The Boeing Company (BA) and Airbus Step Up Their War of Words

Page 1 of 2

Recently, the competition between The Boeing Company (NYSE:BA) and Airbus — the two largest commercial aircraft makers in the world by far — has become increasingly cutthroat. Airlines are looking to buy large numbers of airplanes in the coming years. Rising demand for air travel globally is encouraging a steady expansion of airline fleets, while high fuel prices have pushed many airlines to replace older aircraft with more fuel-efficient models.

Furthermore, airlines are increasingly looking to standardize fleet types, which means that each customer win can be more valuable . With such high stakes, it’s not surprising that Airbus and The Boeing Company (NYSE:BA) are both seeking any advantage possible. As a result, the two companies are really taking the gloves off on the marketing front in the hope of gaining the upper hand.

A global competition

The war between the two plane makers spans multiple aircraft categories. In the last few years, Airbus and The Boeing Company (NYSE:BA) have begun selling updated versions of their narrowbodies — the A320 and 737, respectively — which feature more fuel-efficient engines. In the jumbo-jet market, Boeing began producing a new version of its classic 747 in 2011, in order to better compete with Airbus’ A380 “super-jumbo “.

Perhaps most importantly, Airbus is rushing to catch up to The Boeing Company (NYSE:BA) in terms of composite technology. Boeing seemed poised to dominate this decade with its revolutionary 787 Dreamliner.


The Boeing 787-10 composite widebody (courtesy of Boeing)

However, production delays pushed back the first Dreamliner delivery from 2008 to 2011 , and a recent spate of quality control incidents have opened up an opportunity for Airbus. The A350 composite widebody is still on track for a first delivery late next year .

Marketing wars

While jumbo jets are the smallest addressable market for The Boeing Company (NYSE:BA) and Airbus, this segment has been the subject of a particularly nasty marketing war recently. Boeing ignited this spat with a trade publication advertisement last year stating that the 747-8 has a 26% lower trip cost — and 8% better fuel consumption per seat — than the competing Airbus A380.


The Airbus A380 “super-jumbo jet” (courtesy of Airbus)

Sales for the 747-8 have been disappointing thus far, so Boeing is trying hard to gain market share in the jumbo-jet segment . However, Airbus was not pleased with this ad. In response, it filed a complaint with the U.K. Advertising Standards Authority. More outlandishly, Airbus published a competing ad depicting the Boeing 747 with a “Pinocchio” nose and publicly accused Boeing of stretching the truth . (The Advertising Standards Authority eventually sided with Boeing.)

The A380-747 spat came on the heels of an even more significant battle: one pitting Boeing’s 737 against Airbus’ A320. Boeing and Airbus have both marketed their current- and next-generation narrowbodies as more fuel-efficient than the competition.

The fight extends beyond that, though: each manufacturer also claims that its design entails lower lifetime maintenance costs. Both companies also claim a longer range.  Moreover, Boeing has argued that the 737 is significantly more reliable than the A320: a fact which Airbus disputes.

Based on customer orders so far, Airbus seems to be winning this battle . However, Airbus has reportedly been offering big discounts to airlines and lessors committing to the A320 . Thus, it’s possible that Airbus’ market share lead is being offset by lower margins.

A sore spot

Of course, no discussion of the competition between Boeing and Airbus would be complete without a mention of the new composite widebodies that both companies are marketing heavily. Airbus has been eager to capitalize on Boeing’s Dreamliner woes in order to promote its upcoming A350.

Page 1 of 2