Airbus lands the profits for BAe

Trade and Industry Secretary Margaret Beckett. The DTI looked at seven key sectors; we take our own snapshot

For only the second time in its 28-year history, Airbus Industrie, the trans-European consortium in which BAe is a partner, is set to sell more planes this year than its arch rival Boeing.

The first time, in 1994, was a fluke, because it came in the industry's worst year for sales in decades. This time, with sales booming, an Airbus victory would be impossible to discredit.

With just six weeks left in 1997, new Airbus orders are outpacing those of Boeing by 425 to 415. That makes this year the best ever for the British- French-German-Spanish consortium. And it makes the Airbus goal of achieving a consistent 50 per cent market share by early in the next decade seem plausible for the first time.

"It's clearly been a great year for Airbus," said Keith McMullan, managing director of consultancy, Aviation Economics.

Airbus is reaping the benefit of an expanded range of planes. The group now offers a full range of models from the 125-seat A319 to its four-jet, long-range A340. The newest variants of that plane, the A340-500 and A340- 600, which can seat close to 400 and fly more than 8,000 nautical miles, should be formally launched at the Dubai Air Show this week. Airbus already has preliminary commitments from Virgin Atlantic Airlines, Eva Airways and Air Canada.

The plane maker has also been expanding its geographic reach. In the Latin American market, for example, where Boeing reigns, the European consortium last month broke a 15-year sales drought in Brazil, selling 10 planes to Transportes Aeros Meridionais.

Airbus has also been making inroads into Boeing's hold on the Chinese market. In May, it won a $1.5bn (pounds 920m) order for 30 planes and is now working with the Chinese to develop a 100-seat plane.

A Boeing spokeswoman said the company did not want to discuss the possibility of Airbus winning this year's market fight. "Every airplane campaign is a battle. Wherever planes are to be sold, we're there, we're focusing on our business. We're not going to comment on how they run theirs."

Still, the Airbus victory in the 1997 order contest, if it happens, will carry psychological weight. It will be especially important, because Airbus is stigmatised among conservative airlines as a parvenu. British Airways, for example, has never ordered an Airbus plane.

Strengthening its credibility is also important for Airbus as it loses government financing and relies increasingly on capital markets to fund new projects.

Moreover, the victor in the 1997 order contest will be positioned to get a better return on capital in 1998, according to Nick Cunningham, an aerospace analyst a Salomon Brothers. "The leader can drive the market," he says.

Thus, as the year end approaches, industry executives say both Boeing and Airbus are negotiating furiously to sign deals that will make them number one. Some think each company is "stockpiling" orders, so as to leapfrog its rival at the last minute.

The Airbus success comes at a time of embarrassing and costly reduction delays for its Seattle-based rival. Boeing is having trouble replacing and training workers it laid off during the industry's doldrums in the early 1990s. Its suppliers are also having a hard time boosting output.

Assembly lines at the Airbus partner companies, including BAe, are by contrast humming along smoothly. The European consortium is now reaping the benefits of a seasoned workforce.

But the European maker can ill-afford to feel smug. Even with its strong record for 1997, the Airbus backlog - or total number of planes on order - remains at around 30 per cent to almost 70 per cent for Boeing, which acquired McDonnell Douglas last August.

And the world's leading plane maker has 20-year commitments from American Airlines, Delta Air Lines and Continental Airlines, giving it a firm grip on the US market, the world's largest.

Moreover, the Airbus partners also face some daunting trials from within. Jean Pierson, 57, managing director of Toulouse-based Airbus, is set to retire in March. This hulking, outspoken executive, known as the "bear of the Pyrenees", has led Airbus through its rapid build-up over the last decade.

A search is now underway for a successor who can steer Airbus successfully through the growth period that lies ahead.

Traditionally, the top job at Airbus is held by a Frenchman and the second post - that of supervisory board chairman - by a German. That is because Aerospatiale and Daimler Benz Aerospace own the biggest stakes, with 37.9 per cent each. BAe has 20 per cent and Construcciones Aeronauticas 4.2 per cent.

This time, however, France seems to have few suitable candidates. Many analysts are hoping the top job could go to BAe's 54-year-old financial director, Richard Lapthorne.

Copyright: IOS & Bloomberg

PROMOTED VIDEO
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
Arts and Entertainment
tv
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
News
media
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
footballA colourful discussion on tactics, the merits of the English footballer and rebuilding Manchester United
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Travel
The shipping news: a typical Snoozebox construction
travelSpending the night in a shipping container doesn't sound appealing, but mobile crash pads are popping up at the summer's biggest events
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz