Last week we were treated to day after day of front page stories in both daily newspapers about Boeing’s participation in the Farnborough International Airshow in England. Airplane manufacturers return year after year to Farnborough to show off their wares for major customers: commercial airline companies and military airplane purchasers.
Of course, Airbus was there, too. While the local newspapers fawned on Boeing and used the show to discuss recent personnel shifts among Boeing management (anything to boost Boeing’s stock price!), Airbus was busy taking home the bacon. As it became apparent that Airbus was the star of the show, the articles on the airshow were pushed back from page one of the daily papers to deeper inside Section A, then finally to the Business page. Each article continued to repeat the same, dull information about Boeing: it took a loss last year, its commercial airplane business is still behind schedule, CEO Phil Condit fired his old friend and head of the commercial airplane business, Ron Wood, etc., etc.
Towards the end of each article were tidbits of more important information that, when added up, certainly spell trouble for Boeing. For example:
Boeing needs to get more orders for its F-16 military plane soon or they’ll have to shut down the production line. In the next year or two, the last of the current orders will be rolled out and delivered. (We can only hope.)
Boeing failed to announce new orders for its commercial 717 model, whose last big order was from Valujet in 1995. Airbus is developing a new model to compete with the 717, and it’s possible that potential 717 customers are waiting for the new Airbus jet to appear before they place orders–with Airbus instead.
Boeing and Airbus have been in a long-running price war that Airbus seems to be winning; commercial airline customers have been getting double-digit discounts on their orders.
The 1996-98 sales seasons for airplanes have been viewed by most industry analysts as a “boom” time for the airplane industry. Yet Boeing is in deep financial trouble–mostly because of their aggressive merger strategy, which has left Boeing unable to meet production schedules.
Condit wants to place the blame for Boeing’s poor performance on Boeing President Harry Stonecipher, the former CEO of McDonnell Douglas, without examining why the Boeing Board of Directors appointed Stonecipher as President in the first place (especially after his stint as top manager of a failing company).
A single year’s poor financial performance and an ailing stock price now means a lot more for large companies than it used to. Boeing and Airbus went into the Farnborough show neck-and-neck. Each company had won about an equal amount of airplane orders in the past year, yet Airbus walked away with a record $12 billion in new orders–about double Boeing’s haul.
To add insult to injury, United Parcel Service chose Airbus over Boeing to build 30 new airplanes with options for 30 more; the order totaled $5 billion.
Industry analysts are predicting that the current airplane boom will come to an end within the next year, leaving Boeing poorly prepared for a downturn in new orders. Yet Boeing is already experiencing that downturn, and neither the Seattle Times nor the P-I have reported it or bothered to examine what it will mean for the local economy–whether it will heighten Boeing’s new dependence on military sales and exports, or whether the company’s poor track record for producing orders on time and its general miasma will impact that, too. We can only hope that Boeing’s woes will help slow down some of the rampant growth-at-all-costs that we’ve experienced in this region in the last few years.