Air Transport World

New technology uncertainties blur airframe market trends; an analysis.

New Technology uncertainties blur airframe market trends; an analysis Boeing's historical lock on the airline market is facing a significant challenge by the inexorable rise of the first major European jet airline producer, Airbus Industrie, while McDonnell Douglas likely will see a gradual improvement in its fortunes. This is the conclusion of market analysts and industry experts contacted by ATW.

Shift in market from Boeing to Airbus can range from a few points to approaching equality in the number of seats sold. The major swing factor is the success of new propulsion technology being prepared for market. If the new technology pans out, Boeing can hold onto most of its market share. If there are major hitches in development, Airbus will gain considerable ground.

Majority of industry forecasters also see the manufacturers enjoying profitable conditions for years to come, with manageable dips in the order/reorder cycle if the world economy stays relatively healthy. A continuance of the kinds of flexible deals airlines are demanding and getting from manufacturers could expose those firms to heavy losses if a major international recession bites into airlines' plans for continually expanding traffic. By assuming some risk in future equipment deliveries, the airframers face the possibility of seeing the traditional recession-induced dearth of new orders and cancellations of existing orders coincide for the first time with a major wave of aircraft being returned.

The past two years have been the best of times for the three largest manufacturers of transports for the world's airline industry. Airbus, Boeing and McDonnell Douglas sold 691 new transports in 1986, worth more than $32 billion, including the 52 MD-11s McDonnell Douglas said were on order at year-end.

This follows an excellent 1985 when the three manufacturers sold 599 transports worth about $22 billion. In 1984 sales were a low 313 transports.

So in just the past two years these companies have sold nearly 1,300 new transports worth more than $50 billion. Some of these will replace aging equipment, but a great many represent additional capacity for the world airline system.

In terms of units, sales for the past two years represent a 14.5% increase over the total number of jet-powered transports ever delivered through the end of 1985, according to Boeing figures, including first generation aircraft largely withdrawn from service.

Further, capacity represented by these new sales is greater than the increase in units since most of the new transports are much larger than those delivered in the first years of the jet age.

The brisk sales in the past two years reflect a growing airline industry, spurred in large part by significant traffic growth in the U.S. whose airline industry continues to increase its world traffic market share. The sales also show increased airline attention to improving efficiency, both as a result of the 1970s' fuel scares and the significant increase in competition worldwide--real and anticipated. With literally one or two exceptions, every transport ordered in the past two years has a two-pilot cockpit configuration and high-bypass turbofan engines.

In the first few months of 1987 sales indicate that transport builders might be in for another fine year, particularly in some segments that have not done well lately. Big sellers in 1985-6 have been the Boeing 737 and 747 families, the Airbus A320 and the MD-80 offerings of McDonnell Douglas. Sales of mid-sized transports have been sluggish. Boeing sold only 21 767s in 1985 and 23 last year, plus just 13 757s after registering 45 orders in 1985. Airbus, meanwhile, sold only 24 A300s in 1985 and a meager seven last year. The A310, which started off briskly, slumped to 29 sales in 1985 and 17 in 1986.

In the first few weeks of this year, however, sales in this particular group have been encouraging. Airbus sold a dozen A310-300s to Wardair Canada and 25 A300-600Rs to American Airlines (see News Briefs). Boeing also racked up a sale to American with an order for 15 767-300ERs, plus picking up another six 767 and 14 757 orders elsewhere.

MD-11/A340 competition

McDonnell Douglas started its MD-11 program by announcing 52 orders. Most MD-11 launching customers, however, had not signed contracts by the time of launch. The latest weather vane of the elevated level of airframer competitiveness is the way Airbus attacked MD-11 customers with a renewed vigor, especially major European buyers Scandinavian Airlines System and Swissair.

The first Airbus offering of the A340 was priced at just under $80 million--equal to the MD-11 launching price. Airbus got no takers for the CFM56-5S2-powered aircraft.

Airbus's comeback offer to MD-11 customers was a radically new deal. The airplane would be stretched, it would be powered by advanced International Aero Engines (IAE) SuperFan engines featuring a 17:1 bypass ratio, it would have greater range, and, with all these improvements, it would cost about $10 million less than the MD-11. …

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