BERLIN: Drained by their contest to create the carbon-fibre wonder jet, Airbus and Boeing are observing a truce in futuristic new developments while they refill their coffers with makeovers of older but reliably profitable models.
The two companies have gone head-to-head with their costly carbon-fibre experiments — the wide-body Boeing 787 Dreamliner and Airbus A350 — but are now recognising the need to take stock.
Airbus Group Chief Executive Tom Enders showcased the A350 to Chancellor Angela Merkel at the Berlin Airshow this week, but has warned the industry can no longer afford to “bet its shirt” on game-changing projects that “lead to a crazy game of chicken with the competition and leave nothing to pay the bills”.
U S rival Boeing is also trying to juggle the blistering pace of technology that gave birth to the world’s first carbon-fibre jetliner with a sober message for investors. Investors have responded positively, pushing shares to record levels after both planemakers successfully applied a similar revamp strategy to their top-selling narrowbody jets.
“The pendulum is swinging back from high science to return on investment, and nothing provides almost guaranteed returns like derivatives of successful jets,” said Richard Aboulafia, vice president of analysis at Virginia-based Teal Group. Airbus is fine-tuning plans to put new engines on the A330 long-haul jet — its second main cash cow after the A320.
A surge in A330 orders triggered by delays to the 787 has slowed down, threatening a drop in deliveries from 2016 if Airbus takes no action to improve fuel efficiency.
Its cash pipeline has already been squeezed by the $15-billion A350 and heavy overspending on earlier programmes such as the A380 and military A400M.
Airbus is expected to make a decision later this year, though there is a slim chance it will come as early as July’s Farnborough Airshow. The “A330neo” could enter service in 2018.
Complicating the decision is an unresolved internal debate on whether to offer one choice of engine or two, with Rolls-Royce and General Electric in the race.
A single choice of engine is cheaper and easier to produce, since the engine maker will take more of the risk, but it is less popular with airlines. Negotiations between Airbus and engine makers are expected to intensify in coming weeks.
Reuters
