Airbus A320neo success puts pressure on Boeing

21st June 2011, Comments 0 comments

Europe's Airbus increased the pressure on its giant US rival Boeing Tuesday to make a decision on the future of its iconic 737 workhorse, trumpeting a slew of orders for the upgraded A320neo.

The stand-off between the B737 and A320 is crucial for both parties: Boeing estimates this medium-haul market will account for nearly half of all aircraft sales by value over the next 20 years.

Boeing has said it has two options -- a 737 upgrade, following Airbus, or going for an entirely new plane which it says customers prefer but would be higher risk and certainly more costly and only be available around 2020.

The company insists that either way, clients will still get the better plane but customers seem to be getting restless.

The head of Malaysia Airlines, after agreeing Tuesday to buy 10 737-800 planes, said it would be interesting to see how Boeing responds to the challenge posed by Airbus' fuel-efficient A320neo.

"I believe Boeing will respond in some way ... and then there will be a very interesting discussion we can have," said Tengku Azmil Zahruddin Raja Abdul Aziz.

Over the first two days of the Paris International Airshow, Airbus has won orders for more than 200 A320neos, building on Indian and Philippine low-cost carrier deals for more than 100 planes worth $10 billion last week.

There is growing speculation that Malaysia's AirAsia could top that, buying some 200 A320neo jets worth $18 billion this week but a smaller deal Tuesday may have been just as troubling for Boeing.

Garuda Indonesia signed a memorandum of understanding for 25 A320 jets, including 10 A320neos, as it replaces 737 aircraft operated by its low-cost subsidiary Citilink.

"This aircraft will be very competitive because (it) is fuel efficient," Garuda head Emirsyah Satar said of the order.

Ahead of the airshow, as A320neo orders mounted, analysts had said it would be significant if an established Boeing customer switched from the 737 to the A320A, especially if it was one the size of, say, low-cost pioneer Ryanair.

Ryanair, which operates only Boeing 737-series aircraft, sprang a different sort of surprise Tuesday, putting both Boeing and Airbus on notice that it was ready to look at radical alternatives to either of them.

Ryanair boss Michael O'Leary said the firm would help Commercial Aircraft Corp of China (COMAC) "develop the new C919 commercial aircraft, with up to 200 seats, which would enable Ryanair to lower costs and continue to lower fares."

The point, in case it was missed, was spelled out clearly.

"We are pleased that there is now a real alternative to Boeing and Airbus," the media-savvy operator said in a statement.

O'Leary noted that Ryanair will have a fleet of over 300 Boeing aircraft by 2013, "and we remain in continuing discussions with both Boeing and now COMAC for a replacement aircraft order of at least 200 aircraft."

He said the tie-up with COMAC would not affect Ryanair's relationship with Boeing, whose commercial aircraft head Jim Albaugh said at the weekend that China's first competitive sale would "probably be sooner than anyone thinks."

Clients of both Airbus and Boeing have long chafed at their dominance of the aircraft market, especially when there have been lengthy and costly delays to key projects, such as the A380 superjumbo and Boeing's 787 Dreamliner.

Whether they have now found a potential alternative remains unclear but COMAC's C919 comes into service in 2016, just one year after the A320neo.

© 2011 AFP

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