Is Boeing About to Eat Airbus' Lunch?

Boeing (NYSE: BA  ) and Airbus have been locked in a long-running battle for supremacy in the market for widebody aircraft.  With new airplane models like Boeing's 787 and Airbus' A350, both manufacturers have increased their use of lightweight composite materials to produce significant fuel-efficiency improvements.

At the Paris Air Show last month, Boeing announced a new, larger version of its popular 787 Dreamliner, with initial orders from several airlines including United Continental (NYSE: UAL  ) .  The new plane -- dubbed the 787-10 -- attacks the Airbus A350's largest market segment.  Moreover, it is expected to offer better fuel efficiency than the comparable Airbus product.

Will this new version of the Dreamliner allow Boeing to eat Airbus' lunch? In the following video, Motley Fool industrials bureau chief Isaac Pino and Motley Fool contributor Adam Levine-Weinberg discuss the competition between Boeing and Airbus and the prospects for Boeing's new plane.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies, including Boeing. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!


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  • Report this Comment On July 02, 2013, at 11:13 PM, RobertPhoenix wrote:

    I find it interesting to see so many articles on Fool that are bullish on Boeing. So either there are people on Fool that have an interest in boosting Boeing, or there really is a consensus that Boeing is making all the right moves.

    I don't share that view, mainly because I think the position is much more complex.

    The very first strategic overview I would take is that Boeing decided to move its corporate headquarters from Seattle to Chicago, a well known place for building excellent airplanes (really ! Does most of the board live there ?)

    The next is Boeing's loss of monopoly on the largest aircraft. It used to be said that Boeing could afford to be very competitive on single aisle aircraft because it had monopoly profits on the 747. But those days have gone (look at recent 747 sales versus A380) I take the obvious point that the population is increasing, the people able to fly are increasing rapidly, and the building or airports is just not keeping pace. Larger aircraft are inevitable.

    Next is Boeing's panicked reaction to the sales of the A320neo - and they still don't have the same backlog for this type of aircraft that Airbus has.

    The introduction of the 787 was certainly a win for Boeing, but how much has it cost them to strive for so much and have so many delays and teething problems. I also have engineering doubts about the maintainability of the complete fuselage. The commentator in this video talked about the 2 year start that Boeing has in the medium size wide body arena, but the other side of the coin is that Airbus has much more than two years better technical experience before launching their own competitor (e.g. the ability to make the decision not to employ Lithium Ion batteries) I think if you compare A350 orders to 787 orders, and then add in all the extra A330 orders that Airbus got because of the 787 delays, you will end up with a very similar number - and I suspect all A330 being delivered now are very profitable.

    Now if Boeing had kept Alan Mulally, the father of the 787, I wonder how different things would have been.

    I could say more about the tanker competition, the ULA versus Space-X, the defense cutbacks, but that can wait for another time.

  • Report this Comment On July 03, 2013, at 12:20 AM, ilovewbc wrote:

    Why does anyone think these two Kids have anything of substance to say. This is light weight fluff

  • Report this Comment On July 03, 2013, at 1:10 AM, hunter3203 wrote:

    RobertPhoenix - Boeing's headquarters move was a signal that the company now does more than just build commercial aircraft. Boeing is also one of the biggest defense contractors now.

    The largest aircraft like the 747 and A380 sell in very small numbers. That's one of the reasons that Boeing waited so long to launch an update of the 747, they couldn't build the business case for the required investment. Unfortunately, that's not a problem for Airbus. They still receive substantial launch aid and that has allowed them to be more aggressive in launching new models.

    The real money in larger aircraft are the new 787 and A350 and Boeing's 777. Those aircraft are very efficient due in part to using only 2 engines and new 787 and A350 also use composite construction. They allow point to point routes and that's something passengers look for.

