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Mon, Oct 16, 2006 - Page 10 News List

Superjumbo's delay may be a mixed blessing for Boeing

AFP , WASHINGTON

US aviation giant Boeing Co might be forgiven for crowing over the crisis engulfing its bitter European rival Airbus SAS. Far from it.

Both the US company itself and industry observers say that an enfeebled Airbus presents paradoxical risks should Boeing find itself overwhelmed with orders from airlines.

"I would rather see a healthy Airbus than one that's going through what they're going through," Boeing executive vice president Scott Carson told BusinessWeek magazine in a recent interview.

"I think having healthy competitors is better for all of us," he added in his first extensive interview since being named head of Boeing Commercial Airplanes last month.

The European manufacturer has been rocked by further delays to its flagship A380 superjumbo jet program, which is now two years behind schedule.

Dismay

Australian airline Qantas, Singapore Airlines (SIA), Britain's Virgin Atlantic, Malaysia Airlines and Korean Air have all expressed dismay at the announcement.

Analysts have said that clients are unlikely to cancel orders for the A380, given the advantages of the high-capacity, long-range plane, which can transport 555 to 840 passengers distances of up to 15,000km.

But Airbus will face costly compensation claims and suffer damage to its reputation, which could have knock-on effects in its battle for other airline orders with Boeing.

SIA confirmed it would remain the first to fly the world's biggest commercial airliner, but will not now take delivery until at least next October.

Stephen Forshaw, SIA's vice president of public affairs, said the carrier is already missing out on incremental growth on some routes because of the plane's late arrival.

The Singapore to London route, for example, is served daily by three Boeing 747s that SIA wants to replace with the larger A380s.

Some leases have had to be extended as a result of the A380's late arrival, and some Boeing 747 jumbo jets will remain in service longer than planned, Forshaw said.

SIA meanwhile this month placed an order for 20 Boeing 787 Dreamliners, which the US company says is the fastest-selling plane in history, representing a fuel-efficient competitor to Airbus on medium and long-haul routes.

The Sydney-based independent aviation consultancy firm, the Centre for Asia Pacific Aviation (CAPA), said the delays will be felt most keenly in the Middle East.

Boon for Boeing

CAPA said Emirates' growth trajectory and competitive impact could be slowed, but not stalled by the delays. Last Sunday, the Dubai-based Emirates announced plans to buy 20 747-8 cargo planes from Boeing.

"Every day's delay [at Airbus] gives Boeing a longer walk on the market," said Richard Aboulafia, vice president of the Teal Group, an aerospace consultancy.

This year, the US company is already outstripping its European rival in new aircraft orders by a margin of three to one.

But the US firm has been there before, with unwelcome results. Aboulafia noted that at a time of exploding demand in the late 1990s, Boeing welcomed any and every order placed by an airline.

The outcome was that its factories were overwhelmed by demand, supply chains were interrupted and long-loyal Boeing customers were left seething.

"Historically, the way it works, they would have raised production and gone crazy ... they are more disciplined about that: They are not going after volume or market share, they are going after profit," Aboulafia said.

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