Airbus, Boeing Wait for the Other to Make First Move on New Jets

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The Airbus Group has still not decided whether it will introduce its proposed A330neo passenger jet at the Farnborough International Airshow set to take place later this month. This could be a stare down between Airbus and Boeing Co. (NYSE: BA), which is also considering whether to build a replacement for the company’s 757 single-aisle jet that went out of production in 2005.

The A330neo would be a re-engined version of Airbus’s A330 and would compete with the Boeing 787-8 Dreamliner, a potential replacement for the 757 and the 777X. Aviation consulting firm Leeham has argued that Airbus needs to have an A330neo in production by the middle of the next decade. If the company fails to go ahead with an A330neo, Leeham says that Boeing will own two-thirds of the medium-range, twin-aisle market with its 787 and 777X planes.

Boeing’s announced 737 MAX family of twin-engine, single-aisle planes may be the last iteration of the 737 family, Boeing’s best-selling planes. Bloomberg reported late last month that Kazakhstan’s Air Astana is looking for a plane that can seat around 180 people in two classes and fly up to nine hours. That is right between the 737 MAX and the 787-8/9 in the space that was once filled by the 757.

Airbus competes in that category with its A321 and hopes that an A330neo with more fuel-efficient engines will make the company even more competitive in that space. When Airbus strategy chief Marwan Lahoud said that the economics of an A330-neo would be unbeatable and the cash operating cost would be equal to the cost of operating a 787-9, Boeing’s John Wojick said that the A330neo could not compete with the 787-10 at any price. That is what is known as comparing apples and oranges. On an apples-to-apples basis, Leeham concluded that an A330neo “significantly narrows, but does not entirely close” the gap with the 787.

That remaining gap may be what is holding up an announcement of the A330neo at Farnsworth. Airbus may want to squeeze in a few more goodies before making an announcement. There are billions of dollars at stake here over the next several decades. Making the wrong move could be very costly. Even making the right move at the wrong time could be very costly.

ALSO READ: Why a Boeing 787-9 Dreamliner Costs $250 Million

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