    In the single aisle market, Boeing had hoped to come out with a clean sheet design but the technology just isn't there yet. But they did need to respond to the changing market. Bombardier's C Series and the upcoming 2nd Gen Embraer E Jet are threats to the smaller models of both the 737 and A320. That's why Airbus developed the A320neo and Boeing needed to respond to the same threat. The difference in backlogs between the 2 aircraft is primarily due to Airbus launching their aircraft earlier than Boeing. Over the long run it won't matter. Both of those aircraft will be successful.

    The 787 is a great aircraft and essentially forced Airbus's hand to come out with the A350. They initially came out with an updated A330 and the market quickly rejected it. That happened several times until Airbus finally admitted they needed a new design and composite construction. Airbus has tried to make the A350 larger and try and impact the 777. Now that Boeing is going to update the 777, they'll maintain their lead in that market as well.

  • Report this Comment On July 03, 2013, at 2:13 AM, RobertPhoenix wrote:

    hunter3203 - I think you are making my point when you say "Boeing's headquarters move was a signal that the company now does more than just build commercial aircraft. Boeing is also one of the biggest defense contractors now."

    They no longer have a focus on commercial aircraft, and that is a weakness.

  • Report this Comment On July 03, 2013, at 3:17 AM, AjaxofTelamon wrote:

    The short answer to the question "Is Boeing About to Eat Airbus' Lunch?" is no, absolutely not!

    And it is a baseless question because Boeing hasn't done anything to warrant such a question.

    The question for the Motley Fool however is this: Are you part of the Boeing PR machine? And if so, why?

  • Report this Comment On July 03, 2013, at 6:08 AM, compal wrote:

    Re:Robert Phoenix,

    Very astute, they should have engaged you to write that article, it would have made sense!

  • Report this Comment On July 03, 2013, at 10:47 AM, TMFGemHunter wrote:

    @RobertPhoenix: The main reason Boeing moved its headquarters is to have better access to customers. From Chicago, you can get to a ton of destinations across the globe nonstop. From Seattle, you have to connect somewhere to get to much of Europe, the Middle East, and Latin America.

    The idea that Boeing doesn't focus on commercial aircraft is ludicrous, in my opinion. It's by far their largest business, and will only grow larger over time.

    My point in the video (and the related article) is that while Airbus is building a big lead in the market for very large aircraft (A350-1000 and A380), Boeing is winning the lion's share of orders in the mid-size widebody market, which is a MUCH higher-volume segment. Moreover, Airbus doesn't have a small widebody to compete with the 787-8.

    Only time will tell, but I expect Boeing to maintain its substantial lead in the widebody market as a whole. Whether that translates into big gains for shareholders depends on how fast 787 production costs decline.

    FYI, I have no financial interest in Boeing or Airbus.

    Adam

  • Report this Comment On July 03, 2013, at 10:47 AM, TMFGemHunter wrote:

    @RobertPhoenix: The main reason Boeing moved its headquarters is to have better access to customers. From Chicago, you can get to a ton of destinations across the globe nonstop. From Seattle, you have to connect somewhere to get to much of Europe, the Middle East, and Latin America.

    The idea that Boeing doesn't focus on commercial aircraft is ludicrous, in my opinion. It's by far their largest business, and will only grow larger over time.

    My point in the video (and the related article) is that while Airbus is building a big lead in the market for very large aircraft (A350-1000 and A380), Boeing is winning the lion's share of orders in the mid-size widebody market, which is a MUCH higher-volume segment. Moreover, Airbus doesn't have a small widebody to compete with the 787-8.

    Only time will tell, but I expect Boeing to maintain its substantial lead in the widebody market as a whole. Whether that translates into big gains for shareholders depends on how fast 787 production costs decline.

    FYI, I have no financial interest in Boeing or Airbus.

    Adam

  • Report this Comment On July 04, 2013, at 11:37 AM, willmacc wrote:

    The A350 is the perfect size, its going to be massively successful.. the standard 787 is too small and this even more stretched version just looks like its pushing the design envelope too far.. anyway I'm sure Airbus will say their aircraft is just as fuel efficient

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