Forbes: Airbus Losing Dogfight With Boeing

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Airbus Losing Dogfight With Boeing
Chris Noon, 01.17.07, 2:50 PM ET

Even though Airbus made a record 434 aircraft deliveries for 2006, =

surpassing the 398 planes supplied by Boeing, its commercial position =

versus its U.S. rival is looking weak. =


Airbus, whose parent company is European Aeronautics Defense and =

Space, booked only 790 orders last year, well below the 1,044 won by =

Boeing. Airbus had led Boeing for new orders since 2001. Airbus had =

2006 revenues of approximately 26 billion euros ($33.61 billion).

EADS shares fell 77 euro cents ($1.00), or 3.0%, to 24.97 euros =

($32.25), in mid-afternoon trading in Paris. =


Despite EADS' bumper profits in recent years, analysts say the future =

of Airbus' commercial position against Boeing depends on its wide-
body jets. Its position in this market segment is worrying. =


Boeing's 787 aircraft represents a serious challenge to Airbus. =

Launched over two and a half years ago, the long-range, middle-market =

jet has secured over 450 orders from some of the world's most =

prestigious carriers. The new plane is to enter service in 2008.

Airbus' position in the high-profit-margin, wide-body jet market is =

not nearly as auspicious. Airbus has launched the A350 as its =

response to the 787. While the A350 has garnered just over 100 firm =

orders, it is not yet popular with first-tier carriers. Airbus hopes =

to have over 200 orders for its A350 by the end of this year. =


At a board meeting in December, EADS bosses decided to approve the 10 =

billion euro ($13.0 billion) A350 project and said the firm would =

provide most of the funding itself. =


However, the cost of the project has worried many analysts. It =

emerged Wednesday that EADS may ask shareholders for authorization to =

raise fresh capital on the financial markets, which could include =

issuing new shares.

The development of the A350-XWB plane and the possibility that new =

charges will be needed to put the jinxed A380 superjumbo program back =

on track, may require measures to "strengthen our capital base," =

Chief Financial Officer Hans Peter Ring said during a conference with =

several Airbus executives. Airbus Chief Executive Louis Gallois said =

later that several options would be considered, "including a capital =

increase."

Gallois also confirmed that Airbus will deliver its first A380 =

superjumbo to Singapore Airlines in October. Airbus plans to deliver =

440 to 450 planes this year. =


One analyst told Forbes.com that Airbus' sorry-looking ledger was =

caused by a lack of "customer confidence" and agreed there may now be =

a stigma attached to the company after its shocking 2006.

"Airbus has lost a lot of that [goodwill] and proved it this morning =

by Gallois saying their customers has stood by them, then later =

saying one of the key areas for 2007 was to 'restore' confidence," =

said Doug McVitie, an industry consultant with Arran Aerospace. =


"Airbus in 2007 means uncertainty and unfulfilled promises, so once =

again it's only natural that potential customers are a little =

reticent at taking the company 'at its word.' It's indicative of the =

restrictive thinking at Airbus that senior management today could =

talk about 2006 being a 'good year' and finishing with the 'biggest =

backlog in the history of the industry.' Airbus will need to prove it =

can keep its promises before it gets another chance to break them," =

McVitie added. =




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