At the close of last week’s Farnborough Air Show near London, Boeing Co. (NYSE: BA) reported that it had taken orders with a list price value of $35.6 billion. Airbus reported new orders with a list price value of $16.9 billion. The CEO of Airbus, a division of European Aeronautic Defense and Space Co. (OTC: EADSY), told German newspaper Welt am Sonntag that Boeing is starting a price war to boost sales of its new 737 MAX aircraft, a direct competitor to the Airbus A320neo.
A report at MarketWatch cites Airbus CEO Fabrice Bregier:
They are very aggressive when it comes to price. If they had a superior plane, they wouldn’t have to do that.
According to its 2011 price list, Airbus’s list price for the A320neo is $96.7 million. The 737 MAX 8 carries a list price of $95.2 million, while the 737 MAX 7 lists at $77.7 million and the 737 MAX 9 lists for $101.7 million.
So far this year, Boeing has outstripped Airbus in new orders, and the 737 MAX is part of that success. The company did not decide until late last year whether to offer an upgrade to the 737 or to build an entirely new plane. When the decision was made to upgrade the older model, Boeing was at least a year behind Airbus in announcing plans for a more fuel-efficient single-aisle aircraft.
Perhaps that explains the aggressive pricing that Bregier complains about. After all, Boeing dithered around so long before finally reaching a decision that it had to do something to drum up enthusiasm for its new plane. Nothing like a low price to do that. Airbus is just whining again.
Paul Ausick
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