Rogue5
Adult Swim junkie
- Joined
- Jul 16, 2002
- Posts
- 882
http://seattletimes.nwsource.com/html/businesstechnology/2002896362_boeing29.html
Airplane kingpins tell Airbus: Overhaul A350
By Dominic Gates
Seattle Times aerospace reporter
ORLANDO, Fla. — Two of the world's most powerful airplane buyers yesterday said Airbus should completely rethink the plane it has proposed to compete against Boeing's strong-selling new 787.
Steven Udvar-Hazy, probably the most respected figure in the global business of buying and selling airplanes, predicted the current version of Airbus' A350 would sell poorly and leave Boeing to dominate the lucrative market for midsized wide-bodies.
He stunned a packed audience of some 700 aviation professionals here by calling on Airbus to scrap its existing A350 design and spend many additional billions on a brand-new airplane with a new fuselage and a new wing.
"That's probably an $8 billion to $10 billion decision. Airbus is at a crossroads," said Udvar-Hazy, founder, chairman and chief executive of the second-largest airplane-leasing company, Los Angeles-based International Lease Finance Corp.
Airbus had better make that decision before the Farnborough Air Show in England in July, he said.
His remarks were endorsed by Henry Hubschman, president of the world's No. 1 lessor of airplanes. In an interview, he said he "completely" agreed with Udvar-Hazy's message.
If Airbus sticks with its current design, Udvar-Hazy said, it will wind up with as little as 25 percent market share against the 787.
Sitting in the audience was top Airbus sales executive John Leahy, who earlier had given a confident and rosy presentation of Airbus' competitive position.
In an interview afterward, Udvar-Hazy indicated some Airbus executives are contemplating the extreme step he advocates.
That would be an admission that Airbus' strategy is seriously flawed and needs a radical about-face.
"Airbus will have to deal with this issue or accept a silver medal instead of a gold," Udvar-Hazy said.
The leasing executive spoke at the annual conference of the International Society of Transport Aircraft Trading (ISTAT) at a resort outside Orlando.
He described the current version of the A350 as "a good solid, airplane" with "elements that are leftovers from the early members of the Airbus wide-body family."
The current A350 offering is based on the A330 jet but uses new engines and a lighter airframe, thanks to a composite-plastic wing and a fuselage made from aluminum/lithium alloy.
However, it has the same fuselage cross-section Airbus had 30 years ago, and the wing shape is unchanged.
Udvar-Hazy said Airbus should go for an all-new design to replace not only the current A330 twin-engine jets but also the larger four-engine A340s — "a new family of aircraft that will be the backbone of their wide-body midsize product line for the next 20 to 25 years."
Udvar-Hazy and Hubschman, president of GECAS, the aircraft-finance division of General Electric, lead organizations that are quite simply the rival plane makers' most powerful customers.
In the corridor after the conference session he shared with Udvar-Hazy, Hubschman said he thought that some action at Airbus should come within the next three months.
Udvar-Hazy said in the interview that as a leasing company attuned to an airplane as a long-term financial investment, "we want to have long-term residual value in the A350. ... We're not interested in a Band-aid reaction to the 787."
He said Airbus should develop a new family "that incorporates even more of the new technologies the 787 is doing." It should have a larger diameter fuselage to at least match the dimensions of the 787 interior, and a faster, more swept-back wing to give it the 787's speed.
That would be "a nightmare for Boeing," he said.
But for Airbus, it would be a big gamble. "It's going to cost a lot of money and it's going to cost delay," Udvar-Hazy said.
Analysts at the conference said such a move would delay the Airbus program by at least a year. The A350 is already 2-½ or three years behind the 787.
But Udvar-Hazy believes Airbus has little choice. If it doesn't, he said, Boeing will dominate the entire midsize wide-body segment of the market, with its 787 outselling the A350 and the 777 outgunning the A340.
He said sales of the superjumbo A380 — at best "300 or 400 airplanes," he estimated — cannot compensate for missing out in the much larger midsize wide-body market.
Last year, Boeing opened up a big gap in wide-body sales with big wins selling 787s and 777s to airlines including Air Canada, Korean Air, Qantas, Air India and Emirates.
