Competition between Airbus and Boeing

Boeing has a more developed product line, but Airbus has more potential for improvement. The explosive growth in air travel, especially in Asia, has led to a boom in sales of airliners.

Airbus market share strategy

In the late 1990s - early 2000s, Airbus made several important decisions that affect the company's financial position at the present time. Firstly, it was a risky decision to start the development and production of the A380 aircraft , which even four years after the start of production did not reach a profitable level. The second important factor was the decision to sell aircraft at a loss or with minimal profit in order to increase market share. ^[four]

The strategy paid off. In 2000, Airbus transferred 311 aircraft to customers, Boeing - 489. In 2011, the ratio changed in favor of Airbus - 534 against 477. The volume of Airbus orders increased from 132 billion euros in 2000 to 541 billion euros in 2011 (from 124 to 700 billion dollars). For comparison, the volume of orders Boeing increased from 153 to 355 billion dollars.

However, Boeing has great profitability. Operating profit in the civilian aircraft sales sector was 9.7% versus 1.7% for Airbus.

During the decade of growth in demand for airliners, Airbus was unable to increase profitability. Moreover, for six years (2006–2011), despite the growing turnover and the volume of aircraft deliveries, the company suffered losses. Boeing remained profitable, however, sales and operating income grew marginally. From 2000 to 2011, Boeing sales grew by about 1.4% per year, operating income by 2.3% per year ^[5] . Airbus sales grew by 7.6% per year (11% in dollar terms), but operating profit fell steadily. At the same time, the share of civilian aircraft branch in the profit of the entire company was 66% in 1999; it has now dropped to 52%. The share of Airbus in EADS profits rose from 60% in 1999 to 67% in 2011 ^[6] .

Forecasts

The long-term forecasts of Airbus and Boeing suggest that in the next 20 years, customers will be delivered from 25,000 to 3,300 new airliners (passenger and cargo). Boeing, however, predicts that narrow-body aircraft (Airbus A320 and Boeing 737 and their successors) will be two-thirds of this volume in number and half in value. A third of the new aircraft will be sold in the Asia-Pacific region ^[4] .

Narrow-body aircraft

In the Asia-Pacific region, the profitability of the narrow-bodied aircraft market is being questioned ^[7] . Small planes generate less revenue, and in addition, Airbus and Boeing are experiencing significant pressure in this segment from existing and future competitors, especially from the Chinese COMAC C919 . The COMAC C919 seats between 165 and 190 passengers, and therefore it directly competes with the extended versions of the A320 and Boeing 737. The plane has already received 175 orders, almost all of the Chinese airlines. Deliveries are scheduled to begin in 2016. Since Airbus began assembling the A320 in China, ^[8] some of the Airbus technology could be available to COMAC .

Wide-body aircraft

In the segment of wide-body aircraft Airbus offers A330, A380 and A350, the first flight of which took place on June 14, 2013. As competitors, Boeing offers models 747, 767, 787 Dreamliner and 777. In 2011, Boeing received 254 orders for wide-body aircraft, Airbus - 193.

Airplane size differences

Despite the wide range of products manufactured by both companies, including both narrow-body and wide-body machines, they do not always compete in the same market sector. Companies offer customers a slightly different model:

• The Airbus A380 is significantly larger than the Boeing 747 .
• The Airbus A350 competes with the older Boeing 787 Dreamliner and the Boeing 777 line .
• The Airbus A320 is larger than the Boeing 737-700 , but smaller than the Boeing 737-800 . Salon A320 20 cm wider than the Boeing 737.
• The Airbus A321 is larger than the Boeing 737-900 , but smaller than the discontinued Boeing 757-200 .
• The Airbus A330-200 competes with a similar-sized Boeing 767-400ER .

It should be noted that in the aircraft capacity segment from 120 to 800 passengers, Boeing until recently produced five models (in ascending capacity): 737, 757, 767, 777, 747. In the same capacity range, Airbus cost three - A320, A330 / 340 (identical in size aircraft, differing only in the number of engines) and A380 (models A300 and A310 were listed in the catalogs only nominally; no real orders were received for them). Currently, Boeing has discontinued the Model 757, but four models cover the same passenger capacity range: 737, 787, 777 and 747-8. Airbus still has three models - A320, A350 and A380. The Boeing 767 and A330 / 340 models continue to be produced until the production or models coming in to replace them are stabilized.

