aircraft," he added.

Falling behind

Mr Mulally was referring to how Boeing's order book swelled to 487 aircraft during the first half of this year, up from 439 a year earlier, while Airbus saw a slump in new orders to just 117, down from 276.

Interior of Boeing 787
Interior of the Boeing 787 on show at Farnborough

And this is where Airbus is losing its battle for the hearts and minds of the aerospace community, observed independent defence analyst Paul Beaver, of Beaver Westminster.

The way Mr Beaver, and many others at the show see it, Airbus has missed a trick by still focusing on its problems, by batting back rather than launching offensive assaults.

"The problems, the conflicts, they were last month's issues. This is now," he said.

The difference between the Boeing and the Airbus presentations were notable.

"[We are] in the middle of a serious crisis with our customers. We know the competition is taking advantage of this today," said Mr Streiff.

Whereas Boeing focused tightly on its overwhelmingly bullish predictions about the market going forward, and on the green credentials of its planes, Airbus kept comparing its planes to those made by Boeing.

"We are attacking our competitor on every position," said Mr Streiff.

Airbus executive John Leahy went further, essentially insisting that arriving late in a buoyant market could be perceived as clever manoeuvring.

"You get to study your competitor, you get to study the state of the art that he has brought to the market, and you get to do better," he said, insisting that Airbus was merely "taking the time needed to come out with an aircraft that is a step ahead of the 787".

Government support

Mr Streiff was also cornered on the contentious issue of launch aid for the $10bn (5.45bn) A350 XWB project.

Arms and aircraft on display at the show

"Obviously, we are looking for government support for this programme," he said, though he did add that he could not say whether this would be launch aid or another form of assistance.

Boeing, which rivals say receives state support in different forms, routinely describes such launch aid packages as illegal government subsidies, and the issue sporadically resurfaces in global trade disputes and international airshows alike.

New orders

Soon after the kick-off of the Farnborough Airshow, therefore, it looked as if Boeing was stealing a march on Airbus, though Mr Beaver suggested everybody should take one step back to get an overview.

Standing tall on the doorstep of the media centre was the A380, an imposing reminder that despite a few wires having been crossed, "the confidence is there in the Airbus product".

"It is the process that people are going to be concerned about," Mr Beaver said.

"You have to admire the fact that they are here, and that they are here with bold faces".

NEW JUMBO AND AIRBUS
Boeing v. Airbus
Seating: 450
Cruising speed: 0.85 Mach
Flight range: 14,815km
Seating: Typical 555 (max 840)
Cruising speed: 0.85 Mach
Flight range: 15,000km




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