For the first time in a dozen years, the Boeing Co. last week delivered an all-new airplane -- the twin-engine wide-bodied 767 -- to a commercial airline.
The new jetliner delivered to United Airlines -- the first of eight it will get this year -- is one of two new-generation aircraft Boeing is adding to its arsenal in its battle against Airbus Industrie, the European aircraft manufacturing consortium that has emerged as Boeing's prime competitor in the worldwide commercial jet aircraft market.
United's 197-passenger 767, which will start flying a route between Chicago and Denver on Sept. 8, is the first all-new Boeing jetliner since the jumbo 747 in 1970.
Boeing's other new plane is the smaller 757, a narrow-bodied twin-engine jet seating about 180, compared with the maximum 290 seats in the 767. The 757 is billed as a short- to medium-range plane likely to replace many aging aircraft in airline fleets, including the popular 727 tri-jet, dubbed the "work horse" of the industry. The 757 is scheduled to be certified safe for commercial service by the Federal Aviation Administration at the end of the year, with delivery to follow in early 1983.
Both new Boeing planes incorporate the latest technological advances in aviation, including quieter engines that use as much as 35 percent less fuel than the planes they will replace, sophisticated computerized flight-control and instrument-display systems, lightweight composite structural materials and advanced wing design.
The planes also are being produced for most customers with a cockpit designed for two crew members, instead of three, another money-saving feature.
The new Boeing planes will be competing with the increasingly popular new-technology aircraft of Airbus. The consortium of French, German, British and Spanish companies was formed in 1970, with participation by Dutch and Belgian firms and soon, a Canadian firm. Airbus' success in capturing a share of the world market is believed by many to have spurred Boeing's plans to build its new planes.
The Airbus A300, the world's first twin-engine widebody jet, went into commercial service in 1974. By 1978, the year Boeing launched its 767 program, Airbus had become the world's second-largest seller of widebody aircraft, surpassing both Lockheed Corp., which has since decided to abandon the commercial jet market, and McDonnell Douglas Corp. Airbus now has about a 20 percent share of the worldwide jet aircraft market and has set its sights on 30 percent.
Today, more than 183 A300s, seating between 226 and 345 passengers, are in service worldwide with 30 airlines.
Although the 767 is the first completely new plane to be built by a U.S. aircraft maker in a decade, the occasion has been clouded by a recession-induced fall-off of new orders. In addition, some carriers have requested to delay delivery on, and possibly cancel, some of their previous orders.
Even United, the first airline to order the 767 and help launch its production, has been negotiating with Boeing to delay or cancel deliveries of up to 20 of the 39 planes it has on order. On Thursday, when he accepted the first 767, United Chairman Richard J. Ferris announced that United would definitely take the first 19 planes it had ordered, something that had been uncertain before.
But Ferris cited the sluggish economy, continuing flight cutbacks caused by the air traffic controllers' strike, and "the need to be financially prudent" among reasons for the airline's decision to hold back on its 767 fleet.
The moderation of fuel cost increases and the glut of used aircraft on the market has also played a role in the decisions by some airlines to delay new aircraft purchases.
The new-generation jetliners are expensive. Ball-park prices put the 767 at about $40 million, the 757 at about $32 million, the A300 at about $50 million and the A310 at about $45 million.
Although Boeing has 173 firm orders for its 767 -- from six domestic and 11 foreign airlines -- no new orders have been placed in more than a year. Delivery schedules of some 767s have been delayed but no orders have been canceled outright. But the Seattle-based company has suffered a net reduction of 13 orders for 757s--American Airlines' cancellation of 15 which was partially offset by a new order for two from another carrier. As a result, the total number of 757 orders from eight airlines dropped to 123. Boeing has gotten some orders for its other planes this year.
Recent Airbus sales have been weak as well. The company has added just 17 planes to its order book so far this year -- three A300s and 14 A310s. The A310 is the new, smaller-version widebody twinjet that will seat between 190 and 252 passengers. It will be ready for delivery to airlines next March, shortly after Boeing begins delivering its 757.
Overall, at the end of last month, the European consortium had racked up a total of 354 orders from 46 world airlines for its two models--252 orders for its A300 and another 102 for its A310.
Boeing officials contend that because most of the companies comprising the consortium are government-owned or aided, Airbus has an unfair advantage in that it can subsidize the sale of its planes by between $8 million and $10 million a copy.
"There's no way Airbus could survive if it was a private company," Boeing President Malcolm T. Stamper said in a recent interview. He noted that Airbus hasn't yet reached a break-even point in its production runs. In contrast, he said, the 767 required a $2 billion investment of private capital by a publicly owned firm that has to earn profits for its shareholders.
Stamper said orders from international airlines tided Boeing over when domestic sales were lagging, as they did in the early 1970s when Boeing went for 17 months without an order from a domestic airline and had to lay off thousands of workers. Now, he contended, those airlines are buying Airbus planes because of unfair competitive advantages, such as below-cost financing.
The orders Boeing is losing are needed to make its production lines profitable, Stamper says. In addition, about 71 percent of the firm's sales are repeats, he noted, so if you lose the first round, you lose later, too.
Airbus officials say Boeing's attack is unfounded, unfair and inaccurate.
"These fellows are misrepresenting the facts, and seem to be trying to undermine our credibility," Pierre G. Pailleret, Airbus Industrie senior vice president/marketing, said in a recent interview. "It looks to us like they are after building up emotion to keep us from penetrating the market.
"We're a different animal, it's true, but we're governed by the same rules--of common sense," Pailleret said. The claim that Airbus could continue being subsidized without making a profit is "just crazy," he said. If Airbus managers can't demonstrate to partners that the program will be profitable, subsidies will be reduced, he maintained.
The break-even point for combined A300 and A310 programs is a total of 700 to 750 planes sold, Pailleret said, adding, "We're pretty confident we'll get it."
Besides the 354 firm orders for the two aircraft, airlines have options for 159 more planes that, if exercised, would put total sales over 500 planes.
Both Airbus and Boeing officials expect more orders when the economic climate improves, and Airbus hopes some of its orders will come from the United States. Although its sales in the world market are significant, its impact here has been small. Of the 46 airlines that have bought Airbus, only one is a U.S. carrier. Eastern Airlines ordered a total of 34 A300s after it began flying the plane in 1978 under a very advantageous offer from Airbus. No U.S. airline has ordered an A310.
Pailleret hopes to do better with the A320, a planned 150-seat aircraft. The market for this size plane is likely to be the next important battleground for Airbus and Boeing. This month, the consortium signed on former Transportation secretary and Amtrak president Alan Boyd to head an invigorated North American marketing operation to improve its U.S. sales.
"The A320 is our chance to come back," Pailleret says. Only Air France has committed to buy it so far but numerous airlines are interested in that size aircraft -- including Delta Airlines. An order from Delta would likely launch a program.
Pailleret estimates the worldwide market for a 150-seater at about 3,000 planes, and that Airbus could get 50 percent of the overseas market, breaking even when it sells 600.
Right now, Airbus doesn't think it can or will overtake Boeing's share of the world aircraft market, Pailleret told a meeting of the American Institute of Aeronautics and Astronautics in Baltimore this summer. "We only hope for 30 percent," he said. Noting that Airbus delivered 38 aircraft last year while Boeing delivered 257, he said his company was not the "Goliath" being portrayed by Boeing but more the "David."
"At last count," Pailleret said, "we are number two, and we are comfortable there."