NYTimes.com Article: Plane Makers at Air Show Trade Barbs on New Jets

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Plane Makers at Air Show Trade Barbs on New Jets

July 20, 2004
 By MARK LANDLER





FARNBOROUGH, England, July 19 - Boeing and Airbus, the Avis
and Hertz of the passenger aircraft business, say they are
excited about the prospects for their newest planes, the
7E7 and the A380.

But Airbus, once the perennial No. 2 but now the leader in
the industry, is winning the publicity war, at least at the
Farnborough International Air Show, which began here on
Monday. Success at the show is measured by the number of
new orders for aircraft.

Boeing will not announce any new customers for the 7E7, a
medium-size, fuel-efficient plane it is calling the
Dreamliner, while Airbus is expected to announce one new
customer for the A380, a double-deck plane likely to
challenge the supremacy of the 747 among jumbo jets.

Executives involved with the negotiations said Etihad
Airways, a newly formed airline from Abu Dhabi, would
announce plans on Tuesday to buy a small order of A380's.
Airbus, which is owned by the European Aeronautic Defense
and Space Company, or EADS, said it would announce orders
for other models as well.

The order, the first this year for the Airbus A380, brings
the total number for the $280 million plane to more than
130. Boeing has booked 62 orders from four carriers for the
7E7, but says that about two dozen airlines have put down
refundable deposits for roughly 200 planes. "The numbers
are exciting," said Alan Mulally, chief executive of
Boeing's commercial aircraft division.

But John J. Leahy, the chief commercial officer of Airbus,
said Boeing's figures were somewhat misleading, since the
airlines can demand their money back. The 129 confirmed
orders for the A380, he noted, were nonrefundable.

Such exchanges are part of the macho culture of air shows.
But the chest thumping is particularly loud this year, as
the rivalry between Airbus and Boeing in the world's
commercial aircraft market comes down to a battle between
the A380 and the 7E7. For the moment, the balance is tilted
toward Airbus.

These two planes symbolize different views of the
development of air travel. Boeing sees airlines serving a
proliferating number of direct routes between cities, with
midsize planes. Airbus sees a world of hub cities connected
by high-capacity planes.

Boeing's 7E7, which is to begin service in 2008, is
designed to carry 200 to 300 people over long distances at
extremely low costs.

The Airbus A380, which will make its maiden flight early
next year and is expected to go into service in 2006, will
carry 555 passengers in its standard configuration between
hubs like London and Tokyo.

To hear Airbus and Boeing talk about each other, one would
think that each had made a ruinously bad bet.

"We have no plans to make a plane larger than the 747
because we just don't think that's how people are going to
fly," Mr. Mulally of Boeing said.

Referring to the absence of announced orders for the 7E7,
Mr. Leahy of Airbus said, "We are pleasantly surprised by
the yawns it is getting in the marketplace." He likened it
to an Airbus A330 "with a sexy paint job."

As the two companies spar over their planes, Boeing is also
reviving its criticism of Airbus for receiving improper
subsidies from its government backers. Boeing has called
for the United States to renegotiate its 1992 agreement
with the European Union, which permits Airbus to receive
some aid.

Airbus replies that Boeing received billions of dollars in
subsidies from Washington State to build the 7E7 there, as
well as indirect subsidies from the Pentagon through
military contracts. "Airbus will not start a trade war but
will let no attack go unanswered," Noël Forgeard, the chief
executive of Airbus, said.

The contrast in style at the show between Boeing and Airbus
has been striking. Mr. Mulally appeared alone at a news
conference, speaking cautiously about the future of the
global aircraft market.

Mr. Forgeard appeared with a phalanx of Airbus executives
and gave an ebullient 90-minute presentation, dropping
broad hints about what new orders the company would
announce in coming days.

While Boeing was more reticent, both companies are
optimistic enough about the general prospects for the
airline industry to be making plans to ramp up production
over the next few years.

Boeing said it stopped pushing to present new orders at air
shows about three years ago. It said this imposes
unreasonable demands on sales representatives and can yield
poor contracts.

Still, Boeing announced a deal to sell 13 of its long-range
777 planes to another Persian Gulf airline, Emirates, for
up to $3 billion. Company officials said the pressure to
present the deal here came from Emirates.

The chairman of Emirates, Sheik Ahmed bin Said al-Maktoum,
is a fan of the 777. His airline will fly 51 of them by
late 2007. But Emirates has also signed to buy 45 A380's,
making it the plane's largest customer. Sheik Ahmed was
noncommittal when he was asked whether his airline would
buy the 7E7, saying he did not favor planes with fewer than
300 seats.

In its public relations battle with Boeing, Airbus has
encountered one rough spot. As the A380 nears completion,
it is proving to be four to five tons heavier than in the
original design. Critics say that could prevent Airbus from
meeting performance targets it promised its customers.

Airbus says that at a total weight of 243 tons when empty,
and 560 tons when loaded for takeoff, the plane is barely
over its target weight. Mr. Leahy said that Airbus would
still meet its performance goals because the A380 had
proved to be more aerodynamic than expected.

http://www.nytimes.com/2004/07/20/business/20jets.html?ex=1091327899&ei=1&en=e2f64a15cd96e607


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