NEW YORK (Reuters) - Jean Pierson, the colorful Frenchman who built Airbus into Boeing Co.’s (BA.N) biggest competitor, dropped his trousers to seal a key U.S. plane order in 1997, according to a book to be published on Tuesday.
The bizarre tactic worked, and the resulting order helped Airbus take on Boeing in its own backyard, setting up the biggest rivalry in global business, according to “Boeing versus Airbus,” by former New Yorker magazine writer John Newhouse.
Pierson, who ran Airbus from 1985 to 1998, was at US Airways’ headquarters for what he thought would be a short meeting to tie up a 400-plane deal, the anecdote runs.
At the last minute, US Airways’ then-chairman Stephen Wolf started arguing for a 5 percent discount on the selling price.
“Pierson began slowly lowering his trousers and saying ‘I have nothing more to give.’ He then allowed the trousers to fall around his ankles,” says Newhouse in his book.
Wolf replied: “Pull up your pants. I don’t need any more money,” and the deal was signed, according to the book. The author says he got the story from Pierson himself, and it was confirmed by another person present.
Shortly afterward, US Airways announced the purchase of 124 single-aisle Airbus A320 family jets with options for 276 more, a stab into the heart of Boeing’s competing 737 program. It put the European company on track to overtake Boeing in global orders only two years later.
Airbus’ well-designed planes and aggressive marketing helped the relatively young European consortium overtake long-time industry leader Boeing in 1999, as the U.S. company finally succumbed to a decade of complacency in the 1990s, the book argues.
But the wheel of fortune turned once more last year as Airbus’ delayed its A380 superjumbo and was forced to rethink its new mid-sized A350 jet, prompting boardroom turmoil and heavy financial losses for parent EADS EAD.PA.
In the meantime, Boeing’s new lightweight 787 “Dreamliner” ran away with hundreds of orders as air travelers leaned toward smaller, more comfortable planes that can serve more airports and may be less obvious targets of terrorism.
However, Newhouse says the revitalization of Boeing — which itself flirted with a superjumbo and nearly built the universally unpopular Sonic Cruiser — owes as much to the unpredictability of the aerospace business as planning.
Boeing “flew on automatic pilot” for a decade or so after launching the 777 minijumbo in 1990, Newhouse writes. “Boeing’s leadership during those years is a reminder that it may be better to be lucky than to be smart. Boeing was lucky.”
The battle for dominance in the plane business comes into focus this week as Airbus releases its annual orders for 2006. It is expected to lag Boeing for the first time since 2000.
“My instinct is that Airbus will survive and we will have a mature duopoly in this business,” said Newhouse in an interview last week. “But Airbus is going to be behind Boeing for some time to come.”
Although the competition has heated up, executives in the planemaking business are much less interesting now, said Newhouse, who also wrote ‘The Sporty Game’, a collection of his articles written for The New Yorker, which was published in 1982.
“There were more larger-than-life characters then by far,” he said. “Now they are all tedious bureaucrats, most of them.”
The exceptions, said Newhouse, are Airbus’ marketing chief John Leahy and Scott Carson, the new head of Boeing’s commercial aircraft unit.
“Carson was a breath of fresh air, easily the most impressive Boeing executive I met in Seattle,” said Newhouse.
The author said he spent time in both companies’ commercial planemaking headquarters researching his book, and talked to many current and former executives.
“Whether you go to Seattle or Toulouse you are going to run into a lot of people who are blowing equal amounts of smoke, criticizing the other guy’s program and extolling their own,” said Newhouse, an American.
“The difference is the Airbus people talk like actual people, whereas the Boeing people talk like people reading from a script written jointly by the PR and legal counsels.”