Boeing Versus Airbus (eBook)

Being Number One In the aircraft business, as in a Trollope novel, things are often not what they seem. In the 1980s, Boeing still reigned supreme. Its airplanes covered the market. Its product support was exemplary. Boeing was universally judged one of America's best and most admired companies, partly because its sales abroad of big commercial airplanes were the country's biggest export, and partly because it had learned to build these airplanes better, faster, and cheaper than anyone elso had done. 'World-class' was Boeing's lofty but accurate characterization of itself. The competition was barely visible. McDac had entered its steady but terminal decline, and in Seattle, Boeing's home base, Airbus was seen as just another in a long line of European wannabes that would stay in the game only as long as a consortium of governments remained willing to throw vast sums of money at a seemingly certain loser. Today, things have turned around. Boeing and Airbus are the sole suppliers of big airliners, but over many of the past twenty years, the two companies were moving in opposite directions. Boeing's multiple troubles, most of them self-inflicted, signaled an end to its dominance and pointed up Airbus's methodical rise. Things had begun to change in the late 1980s. And it was no joke when, on April 1, 1993, Moody's downgraded Boeing's debt rating for the first time in the company's seventy-six-year history. Still, as late as 1990, Boeing held 62 percent of the market, McDonnell Douglas 23 percent, Airbus just 15 percent. Today it's very different. McDonnell Douglas is gone, having been absorbed by Boeing in August 1997. In 2004, Airbus outsold Boeing, and did so again in 2005. Boeing's troubles were traceable partly to arrogance--a tendency to take the market for granted, to coast on its laurels--and partly to changes that developed in the corporate culture. These changes began to dull Boeing's feel for the game, a game in which the supplier must either take large risks with operating margins or make way for the competition. Then there is the legacy of obsolescence. So much is invested in existing systems that a Boeing or an Airbus cannot absorb the new technologies except in small bites. Nevertheless, whatever the cost, they must invest in these technologies, even while being manipulated in a way that drives down the cost of new airplanes to a point at which the financially strapped airlines can afford to buy them. 'You can't win, you can't break even, and you can't quit,' said Jean Pierson, a former CEO of Airbus, who understood the need to invest in research and technology. The industry has produced few more interesting figures than Pierson. He is a legend. Experienced people at the Airbus offices in Toulouse agree that without Jean Pierson, who retired in 1998, there would be no Airbus. This is a people industry, even if it is technology driven. Those who succeed are individuals with vision and guts and a sure sense of their company's interests, as distinct from their own (or even those of their stockholders). Pierson defined the model of what it takes. He had the requisite vision, guts, common sense, and the personal force to persuade colleagues at Airbus to do things his way and to persuade customers--including wary, skeptical American carriers--to buy his airplanes instead of Boeing's. Pierson was known as 'the bear of the Pyrenees.' He now spends some of his time in Nice and the rest in Corsica--in the mountains behind a small port not far from Bastia. He keeps a small boat there, a farewell gift from Airbus. And he does some indifferent fishing, not with tackle but with a string tied to his finger to which he attaches...