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Friday, October 28, 2005 - Page updated at 11:59 AM

Boeing expects to defeat Airbus

Seattle Times aerospace reporter

Boeing is expecting a record number of commercial-jet sales this year that would put it ahead of Airbus for the first time in five years. The star prize that could seal the victory is an extraordinary order with a list-price value of at least $16 billion from Australian carrier Qantas.

During the next two months, Boeing and Airbus will wrestle fiercely to finalize several massive orders, including key contests over Singapore Airlines, Cathay Pacific and Dubai-based Emirates.

With the Qantas order, which may be awarded in stages that stretch into next year, the stakes go beyond the big price tag.

If Boeing wins the entire order, that will propel the 787 into the stratosphere of sales success, launch the passenger version of the 747 Advanced and introduce a new 777 variant with the longest range of any airliner.

Industry experts think Boeing may have the edge.

"If I were backing favorites ... I'd be inclined to have Boeing slightly ahead in the betting," said top Australian consultant Peter Harbison, who heads the Centre for Asia Pacific Aviation.

Last year, Boeing won 277 firm orders, the highest mark since 2001. Scott Carson, the sales chief installed in December, vowed to top Airbus in 2005 orders.

For this year, the net order tally is already 649. According to a company insider who asked for anonymity, this month Boeing internally projected a final tally for the year of 965 orders.

The previous Boeing record was 877 orders, in 1988.

Qantas' board meets Dec. 7 to make an initial decision between Boeing and Airbus on the first slice of the order. Whichever aircraft maker wins will have an edge competing for the rest of it.

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Internal documents obtained by The Seattle Times show Boeing's proposal to Qantas includes 45 hot-selling 787s. But the new jets are only half the order — the cheaper half.

The proposal also includes 20 new 747 Advanced passenger jets, 20 777-300ERS and five ultra-long-range 777-200LRs.

Boeing says it will likely launch the new 747 derivative in December. It is awaiting confirmation of key launch customers for both cargo and passenger versions.

Cargolux of Luxembourg is on board for 10 of the cargo jets, and Qantas would do it for the passenger version.

The small number of 777-200LRs is also a key piece of the Qantas order.

Boeing has a version of the 777-200LR in final flight tests that comes with an optional set of three auxiliary fuel tanks. That option may make the jet the longest-range plane in the world, surpassing the Airbus A340-500 already in service.

But Qantas wants an even longer-range jet so that it can offer premium nonstop service on the London-Sydney route.

While the existing 777-200LR could fly from London to Sydney nonstop, strong headwinds on the reverse path demand a refueling stop. Boeing is offering Qantas a modified version of the jet with six auxiliary tanks and fewer seats that could make the journey nonstop in both directions.

Qantas Chief Executive Geoff Dixon has described such an unprecedented airplane as a "hub-buster" — one that could leapfrog Qantas over the Asian and Middle Eastern hubs of its major airline rivals.

Boeing is also battling Airbus over a Singapore Airlines (SIA) wide-body order.

SIA is considering 10 of the ultra-long-range 777s, 20 of the new 787s, as many as 13 747 Advanced jets in both passenger and freighter versions, and 20 to 30 standard 777s.

In the contest of the twin-engine 777s against the four-engine and therefore gas-guzzling A340s, the high price of fuel might tilt the balance Boeing's way.

And for SIA, again the ultra-long-range 777 could be key. The airline flies the A340-500 from New York to Singapore nonstop, a service Airbus heavily touts in advertising. SIA had five more of the Airbus jets on option but has allowed those to lapse.

"When we bought the A340-500, Boeing didn't have an aircraft to compete with it," SIA spokesman Stephen Forshaw said in an e-mail last month. Now, though, "We think it would be preferable to go back to the market and have a look at what's on offer."

If Boeing were to win SIA's new wide-body order, the airline might even switch out its current A340-500s with 777-200LRs, giving Boeing a tremendous public-relations coup.

But Australia consultant Harbison warns that such a niche aircraft, useful only for a few very long routes, is unlikely to determine the outcome of an entire order. He speculated Qantas is almost certainly talking in terms of splitting its order, to get the best deal and "to keep everybody very keen."

Given the stakes, the manufacturers couldn't be keener. Airbus is pulling out all the stops to upset Boeing.

Chief salesman John Leahy could not be reached for comment Thursday; he's in Australia courting Qantas.

And next month, on Qantas' 85th birthday, Airbus will fly into Sydney the prestigious new superjumbo A380, a dozen of which are already on order for the airline.

Near Qantas' headquarters in Sydney, four new billboards promote the Airbus' new A350, rival to the 787. That's a response to a Boeing billboard a few months ago that showed flight attendants from the 11 Asia Pacific airlines that have ordered the 787.

Meanwhile, Boeing's sales force is busy all over the globe. Already announced 787 orders likely to be firmed up by Dec. 31 include 20 for Air India, 14 for Air Canada and 36 for several Chinese airlines.

Internal documents show unannounced prospects, too. Turkish Airlines is considering buying 20. Russian carrier Aeroflot may buy 15 or more.

GECAS, the aircraft-leasing arm of GE and the largest lessor in the world, is considering taking 15. Irish leasing company RBS Aviation is looking at 10.

Massive 777 orders are also on the table, including a proposal to sell 50 777-200ERs to Dubai-based Emirates at a list price of nearly $10 billion.

Airbus is offering the A350-900 against that jet and may be favored by Emirates. The outcome will likely be announced next month at the Dubai Air Show.

And before either Qantas or SIA, Hong Kong-based Cathay Pacific is likely to announce a big wide-body order. The airline is weighing the 777 against the A340 and will eventually order up to 26.

Boeing is keeping a close eye on its rival.

By the end of September, Airbus had booked 417 firm orders, lagging Boeing by more than a couple hundred orders.

According to the Boeing insider, as of the beginning of this month Boeing's forecast for Airbus showed solid prospects of 705 orders and 178 more possible — giving a potential year-end order total of 883.

To get there, Airbus may aggressively compete on price.

An internal Boeing document includes a report from the sales field that Airbus in June was offering the A350 at only $85 million, just over half the list price.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2005 The Seattle Times Company

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