Airbus Cuts Prices; Boeing Pressured

Boeing Co. pledged to cut expenses to maintain profit margins on the latest version of the top-selling 737 jet, countering "predatory pricing" on the new A320neo from Airbus SAS.

Pressure from Airbus means Boeing will have to offer terms that "are responsive to our customers" to regain market share in single-aisle planes, Commercial Airplanes President Jim Albaugh told investors at a presentation today. Paring production costs will preserve profit margins, he said.

The new 737 MAX is due to enter service in 2017, featuring upgraded engines to boost fuel economy, after Chicago-based Boeing unveiled plans for the jet in July. That was more than seven months after Airbus announced the neo, a lag that helped the European planemaker book record narrow-body orders in 2011.

"There is some predatory pricing out there," Albaugh said. "We understand that launch pricing is something we have to deal with."

Airbus and Boeing, the world's two biggest commercial-plane makers, typically sell at a discount to their published prices, while never disclosing the terms they offer customers. American Airlines, a traditionally all-Boeing customer, split a 460-plane order last year between the A320 and the 737, including new versions of both planes.

"It hasn't been lost on us that we need to go play in their sandbox, too," Albaugh said. "And we're talking to a few of those airlines."

Airbus doesn't adjust prices on the basis of competition, Mary Anne Greczyn, an Airbus spokeswoman in Herndon, Virginia, said in an e-mail.

A large gain in market share would give Airbus pricing power and eventually allow the company to erode the more fuel- efficient 737's price premium, Albaugh said. Airbus now has about 52 percent of the single-aisle airplane market and Boeing has 48 percent, he said. Over the past 10 years, the market has been split at about an even 50-50, he said.

"We understand what game they're playing and it is a market-share game," Albaugh said. "It's a slippery slope for us to be on. We are working very hard that the deals we put together are responsive to our customers."

Airbus has said the neo is expected to save 15 percent more fuel than the A320 while Boeing's 737 MAX will burn 13 percent less fuel than the current 737. Albaugh said today there's a possibility for that fuel efficiency to rise above 13 percent.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • National Geographic 'Afghan girl' in Pakistan papers probe
    National Geographic 'Afghan girl' in Pakistan papers probe

    Pakistani officials are investigating after the famous green-eyed "Afghan girl" immortalised in a 1985 National Geographic magazine cover was found living in the country on fraudulent identity papers. The haunting image of the then 12-year-old Sharbat Gula, taken in a refugee camp by photographer Steve McCurry, became the most famous cover image in the magazine's history. Now Pakistani officials say that Gula applied for a Pakistani identity card in the northwestern city of Peshawar in April …

  • NYC, Orthodox Jews reach deal on circumcision suction ritual
    NYC, Orthodox Jews reach deal on circumcision suction ritual

    NEW YORK (AP) — The city said Tuesday it has reached a tentative agreement with members of the ultra-Orthodox Jewish community over a tradition known as oral suction circumcision. …

  • ‘Noy angered by previous SAF failures to get Marwan’
    ‘Noy angered by previous SAF failures to get Marwan’

    Supt. Raymund Train, who led the SAF team that killed Marwan in Mamasapano, Maguindanao on Jan. 25, recounted in a sworn statement the meeting he and senior SAF officers had with Aquino in Malacañang on Nov. 30. Train said among the senior officers who attended the meeting were then PNP chief Director General Alan Purisima, SAF chief Director Getulio Napeñas, SAF deputy commander Chief Supt. Noli Taliño and intelligence group chief Senior Supt. Fernando Mendez. …

  • Duterte: Disband all armed groups
    Duterte: Disband all armed groups

    All armed groups, including those of the communists and Muslim secessionist groups, should be disbanded for the country to achieve stability, Mayor Rodrigo Duterte said yesterday. Duterte said even the Moro Islamic Liberation Front, the Moro National Liberation Front and the New People’s Army should be asked to lay down their arms once these groups agree to join him in what he described as a unity government if he becomes President in 2016. Duterte said under the federal government that he is …

  • Vatican seeks to quell Mexican anger over pope's drug remark
    Vatican seeks to quell Mexican anger over pope's drug remark

    VATICAN CITY (AP) — The Vatican sought Wednesday to defuse a diplomatic tiff with Mexico after Pope Francis referred to the possible "Mexicanization" of his native Argentina from drug trafficking, the latest instance of Francis' casual speaking style getting him into trouble. …

  • School can’t sack unwed mom – SC
    School can’t sack unwed mom – SC

    The dismissal of an employee of a Catholic school on the grounds of premarital sexual relations and pregnancy out of wedlock was illegal, the Supreme Court (SC) has ruled. In a 23-page decision promulgated on Feb. 17, the third division of the high court struck down the decision of St. Scholastica’s College-Westgrove (SSCW) in Silang, Cavite to dismiss Cheryll Santos Leus for “disgraceful or immoral conduct” in violation of the school’s 1992 Manual of Regulations for Private Schools (MRPS). …

  • BOC destroys P50-M smuggled shoes
    BOC destroys P50-M smuggled shoes

    The Bureau of Customs (BOC) destroyed yesterday some P50 million worth of fake footwear products earlier seized in an anti-smuggling drive. The knockoffs of popular brands such as Nike, Adidas, Converse, Skechers, Northface, Leaveland, Merelle, Lacoste, Vans, Havaianas and Ipanema were confiscated from Warehouse 4 in Olivarez Compound, Parañaque City. …

  • Gunmen torch Marwan’s hut
    Gunmen torch Marwan’s hut

    Unidentified gunmen burned down the hut used by slain Malaysian terrorist Zulkifli bin Hir or Marwan in a remote village in Mamasapano. The hut was torched late Tuesday, just hours after members of the Philippine National Police (PNP)’s Board of Inquiry made an ocular inspection of the site where 44 commandos of the PNP Special Action Force (SAF) were killed in a firefight with Muslim rebels in Barangay Tukanalipao on Jan. 25. The SAF policemen were on a mission to capture Zulkifli, alias …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options