With the loss of several aircraft manufacturers in recent times and the growing dominance of Boeing, are the airlines going to be stuck for choice?
In the UK the rise of Tesco as the dominant household supplier is causing concern as the Cheshunt-based one-time grocery merchant grows past the 30% mark in the British market. There are claims that smaller people on the high street cannot compete and that unfair pressures are being put on the supply chain leading to less choice for the public.
Compare this to the airliner situation. As things stand Airbus and Boeing split sales roughly 50/50. But are things about to change?
Go back a couple of generations and if you as an airline wanted an aircraft for use on the North Atlantic you had a choice”Boeing of course, McDonnell (plus Douglas), Lockheed and the last of the long-range British airliners, the VC10. For regional operations the selection was even greater”Boeing and McDonnell-Douglas, plus Fairchild from the USA, various British Aerospace products, de Havilland Canada (now Bombardier), Saab, ATR and Dornier, along with the emerging Airbus.
In the up to 100-seat segment you still have a decision to make and there is the further option of turboprop versus pure jet. ATR and Bombardier; plus Embraer, the Brazilian manufacturer having emerged over the last 20 years as a very serious player in the marketplace.
Now for the future.
From 100 to 200 seats, Airbus and Boeing will fight it out.
But there could be a serious monopoly problem when it comes to a choice of a large long-range piece of machinery.
Boeing has all its guns lined up - 787 Dreamliner for up to say 300 seats, 777 in the next category, and it looks increasingly likely the 747-8 if your maximum target is 500 passengers.
What has Airbus on offer?
The problems, unlike Boeing, are political as well as commercial.
When Airbus was founded in 1970 it was essentially a French organisation with European partners. Toulouse was the centre with lip service to Hamburg. British Aerospace, to its credit, established itself as the centre of excellence for wing design. Plans by the Germans to move all A320 series production to Hamburg were thwarted by the French, perhaps with an eye on the future with A330/340 problems in mind. Hamburg was also turned down for the A380 assembly although many industry experts considered it a better location than France”s second city. This inland location necessitating complicated (and expensive) seaborne and canal routing of the large components. Some even suggested that Bristol would have been a better location for the plant.
Taking the history of Airbus, first came the A300 series wide-bodied aircraft, not perfect but a fine first production attempt. This was followed by the A320 series with 4,500 sold and getting on for 3,000 in service. A success story by any standards.
The A330/340 was next up and here the waters get muddied. Essentially this product and its derivatives are a development of the original A300 with the same cross section and many of the 1960s features. It was also a compromise offered in both twin-engined (A330) and four-engined (A340) configuration. Fine for flight deck similarities but not so clever when it comes to the structures needed to support four engines instead of two. However with 1,076 total orders and 761 delivered it too has been a commercial success for the manufacturer, although some airlines are reputed to have been none too happy with both the aircraft and the support.
From a sales point of view the A330 in particular has taken a bashing in recent times from Boeing with the all new 787. Airbus retaliated with the updated, but essentially same A350. Airlines lined up to order”persuaded perhaps by large discounts”and then stepped back for another look. The Airbus answer, unveiled in a hurried way at Farnborough 2006, is the 350XWB. It”s a major development with a larger fuselage and many advanced (paper) features. It was supposed to be officially launched in mid-October. That date looks like it is slipping back.
The problem is that an aircraft manufacturer can probably overcome one really serious crisis. But Airbus has two problems”A380 and A350XWB. Has it the resources to focus on both? The losses involved just on the A380 are dramatic with a shortfall in terms of cash generation until 2010, suggested to be more than £6bn ($7.62bn).
Parent company EADS co-CEO Tom Enders, speaking at a Berlin news conference, said the A350 XWB programme is under review: "We will discuss intensively in the next few weeks whether we have the financial and engineering resources to actually take on this programme".
The knock-on effects of the A380 delay are also extremely serious for suppliers. Rolls-Royce has already announced a 12-month production interruption, which will also allow competitor GE to catch up. The Toulouse problems will also have an effect on other Airbus factories including Bristol and Chester in the UK.
The question is where does Airbus go from here? It increasingly seems that BAE Systems” decision to pull out, even with less cash than originally thought, was the right one. Enders is talking about a 30% cut in overheads. Toulouse operates under the generous French workplace social framework and will never compete with Boeing in terms of productivity. Factories will have to close.
The new Airbus CEO Christian Streiff (pictured above), former executive of French building materials group Saint-Gobain, came in during the summer and lasted three months before giving up. He has been replaced by Airbus parent company EADS co-chief executive Louis Gallois.
In fact after this fiasco Airbus had little choice as time is very short. Gallois may not be everyone's idea of the man to be in charge but at least he knows the company.
EADS COO Hans Peter Ring is reported to have said that his board has "not excluded pursuing civil or criminal complaints against individuals it believes are responsible for the extensive programme delays. We're talking about billions that the company, and the shareholders effectively, are losing," he said. "This is why the board of directors has reserved the right to investigate who is responsible for that situation."
The power base at Toulouse has performed badly. Sadly it should pay the consequences. Perhaps Hamburg is where Airbus needs be run from in the future.
The situation must be resolved. It would be dangerous for Boeing to be left as the world”s only large aircraft manufacturer. It would be a worrying monopoly.