A New Chapter in the Airline Manufacturing Sector – The Competition Heats Up
Even with the absolute dismal economic challenges in the European Union, the Boeing Company here in the US is selling more of their new 737 Max aircraft into that market, as well as around the world even where growth has slowed in emerging markets and throughout Asia. But how can this be, after all, Boeing is competing with the new Airbus A320 Neo which has made headlines since almost the day it was introduced with back-up orders of nearly a decade into the future. Well, that’s exactly it you see, it’s about delivery schedules too, not just the new efficiencies.
After all, if you order a brand-new airliner, and you won’t be getting it for seven years, and there is no guarantee that the company can deliver upon that promise or that you will need that aircraft at that point, thus, it makes more sense to go with a company that can deliver that product on time. Interestingly enough, the Boeing Company has added the production lines to its 737 Max aircraft, and it now has its production rate up significantly, and plans on wrapping up the process even more.
How can Airbus respond to this? Well, as the EU gets further into economic crisis, Airbus cannot rely on European airlines to continue ordering their aircraft because those airlines are taking an economic hit. Whereas, European airlines would rather order Airbus because they are made in the EU, if they are buying only in limited numbers, those airlines must to get the best deal, and buy from a known source that they can guarantee in the future. Right now as it stands the future of Airbus is not guaranteed due to the very economic crisis and the changes going on around Europe.
The Boeing Company has announced a new wing and new engines for the 737 Max, as well as their serious goal to increasing production capabilities. Boeing has always made good on its promises, and due to the SEC laws in our country, they don’t make forward-looking projections unless they know what they are doing, and are pretty certain of the outcome. Airbus seems to have responded by suggesting they will put an engine plant in Alabama. This would be good for US workers, and could help them persuade US airlines into buying their product as well.
Nevertheless, this is somewhat risky for Airbus even though 40% of their aircraft components are already made in the United States because if the euro continues to evaluate and pars with the dollar, then Airbus would be much better off manufacturing those airliners in the EU, and saving the difference on the currency. Some analysts have considered the Airbus move to put an engine plant in a non-union state like Alabama as a way to get the WTO to forgo future rulings, or perhaps even fines or sanctions due to the European Union counties inadvertent, but obvious subsidizing.
Yes, I would say that we have a new chapter in airline manufacturing history going on right now, and yet, isn’t that how it’s always been? Apparently, both Airbus and Boeing are responding to the competition with reciprocal responses with a little bit of creative brinksmanship and creative cunning, and luckily, the aircraft are getting more efficient, which is good for everyone including the business traveling airline ticket holder. Indeed I hope you will please consider all this and think on it.