"It's the marketplace that is going to dictate whether they do this or not do this," said Udvar-Hazy. "They have some big sales campaigns against Boeing. If they continue to lose, if Airbus loses two or three more critical campaigns, what choice do they have? They can't be out of this segment of the business.
"Otherwise, what happens to the A340? Do they make one a month or one every two months? Where is that headed, the whole A340 product line, after say 2008?"
Udvar-Hazy said time is not on Airbus' side because Airbus is already spending on the A350 program, and because airlines may get edgy with uncertainty and decide to go for the 787.
"That's a huge financial decision. It can't be delayed very long," said Udvar-Hazy. "If they are going to make a course correction, it's got to happen I think in the next four or five months."
"Time is an enemy," he said. "They've got to tell the market clearly."
By speaking publicly and in front of John Leahy, Udvar-Hazy is also trying to influence Airbus' decision.
"There are forces within Airbus that like the current approach; it's the lowest investment and lowest risk," he said. "And then there are others that are perhaps more visionary. They're saying let's think this through very carefully. There are alternatives."
Outside, Leahy downplayed the impact of Udvar-Hazy's remarks and pointed out International Lease Finance Corp. has ordered the current version of the A350. "Actions speak louder than words," said Leahy.
Asked if a change of plan was in the works, he responded: "I don't see anything imminent at this juncture."
Udvar-Hazy said his company placed the A350 order because those planes will sell well enough in the short term if priced much less than the 787. It's the jet's long-term future he is concerned about.
Analysts at the conference were doubtful that Airbus can afford to could pull off a complete new aircraft program, even while it struggles to complete the A380 and the military cargo A400M airplane.
"They cannot drop everything and start from scratch," said Adam Pilarski, an analyst with Avitas.
Richard Aboulafia of the Teal Group said Udvar-Hazy was asking for "a massive turnaround, a total redirection of Airbus resources."
"No airplane company is good at admitting that everything is wrong and that their whole strategy is so flawed it needs a fundamental rethink," said Aboulafia. "That's tough."
Dominic Gates: 206-464-2963 or [email protected]
Airplane kingpins tell Airbus: Overhaul A350
By Dominic Gates
Seattle Times aerospace reporter
ORLANDO, Fla. — Two of the world's most powerful airplane buyers yesterday said Airbus should completely rethink the plane it has proposed to compete against Boeing's strong-selling new 787.
Steven Udvar-Hazy, probably the most respected figure in the global business of buying and selling airplanes, predicted the current version of Airbus' A350 would sell poorly and leave Boeing to dominate the lucrative market for midsized wide-bodies.
He stunned a packed audience of some 700 aviation professionals here by calling on Airbus to scrap its existing A350 design and spend many additional billions on a brand-new airplane with a new fuselage and a new wing.
"That's probably an $8 billion to $10 billion decision. Airbus is at a crossroads," said Udvar-Hazy, founder, chairman and chief executive of the second-largest airplane-leasing company, Los Angeles-based International Lease Finance Corp.
Airbus had better make that decision before the Farnborough Air Show in England in July, he said.
His remarks were endorsed by Henry Hubschman, president of the world's No. 1 lessor of airplanes. In an interview, he said he "completely" agreed with Udvar-Hazy's message.
If Airbus sticks with its current design, Udvar-Hazy said, it will wind up with as little as 25 percent market share against the 787.
Sitting in the audience was top Airbus sales executive John Leahy, who earlier had given a confident and rosy presentation of Airbus' competitive position.
In an interview afterward, Udvar-Hazy indicated some Airbus executives are contemplating the extreme step he advocates.
That would be an admission that Airbus' strategy is seriously flawed and needs a radical about-face.
"Airbus will have to deal with this issue or accept a silver medal instead of a gold," Udvar-Hazy said.
The leasing executive spoke at the annual conference of the International Society of Transport Aircraft Trading (ISTAT) at a resort outside Orlando.
He described the current version of the A350 as "a good solid, airplane" with "elements that are leftovers from the early members of the Airbus wide-body family."
