Wed, Jul 24, 2002 page10

• Giants battle for CAL order

  SLIM PICKINGS Major aircraft manufacturers are experiencing one of their worst years as far as sales, and China Airlines' desire to upgrade its fleet has become a desirable prize

  • By Richard Dobson / STAFF REPORTER
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  A purchase order by China Airlines Co (華航) for at least 12 new planes is shaping up to be a key prize in the battle for business amid desperate times between aviation giants Boeing Co and Airbus SAS, which is reportedly offering steep discounts.

  Eager to fill the lucrative order, French-based Airbus is reportedly offering up to US$410 million off the total price of the 12-plane deal that pits the Airbus A330-300 against Boeing's 777, according to a Chinese-language newspaper report yesterday. It is estimated that a 12-plane deal based on prices for the A330-300 is worth around US$1.5 billion.

  But China Airlines spokesman Roger Han (韓梁中) said that both Boeing and Airbus were offering very competitive prices and that the number of new planes may exceed 12.

  

  A Boeing C-17 Transport plane lands in front of spectators at the Farnborough Airshow, on Monday. Some 300,000 people are expected to attend the seven-day show, where the organizer, the Society of British Aerospace Companies, is hosting more than 1,200 exhibitors. Makers of passenger aircraft have seen orders this year slow down to a trickle.

  PHOTO: AFP

  Sixteen planes may eventually be purchased, the paper reported without citing sources.

  Executives from Airbus were unavailable for comment.

  The purchase deal will replace 12 older A300-600Rs in an effort to modernize China Airlines' fleet and hopefully improve its safety record, which is arguably one of the worst in the world.

  China Airlines has said it will decide in the second half of the year whether to buy Airbus A330s or Boeing B777s.

  Executives from both companies have been busy visiting China Airlines in a bid to seal a deal that amid a worsening global downturn in airline travel and aircraft purchases would provide some rare good news.

  Boeing and Airbus won orders for just eight planes as the air show in Farnborough, England opened over the weekend.

  In 2000, the world's two largest aircraft builders announced 114 orders worth US$15 billion on the show's first day.

  Boeing Chairman Phil Condit said that the industry faces its worst slump ever, predicting that airline traffic will drop as much as 14 percent this year, seven-times worse than the decline that followed the 1991 Gulf War.

  The worst ever

  "It is the worst decline the commercial aviation market has ever seen," Condit said, adding that Boeing's deliveries aren't likely to rebound until 2004.

  Some analysts even consider that forecast to be optimistic. Airlines might lose as much as US$6 billion this year, the International Air Transport Association estimates, choking demand for new planes.

  Industry executives say few other orders are expected at the show, where Boeing and Airbus traded barbs over who's to blame for heavy price discounts. Condit said that the discounts are the steepest he's ever seen in his four-decade career at Boeing.

  Boeing contended that Airbus is keeping production artificially high in an effort to unseat Boeing as the world's largest planemaker.

  Airbus has said it plans to make at least 300 planes next year, the same as this year, while Boeing plans to cut production to as few as 275 from 380.

  "We stepped up and made the hard decision to reduce our production, and it's just amazing to us that our competitor would not," said Alan Mulally, the head of Boeing's airliner unit.

  Airbus responded that it's taken market share by gaining some former Boeing customers.

  "They're trying desperately to fill up their volumes," Airbus Chief Operating Officer Gustav Humbert said.

  Toby Bright, Boeing's chief airliner salesman, called the claim "absolutely absurd."

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