Boeing changes course

Boeing’s decision to ditch plans for its own superjumbo has sparked controversy over the future of the global aircraft market.

Boeing is mothballing plans to produce a ‘stretched’ jumbo, the 747X, as a direct competitor to Airbus’ A380 – 20% of which is owned by BAE Systems – and will instead focus on a long-range, subsonic aircraft.

The 250-seater airplane, dubbed the ‘Sonic Cruiser’, could enter service by 2006, and will fly at speeds of Mach .95, or 95% of the speed of sound.

Good news

Roman Zuper, director of corporate ratings at consultant Standard & Poor’s, said Boeing’s announcement could be good news for both companies. ‘The market wasn’t big enough for two large airplanes, so now Airbus can make more money (without competition to the A380), and Boeing won’t have to invest billions of dollars in developing a product for which there is not enough customer demand.’

Boeing said the need for the aircraft, which could cut flights by one hour for every 3,000 miles flown, is greater than for a stretched version of the 747. It will avoid refuelling stop-overs at congested hubs and allow passengers to fly directly to theirdestinations. With a range of 16,700km, it could fly directly from Singapore to New York.

Analysts are split on which of the two aircraft will prove most successful, said Tim Coombs, managing director of consultant Aviation Economics. ‘Arguably they are both right.’ Where there are slot restrictions at airports, airlines are going to require larger aircraft, so there’s a natural market for the A380, while developments in the last decade have shown that people like flying directly, so Boeing’s new jets will have a market as well.

Boeing’s decision makes better economic sense than going head-to-head with the A380, as there could be less financial risk in competing for customers in the smaller aircraft market, where it has also been losing out to Airbus. ‘Boeing has had a slight problem recently, its only new plane has been the 777, and to start developing several new aircraft families is quite a tall order,’ said Coombs. So to compete head-on against a new concept with a stretched version of an existing product just doesn’t add up.

Airbus has 62 firm orders for its 550-seater A380 aircraft and is hoping to reach 100 by the end of the year. The company has itself looked into faster aircraft, but said the greater operational costs would outweigh the benefits from speed increases.

Brian Fleet, director of manufacturing at Airbus UK, said he was not surprised Boeing had decided to shelve its plans to build the 747X. ‘They’ve been having difficulty finding customers for the craft, and you never launch a product until you’re sure it can sell.’

The Sonic Cruiser could take some business passengers away from the A380 super jumbo, he said, but it would depend how much more people were prepared to pay for shorter journey times.

Minimal costs

Boeing said recent technological advances by the company meant the extra operating costs would be minimal. The company still has some technological issues to resolve before the new aircraft is built, and has yet to decide on its exact size.

Greece last week said it was postponing its £6.29bn purchase of 60 Eurofighter Typhoon fighters until after 2004 to save money for what it calls social enhancement programmes and the Olympic Games in 2004.

Greece has an option for another 30 Typhoons. BAE Sytems is a 33% partner in Eurofighter, alongside Germany, Italy and Spain.

Delaying the decision until after 2004 brings several other fighters into the competition, including the US Joint Strike Fighter and the French Dassault Rafale.