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Boeing’s New Strategy To Win Over Airbus’ A320 Family?

Airbus A320neo

In the narrow bodied aircraft category, the U.S. plane maker Boeing has always come in second in rank, while the European player Airbus has stolen the show in terms of orders garnered in this segment. Almost every year, there is a gap created between the order counts of Airbus and Boeing in the narrow bodied jet category. However, Boeing is looking ahead to get rid of this gap now. If it looks impossible to readers, then let’s realise that nothing is impossible for the Number 1 plane maker of the world. In fact, to offer competition to the Airbus A320 which grabs maximum orders across various airlines, Boeing had launched the Boeing 737 program. On similar lines, when the Airbus 320neo was launched, a few months later Boeing declared the Boeing 737 Max which would be built through re-engineering.

But the U.S. aircraft maker does not feel satisfied by these moves. Instead, it’s probably thinking of building the second plane entirely from scratch after the Dreamliner 787 program which has faced several criticisms. But, is this plan of action worth trying out for Boeing? Why is Boeing advocating such a sudden move when it actually wants to abstain from “pursuing moonshots” after the discrepancies noted with the Dreamliner project? Let’s dig in deeper to find out.

Intense rivalry adds on aggression

The age-old rivalry with Airbus has mainly triggered such a decision in the case of Boeing. Despite 737’s incredible success rate, CEO, James McNerney believes that building a new plane is essential to stay ahead of the chief rival which is currently offering the A320neo which offers almost exactly similar features as is being offered by Boeing 737 Max. It’s true that the 737 Max offers better features with cost savings for the manufacturer, but Boeing believes that the best effective way to fight the competitor is through constant innovation.

Hence, it’s proposing to make a new plane for the narrow bodied jet category typically from the scratch, though it might require more expenditure than what was spent during the Dreamliner program. A few days back, when Boeing announced its plans to replace the 737 Max by 2030, investors might have felt a bit worried as this is the best-selling plane which comprises more than 70% of its narrow-bodied aircraft’s order backlog. But McNerney has stated that there will be a new plane replacing this 737 Max which would be larger than the 737 but will have similar fuselage like the former. Chances are there that it could be made of composite material to make it more fuel efficient. Boeing has already spent on similar technology during the Dreamliner project which was done to create the best-selling plane in the wide-bodied category. So, using the same platform for the narrow-bodied jet segment might be a commendable plan for the U.S. aircraft manufacturer.

Making a lethal weapon against the A320 family

Boeing had long thought of building a new plane to succeed the Boeing 737 – however, when Airbus initiated its A320neo program, the former started thinking on different lines. But only after eight months passed from the date of announcement by Airbus on the A320neo program to take over the aging A320, Boeing did declare the news on Boeing 737 Max set to replace the 737 completely.

This time lag in the two announcements has taken a toll on Boeing’s order count in the narrow bodied jet category where Airbus still emerges the winner. Presently, Airbus holds more than 3,000 firm orders from 60 customers for the A320neo compared with Boeing’s 2,325 737 Max orders from 48 customers.

And the European company is already posing a threat to Boeing at it has recently introduced the latest member in the A320neo family – the A321neo LR which offers the maximum competition to the 737 Max family. According to LeehamNews, the 737 Max is falling further behind in market share as Max 9 lags in the order count when it’s compared to the A321neo.

The A320neo is scheduled to enter service in 2015, almost two years ahead of the 737 Max schedule for service entry. Thus, the U.S. manufacturer understands that something extra is required from its end to preserve its position in the narrow-bodied segment, and building a new plane to replace the 737 Max does look as an opportunity for the Chicago-based aero major.

Last word

Boeing is taking on a difficult path which requires critical investments to maintain its lead over the major rival, Airbus in the aircraft sector. Though Airbus has won over Boeing in the narrow bodied jet category in terms of bagging more orders than the latter, Boeing believes in trying the best shot to retain its current position in the market. Hence, it’s now speaking about replacing the 737 Max in order to develop better aerodynamic and ergonomic planes for its customers besides easing the long term pressure which it has been facing in the short-haul market. However, investors are also expecting this new program to have almost no glitches as faced with the Dreamliner program.

More… http://www.gurufocus.com/news/294456/is-boeing-building-a-new-strategy-to-win-over-airbus-a320-family

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