This state of affairs benefits the airlines because they receive a wide choice of aircraft with a capacity from 100 to 800 seats.

Passenger Capacity / Range Diagram

Model Comparison Table

Comparing A320 with Boeing 737

Sources: Airbus, ^[9] Boeing ^[10] .

In general, both aircraft are very popular among customers. However, in mid-2012, the Boeing for the Model 737 received 2,227 orders plus 649 for the Model 737 MAX, ^[11] while Airbus received 3,352 orders for the A320 series and 1534 orders for the updated A320neo model. ^{[12] [13]}

Both companies abandoned plans to create new narrow-body aircraft due to the huge costs of launching new models. Airbus has incurred huge costs for launching the A380 model and is currently completing a nearly as expensive A350 project. However, Boeing incurred even more serious costs for the creation and launch of the Model 787 Dreamliner - according to some estimates, the cost of the program has increased almost fivefold. ^[14] And both models continue to experience problems associated with the novelty, and divert considerable funds.

Comparing Airbus A330 with Boeing 767 and 777

Sources: Airbus, Boeing ^[15] , Airbus ^{[16] [17] [18] [19]} , Pratt & Whitney ^[20] , EASA ^[21] , FAA ^[22] , The International Directory of Civil Aircraft ^[23]

Comparing Airbus A350 with Boeing 787 and 777

Sources: A350-800 ^[24] , A350-900 ^[25] , A350-900R ^[26] , A350 ^{[27] [28]} , 777-200LR ^[29] , 777-300ER ^{[30] [31]} , 787- 10 ^{[32] [33]} , 777 ^[34] .

Comparing Airbus A380 with Boeing 747

Sources: A380-800 ^{[28] [35] [36]} , 747-400 ^[37] , 747-400ER ^[38] , 747-8I ^{[34] [39] [40]} .

The wide-body Boeing 747-8 , the latest modification of the largest model of Boeing, is a direct competitor to the giant A380, double-decked along the entire length of the aircraft. Many airlines that require very large aircraft consider these two aircraft as competitors. After numerous delays with the start of production in October 2006, FedEx and United Parcel Service canceled orders for a cargo modification of the airliner . Some customers of the A380 postponed commissioning of the aircraft or ordered in return cargo modifications of the Boeing 747-8 and 777. ^{[41] [42]}

Boeing marketers claim that the 747-8I per passenger is 10% lighter and consumes 11% less fuel, which reduces the cost of each flight by 21% and the cost per passenger-kilometer by more than 6% compared to the A380. The empty 747-8F will be 80 tons less than the A380F, it will consume 24% less fuel per ton of cargo, the cost of one flight will be 21% lower, and the cost per ton-kilometer will be 23% less. ^[43]

Their colleagues at Airbus claim that the A380 burns 8% more fuel per passenger than the 747-8I, but it has a longer range and can use runway strips 17% shorter than those required by a competitor. ^[44] In order to deprive the 747-8I of its latest advantages, Airbus has been proposing, as custom equipment, to increase the maximum take-off weight, which will improve the range and payload. The first customers of this modification will become the airline British Airways and Emirates . ^[45]

In the summer of 2012, no airline has canceled the order for the passenger version of the A380. At the same time, Boeing has orders for passenger 747-8I from only three commercial airlines: Lufthansa (20 aircraft), Korean Air (5) and Arik Air (2). ^[46]

It should be noted that both corporations were counting on the best sales of their older models. By the time production began, Airbus planned to receive at least 400 orders. In 2007, Airbus predicted the demand for VLA class aircraft (aircraft with more than 400 seats in a 3-class layout) in the amount of 1,283 passenger cars for the next 20 years, provided that the current airports are preserved. According to the group's estimates, if the workload rises, the demand may reach 1,770 aircraft. Most of the demand comes from urbanized and rapidly growing Asian countries. ^[47] It is assumed that the A380 will be used on a relatively small number of routes, mainly between the busiest airports.