The current A350 offering is based on the A330 jet but uses new engines and a lighter airframe, thanks to a composite-plastic wing and a fuselage made from aluminum/lithium alloy.
However, it has the same fuselage cross-section Airbus had 30 years ago, and the wing shape is unchanged.
Udvar-Hazy said Airbus should go for an all-new design to replace not only the current A330 twin-engine jets but also the larger four-engine A340s — "a new family of aircraft that will be the backbone of their wide-body midsize product line for the next 20 to 25 years."
Udvar-Hazy and Hubschman, president of GECAS, the aircraft-finance division of General Electric, lead organizations that are quite simply the rival plane makers' most powerful customers.
In the corridor after the conference session he shared with Udvar-Hazy, Hubschman said he thought that some action at Airbus should come within the next three months.
Udvar-Hazy said in the interview that as a leasing company attuned to an airplane as a long-term financial investment, "we want to have long-term residual value in the A350. ... We're not interested in a Band-aid reaction to the 787."
He said Airbus should develop a new family "that incorporates even more of the new technologies the 787 is doing." It should have a larger diameter fuselage to at least match the dimensions of the 787 interior, and a faster, more swept-back wing to give it the 787's speed.
That would be "a nightmare for Boeing," he said.
But for Airbus, it would be a big gamble. "It's going to cost a lot of money and it's going to cost delay," Udvar-Hazy said.
Analysts at the conference said such a move would delay the Airbus program by at least a year. The A350 is already 2-½ or three years behind the 787.
But Udvar-Hazy believes Airbus has little choice. If it doesn't, he said, Boeing will dominate the entire midsize wide-body segment of the market, with its 787 outselling the A350 and the 777 outgunning the A340.
He said sales of the superjumbo A380 — at best "300 or 400 airplanes," he estimated — cannot compensate for missing out in the much larger midsize wide-body market.
Last year, Boeing opened up a big gap in wide-body sales with big wins selling 787s and 777s to airlines including Air Canada, Korean Air, Qantas, Air India and Emirates.
"It's the marketplace that is going to dictate whether they do this or not do this," said Udvar-Hazy. "They have some big sales campaigns against Boeing. If they continue to lose, if Airbus loses two or three more critical campaigns, what choice do they have? They can't be out of this segment of the business.
"Otherwise, what happens to the A340? Do they make one a month or one every two months? Where is that headed, the whole A340 product line, after say 2008?"
Udvar-Hazy said time is not on Airbus' side because Airbus is already spending on the A350 program, and because airlines may get edgy with uncertainty and decide to go for the 787.
"That's a huge financial decision. It can't be delayed very long," said Udvar-Hazy. "If they are going to make a course correction, it's got to happen I think in the next four or five months."
"Time is an enemy," he said. "They've got to tell the market clearly."
By speaking publicly and in front of John Leahy, Udvar-Hazy is also trying to influence Airbus' decision.
"There are forces within Airbus that like the current approach; it's the lowest investment and lowest risk," he said. "And then there are others that are perhaps more visionary. They're saying let's think this through very carefully. There are alternatives."
Outside, Leahy downplayed the impact of Udvar-Hazy's remarks and pointed out International Lease Finance Corp. has ordered the current version of the A350. "Actions speak louder than words," said Leahy.
Asked if a change of plan was in the works, he responded: "I don't see anything imminent at this juncture."
Udvar-Hazy said his company placed the A350 order because those planes will sell well enough in the short term if priced much less than the 787. It's the jet's long-term future he is concerned about.
Analysts at the conference were doubtful that Airbus can afford to could pull off a complete new aircraft program, even while it struggles to complete the A380 and the military cargo A400M airplane.
"They cannot drop everything and start from scratch," said Adam Pilarski, an analyst with Avitas.
Richard Aboulafia of the Teal Group said Udvar-Hazy was asking for "a massive turnaround, a total redirection of Airbus resources."
"No airplane company is good at admitting that everything is wrong and that their whole strategy is so flawed it needs a fundamental rethink," said Aboulafia. "That's tough."
Dominic Gates: 206-464-2963 or [email protected]
