June 1, 2014 / 2:20 PM / in 4 years

UPDATE 1-Boeing sees smooth jet switch, clashes with Airbus

(Adds Airbus comments, background)

By Tim Hepher

DOHA, June 1 (Reuters) - Boeing vowed on Sunday to carry out a smooth transition between current and future models of its two most profitable jets - the long-haul 777 and smaller 737 - and dismissed Airbus plans to overhaul its own A330 model.

Sales chief John Wojick told Reuters he was confident of selling enough of Boeing’s current long-distance benchmark, the 777-300ER, to fill the gap until a new revamped 777X version enters service in 2020 and avoid any interim production cut.

“We are looking at solid demand for the airplane, and we think we can fill the bridge, and that is my job,” Wojick, senior vice president of global sales & marketing at Boeing Commercial Airplanes, said in an interview.

Asked if he based his forecast on the current production rate of 8.3 aircraft a month, or 100 a year, he said, “yes”.

Boeing and European rival Airbus are both focusing on overhauling their most cash-generating models to help pay for developments of two revolutionary carbon-fibre jetiners, the Boeing 787 Dreamliner and the Airbus A350.

While investors have welcomed this cautious strategy, analysts say both companies face challenges in keeping output of existing models stable while airlines wait for the new ones.

Airbus is upgrading its A320 family, which competes with the 737, while looking closely at upgrading its wide-body A330 jet.

If it decides to re-engine the 20-year-old A330, Airbus would be gambling that lower capital costs and proven reliability would be a match for the 787, which has had a spate of technical problems recently but has a lightweight design.

Wojick insisted those numbers would never add up.

“The 787-10 burns 30 percent less fuel per seat than the A330-300. That is going to obsolete the A330,” he said.

“There isn’t a price at which people will buy the A330 once (you have) 30 percent fuel savings. It is a huge benefit to an operator.”


The remarks on the fringes of an annual meeting of the International Air Transport Association reflect a more combative tone after Boeing suffered market share losses to Airbus in sales of narrow-body jets.

They drew a sharp response from Wojick’s counterpart at Airbus, chief operating officer for customers John Leahy, who told reporters the rejigged A330 would be Boeing’s “nightmare”.

Airbus is close to a decision on whether to launch the “A330neo”, he said, adding that it would have similar cash operating costs to the main 787 model but cost less to buy.

Airbus and Boeing have been in a struggle for market share on short-haul jets since around 2011, when Airbus decided to upgrade the A320.

Airbus claims a 60 percent share of that market, but Wojick called the statement exaggerated and said Boeing had outsold its rival since deciding to re-engine its own 737.

He said Boeing had now sold enough of the existing 737NG models to ensure a smooth transition to the new 737 MAX.

“We are sold out on the 737NG,” he said.

At the same time, he signalled that Boeing could keep raising output after reaching a goal of increasing production of the 737 family as a whole to 47 a month from 42.

Airbus has also hinted at future production increases from 2018 onwards after setting an earlier goal of 46 A320s a month.

“We are pretty confident that with the demand that we are seeing for the 737 MAX, at some point out towards the end of the decade, we have got the possibility for even more airplane demand out there,” Wojick said, adding he did not see evidence of a plane order ‘bubble’ that is being predicted by some analysts.

“When one region has financial difficulties, another region will be doing quite well,” he said.

Asked about signs of an economic slowdown in Asia, where low-cost airlines have placed heavy orders for A320 and 737 jets, Wojick said, “I don’t think you are seeing a huge change there, but I do think some of the airlines there are maybe not able to take all the airplanes that they were looking to take in a given time period”.

Boeing has not seen airlines defer orders, he said, but he added, “Certainly we are not seeing them exercising all the options they have for growing even faster than they were predicting.” (Additional reporting by Victoria Bryan, Siva Govindasamy, Amena Bakr; Editing by Praveen Menon and Jane Baird)

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