In addition, Airbus is also counting on demand in the segment of cargo aircraft with a carrying capacity of more than 120 tons in the amount of 415 vehicles.

Boeing, the only Airbus competitor in this segment, predicts demand for extra-large aircraft in the amount of 590 passenger cars and 370 trucks for the period from 2007 to 2026 ^[48]

Comparing EADS A330 MRTT and Northrop Grumman KC-45A with Boeing KC-767

Announcement of the victory of Northrop Grumman and Airbus in the competition for the supply of tankers in the US Air Force worth more than $ 40 billion caused protests in the US Senate. ^[50] After reviewing the Boeing protest, the United States Audit Chamber decided in favor of Boeing and issued an order to the US Air Force to hold a new competition. The new competition was suspended and then canceled. The new competition was held in March 2010, but Airbus refused to take part in it.

On February 24, 2011, Boeing won the contract, but at a much lower amount ^[51] The contract indicated prices so low that some observers felt that Boeing would incur losses as a result of this deal. However, some of them noted that the company will be able to make a profit through service contracts and the supply of spare parts. ^[52] In July 2011, it was announced that the development cost increased by 1.4 billion dollars and exceeded the maximum value of 4.9 billion dollars specified in the contract by 300 million. If the development cost exceeds 1 billion (from the specified in the contract to the maximum amount specified in the contract), the US government must pay 600 million; The remaining money should make Boeing. Since Boeing must pay in full the excess of 300 million, the company will have to make an additional 700 million dollars in the project. ^{[53] [54] [55]}

Competition at the expense of contractors

Since many airlines have a significant government stake, aircraft are often purchased taking into account not only commercial, but also political factors. Boeing and Airbus use this trend by placing orders for components and assemblies in countries that are priority customers for a strategic advantage.

So, Boeing has long-standing relationships with Japanese suppliers, such as Mitsubishi Heavy Industries and Kawasaki Heavy Industries . The contracts concluded by Boeing with these companies allow them to participate in successful Boeing projects. Good Boeing relations with the largest Japanese manufacturers helped the company to achieve almost complete dominance in the Japanese civil aviation market (about 80% ^[56] ). Outsourcing in the production of model 787 has reached such a scale that Boeing, in fact, is only the management company and is responsible for the design, assembly and testing of components sent by contractors from around the world. However, this, according to representatives of Boeing, led to significant problems and loss of control. The company said that in subsequent projects Boeing will mainly rely on its own production potential. ^[57]

Airbus is not so free to choose contractors - the company was formed as a consortium of manufacturers, and most of the components are produced in its own European factories. However, in 2009, Airbus opened an A320 airliner assembly plant in the Chinese city of Tianjin . ^[58]

Technology Competition

In the 1970s, the newly formed Airbus company competed with the long-established and well-proven giant Boeing. Competition was possible only due to the proposal to customers of the new qualities of the aircraft, which competitors did not have. For Airbus, such qualities were the wide use of composite materials and electronics. Airbus A300 had at that time the largest percentage of use of composite materials in the design. Automating the functions of the flight engineer allowed the aircraft to become the first major airliner with a crew of two people. . In the 1980s, Airbus for the first time offered a fly-by-wire control system on a commercial airliner ( Airbus A320 ).

This allowed Airbus to become a powerful competitor to Boeing and led to competition in the use of electronics to improve the technical characteristics of the aircraft. So, the Boeing 787 Dreamliner became the first commercial airliner, most of which is made of composites.

An important competitive factor is fuel efficiency, which is with the change of aircraft models from both manufacturers.

