Arrow-right Camera


Suddenly it’s smooth sailing for Boeing

Wed., April 27, 2005

WASHINGTON — Buoyed by an influx of new orders, Boeing Co. appears to be turning the corner in its battle with archrival Airbus SAS.

Boeing’s commercial airplanes chief, Alan Mulally, conveyed that message in a private meeting with lawmakers Tuesday — backed by a slew of new orders that testifies to the company’s improving jet sales outlook.

The latest evidence came earlier Tuesday when Air India announced plans to order 50 new Boeing jetliners — a deal worth $6.8 billion minus undisclosed price discounts. On Monday, Air Canada said it had made firm orders for 32 Boeing jets at a list price of $6 billion.

Earlier this month, Korean Air said it will order up to 20 of Boeing’s new fuel-efficient 787 aircraft in a deal worth up to $2.6 billion at list prices. Analysts and numerous published reports also have said that Northwest Airlines Corp. is negotiating an order for a substantial number of planes.

“The momentum has definitely swung in their favor, in terms of orders,” analyst J.B. Groh of D.A. Davidson said of Boeing.

All the airlines involved in the recent orders had been committed Airbus clients.

“It’s not just sheer volume in customers’ orders — it’s penetration deep in the heart of Airbus territory,” said Richard Aboulafia, an aviation analyst for the Teal Group in Fairfax, Va.

Boeing’s stock fell 58 cents to close at $59 in Tuesday trading on the New York Stock Exchange, after earlier rising to $60, matching a four-year high it also reached earlier this month.

Mulally wouldn’t give specifics about his closed-door presentation, which lawmakers commented on afterward, other than to say the meeting “went really well.” But numbers released by Boeing show the company is making inroads in the airplane market after being runnerup to Airbus in each of the past two years.

Boeing said that in 2005 it now has 57 net new orders plus unsigned but announced commitments for another 238, compared with the 2004 total of 272 orders. For the 787, it has a total of 237 orders and commitments since that program was launched a year ago Tuesday, company spokesman Todd Blecher said.

Mulally, a top contender along with Boeing defense unit chief Jim Albaugh to become the company’s new CEO, made an upbeat presentation to Washington state’s congressional delegation on the day before Boeing reports quarterly earnings results.

Mulally said the company was pleased with the U.S. government’s response to Boeing complaints about subsidies given to Airbus by European governments.

The Bush administration has threatened to resume a trade case against the European Union if Europe goes forward with new development subsidies for Airbus. Despite missing an April 11 deadline, both sides have offered to keep negotiating to avoid a formal complaint with the World Trade Organization.

“I don’t know how that will come out, but we’re all very supportive of the United States and Europe working things out. We’re very encouraged by what’s going on,” Mulally said.

Washington lawmakers also were encouraged — but for a different reason. They said the company appears back on track after a difficult two years in which it lost market share and watched as Airbus became the world’s top supplier of commercial airplanes.

Sen. Maria Cantwell, D-Wash., said she was struck by the difference in tone from a similar meeting with Mulally two years ago.

“Basically it’s good news and great orders,” she said, contrasting it with Boeing’s recent troubles over an ethics scandal and a business slump spurred by the 2001 terrorist attacks.

Cantwell called the company’s new 787 Dreamliner — which has played a key role in new orders from Canada, India and China — a “game-changer” and said Mulally deserves much of the credit for it.

Rep. Norm Dicks, D-Wash., also touted Mulally. “We’ve turned the corner and are going to be able compete effectively with Airbus,” Dicks said, referring to Boeing.

Dicks, the delegation’s senior member, convened the meeting with Mulally, saying it was time to re-establish the monthly breakfasts and strengthen ties with the jet-maker, the state’s largest private employer.

Many Washington lawmakers were infuriated by the recent tanker-leasing scandal, during which they argued Boeing’s case only to be embarrassed later by revelations of conflicts of interest and illegal actions by Boeing and Air Force officials.


Click here to comment on this story »