Boeing seeks big orders to regain market share

Boeing Co heads to the year’s biggest air show under a new leader looking to make a hit with its latest single-aisle aircraft and undermine Airbus’ leadership of the global $100 billion a year airliner market.

The world’s No 2 aircraft maker, which put top salesman Ray Conner in charge of its commercial plane unit recently, will also be grilled by international customers on how it plans to replace its successful but aging 777 mini-jumbo and increase production across the board.

“There’s going to be lots of eyes looking toward Boeing 737 MAX orders,” said John Plueger, Chief Operating Officer of Air Lease Corp, one of the aviation industry’s leading aircraft buyers. “And a lot of attention focused on production rates and the overall worldwide demand equation.”

Boeing is scrambling to catch up to Airbus in orders for single-aisle aircraft - the workhorse for many airlines - with its revamped, re-engined 737 MAX unveiled last year in response to Airbus’ reworked A320neo. Boeing has 451 firm orders for the MAX since launching it last August, but wants 1,000 sales by the end of this year, as it tries to close the gap with Airbus, which has already booked more than 1,400 firm A320neo orders.

A good part of Boeing’s goal could be realised at the Farnborough International Airshow next week, where airlines and leasing companies like to grab publicity with big orders.
Air Lease Corp, run by leasing pioneer Steven Udvar-Hazy, is one of the most likely MAX buyers at Farnborough, having firmed up an order for the A320neo a month ago. The Los Angeles-based firm says it has had discussions on the MAX, but would not be drawn on the date of any announcement.

“Ask Boeing,” Udvar-Hazy wrote in an email to Reuters. Boeing is counting on Udvar-Hazy, along with American Airlines and other big buyers, to help it regain the historical 50/50 split with Airbus in the single-aisle aircraft market, which tilted in the European company’s favour last year on the back of strong A320neo orders.

“I would definitely expect that (50/50 split) to continue,” said Beverly Wyse, general manager of the 737 programme, in a briefing at Boeing’s Renton plant near Seattle last month. “We have thousands more proposals out. I think you can expect over the next few months to see several of those orders come home.” Beyond the 737, Boeing needs to reinforce its presence in the smaller, but equally valuable, market for widebody, long-haul airliners, where it traditionally has led the market. Its massively successful 777, its second biggest aircraft behind the 747 jumbo, is due for a replacement, but Boeing is taking its time.

Unless Conner decides to take Boeing in a radically new direction, Boeing is unlikely to make any quick decisions on the new 777 - dubbed 777X by the industry - as it weighs the views of its customers.

Boeing held a two-day “summit” of key 777 customers, including Air Lease and Emirates, two weeks ago in Seattle, to find out what they want to see in the new aircraft. People with knowledge of the discussions say Boeing gave no indications of how it was leaning, or when it would make a decision.

Boeing officials acknowledged that Airbus’ final specifications on the slow-selling A350-1000, the largest of its mid-size aircraft, will affect Boeing’s own plans to bring in the new 777 by the end of the decade.

“We are interested to know what it (the A350-1000) is because we’re going to be better than whatever it is,” she said. “We have time to move, we have a few years to move if we have to.” Boeing must also make a decision about the next variant of its popular, carbon-fiber 787 widebody - known as the 787-10 - which will be a stretched version of its 787-9 model, carrying around 300 passengers, but with a shorter range.

“If I were them, I would do 787-10 first; go straight after Airbus' greatest strength, which is the A350-900,” said Aboulafia, referring to Airbus’ rival 300-seat model.
Boeing plans to fly a 787 in the displays at Farnborough, giving many their first up-close look at its latest jet.  Boeing either just has, or is in the process of, ramping up production of all its major aircraft families to meet surging demand for the newest, most fuel-efficient models.

At its 737 plant in Renton, south of Seattle, there is a hum of construction as the company builds the infrastructure to hit its aggressive targets.

Boeing is currently producing 35 737s a month, having just ratcheted up from 31.5 a month this year. It plans to go to 38 a month in April 2013 and 42 about a year after that. It is even now considering what it would have to do to go still higher.

That puts Boeing slightly behind Airbus, which is planning to hit 42 A320s a month by the end of this year, but has no plans yet to go further. Boeing’s plan is to build the 737 MAX along the same lines as the existing 737 NG. The first MAX is scheduled to fly in 2016 and enter service in 2017.