Boeing a bit antsy about slow sales

  • By Bryan Corliss / Herald writer
  • Tuesday, December 14, 2004 9:00pm
  • Business

I am starting to notice an ominous trend – every time I take a winter vacation, a Boeing Co. executive loses his or her job.

Last year it was disgraced former chief financial officer Mike Sears. This year, Boeing Commercial Airplanes’ top salesman Toby Bright, who was reassigned to unspecified work earlier this month.

The consensus among local Boeing-watchers is that Bright fell victim to a mandate from Chicago to not make deals that did not make money. This, of course, makes perfect sense on Wall Street, but it makes it hard when you’re competing with a government-backed competitor that’s willing to give away jets for market share.

I suspect Bright also took the fall for his sales team’s inability to close the book on the more than 200 7E7s for which airlines have put down deposits.

In those heady days back in April, after announcing the launch order from All Nippon Airways, Boeing executives announced that 200 orders was their goal for the first year, basing that on what they now say was unprecedented interest. Airlines were rushing to get in line for the limited number of 7E7s that Boeing will be able to deliver in the first years of the program.

But once they got in line, the airlines kind of sat on their hands, leaving Boeing looking a little, shall we say, overly optimistic.

One of the factors, pundits say, was that Airbus began talking up its plans for the A350 jet that got approved for marketing last week by parent companies EADS and BAE Systems.

Boeing is, predictably, poo-pooing the new jet.

“They’re doing exactly what we would be doing – talking about as many things as we possibly could to confuse as many people as possible,” said Mike Bair, Boeing’s 7E7 program chief, before last week’s announcement.

Whether Airbus sells any A350s will likely come down to pricing. The 7E7 will be a better airplane, but if Airbus can cut good enough deals on the A350, some airlines will buy it.

In a sense, it’s a bit of a panic move to think that 7E7 sales have stalled. Airbus has only sold 129 of its A380 superjumbos, and it launched that program three years ago. Boeing’s total of 52 firm 7E7 orders in the first year already is slightly ahead of its first-year orders total for the 777 a decade ago – 49.

And Boeing spinmeisters have done a good job of pointing out that it doesn’t matter if the 200th order comes in 2004.

Still, there’s a sense that the 7E7 has lost momentum.

“This A350 guerrilla marketing campaign looks highly effective,” Teal Group analyst Richard Aboulafia wrote his clients this week before dashing off on his own winter vacation. “Something has disrupted Boeing’s lofty goal of selling 200 planes by the year end … The A350 is the likely culprit. Throwing Toby Bright into the volcano to appease the market gods won’t change this.”

One potential 7E7 buyer is Japan Airlines.

Jane’s, the aerospace and defense publication, reports that both Boeing and Airbus have submitted proposals to JAL, which is trying to restructure its fleet.

JAL has eight mid-sized jets – a mix of A300s, DC-10s and MD-11s – that it plans to retire, Jane’s said. The 7E7 is a potential replacement.

In addition, The Sunday Times of London reports that Boeing is in talks with Scottish low-cost carrier Flyglobespan, which wants two 7E7s to allow it to offer trans-Atlantic service. The airline now flies eight 737s.

“The only thing that’s being debated is the price,” airline owner Tom Dalrymple told The Sunday Times.

The airline also could buy or lease two 777s, The Scotsman of Edinburgh reported.

And Qatar Airlines is close to signing a Dreamliner deal, Boeing 7E7 sales chief John Feren told the English-language Gulf News recently. The airline reportedly wants up to 60 7E7s, according to earlier reports.

A spokeswoman for the airline confirmed that talks were underway, but told Agence France-Presse that “negotiations are in the early stage and we hope to complete them next summer. It’s too early to decide how many aircraft we want to buy.”

Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.

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