On the surface, the contest between Boeing (NYSE: BA ) and Airbus appears to be an epic struggle. A clash between titans for control of the $4.7 trillion airliner market. But could Boeing actually be the best thing that ever happened to Airbus?
I know the idea's heresy. But a recent report out of Bloomberg suggests that Boeing's attempt to steal share from Airbus with its groundbreaking "composite-skinned" 787 Dreamliner may have hamstrung Boeing, even as it gave Airbus a weapon with which to grow sales.
Bloomberg describes how London-based Umeco gained experience working up carbon-fiber components for the 787 Dreamliner. The new technology has been bad news for Alcoa, whose share price has never quite recovered since Boeing's switch to from aluminum to composites was announced back in early 2003. But it's been worse news for Boeing, whose 787 project has been plagued by three years of production delays as the company tried to get a handle on integrating the new material into the 787.
But here's the real kicker: Boeing began its 787 project nearly two years before Airbus announced the development of its answer to the Dreamliner, the A350. On one hand, this gave Boeing a big head start that's enabled it to book record sales on its new plane. On the other hand, it gave Airbus time to learn from Boeing's mistakes and to profit from advancements in the technology while avoiding similar mistakes itself.
Today, says Umeco, it's figured out how to manufacture composites more cheaply and easily than it used to. Many analysts believe that Boeing's initial foray into composites has made it difficult for the company to turn a profit on planes using the new tech, such as the 747-8 and the Dreamliner. But Airbus also buys composites for its A350 from Umeco. Between lower costs on these components and the ability to learn from Boeing's mistakes, it's that possible Airbus' A350 will fare better.
If Airbus ends up enjoying lower development costs, the company will face less pressure to keep prices high to recoup its investment. That situation could help it to win more sales outright, instead of splitting them with Boeing, as happened at United Continental (NYSE: UAL ) last year. (In fact, Airbus did just that with its recent 100-plane order from AIG (NYSE: AIG ) .) Reduced pricing pressure could help it win further contracts in bidding on upcoming contracts from Delta (NYSE: DAL ) and Ryanair (Nasdaq: RYAAY ) .
Boeing may yet rue the day it came up with this particular bright idea.