Competition with a wide range of engines

The competitiveness of an airliner in the market depends largely on the ability of the customer to choose the engines of the desired brand. Many airlines prefer to have engines of the same manufacturer on different models of aircraft in their fleet, which allows them to save significant funds when buying and maintaining them. As a rule, operators are offered a choice of two engine models from any of the three main manufacturers: General Electric , Rolls-Royce and Pratt & Whitney . However, due to the high costs of developing new engines, manufacturers prefer to receive exclusive contracts. Examples include the Boeing 737 Classic (starting with model 737-300), equipped exclusively with CFM International CFM56 engines , Airbus A340-500 & 600 ( Rolls-Royce Trent 500 ), Airbus A350 ( Rolls-Royce Trent XWB ), Boeing 747-8 ( General Electric GEnx-2B67 ) and long-range modifications of the Boeing 777-300ER, 200LR and F ( General Electric GE90 ). ^[59]

Effect of exchange rates

The cost of production of aircraft for Boeing and Airbus is calculated in dollars and euros, respectively. While the euro was cheaper than the dollar, Airbus had the advantage of cheap currency. However, with the growth of the euro against the dollar, this advantage passed to Boeing.

In addition, the exchange rate plays a certain role in the sale of aircraft. Boeing usually sells its cars for dollars, while Airbus, in most cases indicating prices in dollars, in some transactions, especially in Asia and the Middle East, shows greater flexibility and exposes prices in other currencies. Depending on the rate fluctuations in the interval between the order and the delivery of the airliner, this can lead to both additional profit and additional losses for the manufacturer. ^[60]

The impact of competition on production plans

The Airbus A320 is operated by 224 operators. The aircraft was able to invade the low-cost airline sector, which had previously almost entirely belonged to the Boeing 737 model. Many major airlines, such as United Airlines and Lufthansa , chose it as a replacement for the discontinued Boeing 727 and the outdated Boeing 737.

After 40 years, the Boeing 747 has a competitor in the form of the Airbus A380. The Boeing 747-8 is an elongated and updated modification of the successful model 747-400, it offers greater capacity, efficiency and range. Delays in the production of the Airbus A380 made some customers think about abandoning the model in favor of the 747-8, ^[61] , but so far none of them have done so, and some have even placed additional orders for the A380. However, the A380F freight program has been frozen. To date, Boeing has received 70 orders for the cargo 747-8F and 36 orders for the passenger 747-8I. Airbus has 234 firm orders for the passenger version of the A380. The first aircraft was delivered to the customer in 2007; Currently, 223 vehicles have been handed over to customers (as of January 2018).

Boeing worked on several projects of future aircraft, but many of them were closed, for example, a promising transonic Boeing Sonic Cruiser airliner. Having not received due interest from the airlines, Boeing began developing the Boeing 787 Dreamliner, which uses the developments of the Sonic Cruiser project. The excellent 787 sales figures and pressure from potential customers forced Airbus to completely revise the A350 project. Instead of upgrading and light aerodynamic changes, the company was forced to start developing a completely new airliner.

In the sector of narrow-body aircraft, Boeing, on the contrary, acts as a catch-up. Initially, the company rejected the idea of ​​releasing an updated model 737 to compete with the A320neo, which should be launched in 2016. Representatives of the company said that, in their opinion, the airlines are not willing to pay a 10% higher price per plane, which saves only a few percent of the fuel. Instead, the company promised to release a new model over the next 20 years, 30% more economical than the 737.

However, under pressure from major customers in the home market, plans were revised. Southwest Airlines , the largest operator of the model 737 (614 cars in operation, 394 ordered), said it did not intend to wait 20 years for the new model and threatened to change the supplier of aircraft. Some experts believe that the Boeing 737 with new engines will cost Boeing much more expensive than the Airbus A320neo. Under pressure from customers in the summer of 2011, Boeing agreed to supply a large number of new aircraft, called 737 MAX, to one airline, and then announced that the new model would be available to other customers. ^[62]

Security

New models of both manufacturers show a comparable highest level of security. Both companies avoid direct comparisons when selling aircraft. Older models (Boeing 727, first series Boeing 737 and 747, Airbus A300 and Airbus A310 ), presented respectively in the 1960s, 1970s and 1980s, have lower safety records. ^[63]

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  Order schedule

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  Delivery schedule

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  Orders and deliveries

Orders and deliveries by model

Source: Analytics: Airbus again lags behind Boeing

Orders by Decade

Deliveries by Decade

• Boeing
• Airbus

• Airbus official website
• Boeing official website
• The official website of Airbus Military
• Full list of Airbus models
• Battle of the Titans: how did Boeing beat Airbus and lose to it // BBC Russian Service, January 15, 2018