The Boeing Co. is crying foul after reports that Airbus has snagged its second major order for single-aisle jets in as many weeks.
According to The Wall Street Journal, AirAsia opted to order 40 A320s, largely because Airbus slashed as much as 50 percent off the $2.6 billion list price.
The order comes on the heels of another big Airbus win last week when Air Berlin – until now an all-Boeing airline – ordered 70 A320s. In that case, “Airbus trumped Boeing by offering steep discounts and other financial guarantees that the Chicago aerospace company was unwilling to match.”
Boeing claims Airbus’ government subsidies are allowing the European jet builder to slash prices like a used car dealer – zero down, zero interest and no payments till 2006.
“It’s clear that Airbus is being totally driven by market share and production goals,” Boeing spokesman Todd Blecher said. “As a subsidized company, it can offer irrational pricing.”
Airbus has played some serious hardball in recent years, trying to unlock Boeing’s stranglehold on the low-cost airline market. Southwest Airlines pioneered the market using a fleet of Boeing 737s, and most of the airlines that followed copied that model until two years ago, when British carrier easyJet jumped from Boeing to Airbus with a 120-jet order.
According to The Wall Street Journal, easyJet opted for Airbus because the Europeans slashed nearly 60 percent off their list prices.
Since then, Airbus has captured a string of orders from startup low-cost carriers, including Virgin America, launched by Richard Branson, whose Australian low-cost airline Virgin Blue was all-Boeing.
But the big orders could backfire if Boeing can prove its case before the World Trade Organization that Airbus is taking business away from Boeing because it can afford to lose money, thanks to European government subsidies.
That’s what Blecher was arguing this week. Even if Airbus isn’t cutting A320 prices in half, it’s obvious that “their business dynamics are different from ours,” he said. “You start to get into whether it’s competition or predatory pricing.”
Airbus has always denied that it makes unprofitable deals.
It’s good to point out that Air- Asia hasn’t actually announced its order. The airline is just wrapping up its first public stock offering and plans to use that money to order new planes. The announcement should come within a few weeks, the Journal reported.
Until then, Boeing will continue to argue that 737s are superior to A320s. But even with all the lean manufacturing and outsourcing Boeing has embraced, it still can’t break even at the prices Airbus is quoting, the Journal said.
* There is some good news on the order front. Qatar Airways wants 7E7s – lots of them.
Airline chief executive Akbar Al Baker told Air Transport World his airline is talking with Boeing about an order for as many as 60 Dreamliners, with deliveries to start in 2008, the first year of the program.
There’s only one catch. Qatar really wants the 7E7-9, the stretched-out 257-seat version of the plane. That’s the last of the three versions Boeing has on the drawing board, and it’s not likely to enter service until about 2010.
“We’re ready to sign an MOU from the moment Boeing crystallizes the definitions of the -9,” Al Baker said. “We will not go for the 7E7 if they (Boeing) don’t specify the -9. We want to operate a family of aircraft, not just one aircraft type.”
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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