Friday, May 08, 2009

Swords are flashing in the skies as aircraft majors Boeing and Airbus get ready to fight with grit and splendour.

4Ps B&M’s Ratan Lal Bhagat scans the battle field...

Swaying the razor sharp swords, delivering flying kicks, mind-numbing punches and artful killing moves; the Samurais were the ultimate masters of war. Fighting till their last drop of blood, the Bushido following knights did everything to keep their flags flying high. Even in the worst situations their sole motive was to knock their opponent down and emerge victorious. Today the global skies are witness to a similar warfare between two modern Samurais, Airbus and Boeing, masters in their own right. After rivaling each other in almost everything, the two are fighting the Battle of Kawanakajima and the victor will take the honours. In these difficult times winning or loosing is a matter of survival; a minor slip and the other would deliver the deathly kick.

For decades Boeing had been the undisputed emperor in the arena with numerous successful jetliners. Hinged with multiple projects being pursued and then being cancelled (the Sonic Cruiser project being one of them), Boeing began to lose ground to a competitive and aggressive Airbus. Subsequently in 2003, Boeing lost the crown of market leader to Airbus, which gained an upper hand by offering an aircraft in almost every commercial aircraft class. The Toulouse based manufacturer has gradually expanded it’s family of aircrafts that now includes the A330, A340 and the mammoth A380, making a huge dent in Boeing’s market share. The A320, for instance, has been preferred by several low cost operators over the traditionally used B737 series. “Not only does it (A320) offer the widest fuselage in the market but it offers the most space and passenger comfort. When it comes to operating cost the A320 Family is simply the best,” said John Leahy, COO, Airbus. But Boeing has no plans to take the blows lying down and is leaving no stone unturned to gain back what it lost. The American is all set to combat the Airbus lineage with its own salvos including the 737, 777, 747-8 along with its most ambitious and talked about project: the Dreamliner 787.

In a major blow to Boeing, however, customer expectations for higher operating costs have helped Airbus outdo Boeing. “Airbus aircrafts are considerably more fuel efficient and profitable, and many airlines plan to replace aging aircrafts with the new planes,” supports Michael Englund, Chief Economist, Action Economics. Airbus has also developed a universal cockpit design for its entire fleet. This helps in optimum pilot utilisation thus saving training cost. This eventually has led to the increasing market share of Airbus lately.

Over the last fiscal, Airbus has won 777 net orders (900 new gross orders), valued at a mouth watering $100 billion at catalogue prices. “At Airbus we are prepared and confident: our leadership team is aligned, integration is progressing well and we have a solid financial basis...” said Tom Enders, CEO, Airbus. This has fuelled the growth of Airbus in terms of market share now at 54% for all commercial aircrafts. “In terms of aircraft deliveries, Airbus exceeded Boeing in 2008 by more than one hundred planes (483 to 375), but Boeing had to defer delivery of approximately 100 planes because of a labor strike,” explains Craig Fraser, Analyst, Fitch Ratings, thus discounting the lead and putting both of them on the same podium.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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