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Success for Airbus A320 puts pressure on fate of Boeing 737

The success of Airbus' A320neo in Paris puts pressure on Boeing to decide the fate of its 737.

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By Michelle Dunlop
Herald Writer
Published:
Even Airbus officials weren't expecting so much success so soon for its A320 new engine option aircraft.
"With over 1,000 commitments just half a year after launch, our A320neo is a real best-seller," said Tom Enders, president of Airbus, after announcing a record $18 billion order for the A320neo Thursday at the Paris Air Show. "I have to admit, I largely underestimated the market demand for neo before this show."
Airbus, which says its A320neo will save carriers 15 percent in fuel use, raked in 667 requests for the updated single-aisle jet during the first four days of the Paris Air Show. The European company announced an order from low-cost carrier AirAsia for 200 A320neo aircraft on Thursday. Since its launch in December, the A320neo has received 1,029 orders and commitments.
The early market success of the A320neo makes Airbus the clear winner at the Paris show and it puts pressure on the Boeing Co. to decide the fate of its single-aisle 737.
Boeing officials have said that improvements on the A320neo -- such as adding new engines and fuel-saving wing tip devices Airbus calls Sharklets -- only put Airbus' single-aisle jet on "parity" with the 737.
"Boeing dismisses the sales as a threat to Boeing, saying they have come from Airbus customers," wrote analyst Scott Hamilton, on his Leeham Co. blog Wednesday.
While that's essentially true, Hamilton noted that regardless of how Boeing views the A320neo, the jet's large order tally should give Boeing one reason to worry: the orders provide Airbus with cash flow. That's something Airbus sorely needs after the drain of programs like the A380, A400 military plane and the new A350 XWB.
Airbus executives also seem confident they'll steal away a Boeing customer with the A320neo by year's end. Several news outlets at the air show reported that American Airlines could be in talks with Airbus on the A320neo, though no announcement was made.
Boeing officials have said they'll likely decide whether to put a new engine on the 737 or to come out with an entirely new plane -- or both -- by year's end. That decision is likely to kick off a competition for where the jet will be built. Washington's Gov. Chris Gregoire brought a group of 75 aerospace leaders to tout the state's skilled workforce and 650 aerospace companies. Gregoire already has announced an effort, called Project Pegasus, to ready Washington for the competition.
It wasn't all bad news for Boeing in Paris. Airbus confirmed on Saturday that it will push back the first delivery of its A350-1000, which is expected to compete with Boeing's 777-300 Extended Range jet. Industry observers say the delay could mean orders for Boeing in the meantime and will provide Boeing ample time to decide how to respond to its 777 challenger.
The Chicago-based company said it recorded orders and commitments for 142 aircraft worth $22 billion at catalog prices during the air show. That includes a commitment from an undisclosed customer for its hulking new 747-8 Intercontinentals worth $4.7 billion.
Airbus said Thursday it had received 730 orders and commitments, estimated at $72.2 billion at list prices. Airlines typically receive discounts from list prices.
Boeing played down the orders rivalry, saying it doesn't keep deals in reserve just to announce them at air shows.

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