Boeing, Airbus warned on rivals
The most influential man in the global commercial-aviation business said Tuesday that Boeing and Airbus should expect serious competition...
Seattle Times aerospace reporter
PHOENIX — The most influential man in the global commercial-aviation business said Tuesday that Boeing and Airbus should expect serious competition to emerge from China, Russia and Japan starting in about 15 years.
That prospect, said Steven Udvar-Hazy, should help to shape the looming decisions at both manufacturers over replacement programs for their single-aisle workhorses, Boeing's 737 and Airbus' A320 family.
"For us to sit here today and think that forever and ever we're going to have two manufacturers, one in Toulouse and one in Seattle, that will dominate the airplane business is extremely presumptuous," Hazy said, responding to a question on when Boeing might come up with a 737 replacement. "What makes you think Boeing and Airbus will be the only survivors in this game?"
Hazy — founder and CEO of the leading airplane-leasing company, Los Angeles-based International Lease Finance Corp (ILFC) and by far Boeing's largest customer — made his comments in deliberately dramatic fashion at the annual International Society of Transport Aircraft Trading conference.
When Hazy speaks, the industry listens. At the same conference last year, his devastating comments on the inadequacy of Airbus' design for the A350 led within months to the shelving of that plan and a radical redesign of the airplane.
ILFC has more than 1,000 airplanes in its portfolio, with a total list price value of about $50 billion. About $30 billion worth are Boeing airplanes.
Facing the audience and seated on a high bar-style chair as one of a panel of four leading aircraft-lessor executives onstage, Hazy rose in his chair and raised his voice to ensure everyone got the message.
"Times are changing," Hazy said, "There are new things coming up on the horizon that will change this industry in very profound ways."
Then he detailed the three potential rivals set to emerge:
China "has tremendous financial capabilities, tremendous technical capabilities," he said. "They have a huge home market; they have tremendous influence in the surrounding areas of Asia. If they form alliances with Western companies, they could become a formidable competitor.
"We have a country, Russia, that lost the Cold War, but has tremendous wealth and natural resources. They want to win the economic war. With proper joint ventures and alliances, they could actually be a formidable player.
"We've got a Japanese industry that's been a major subcontractor, a minority partner, in Boeing programs, that's just itching to build an airplane that's in the same class, the same quality, as [those in] the Western world."
Along with financial strength and access to technology, all have large home markets. "If they develop the export market, if they develop the talents to properly support equipment, the landscape could change," he said.
Boeing Chief Executive Jim McNerney told a German magazine last week that China will pose a threat in the future. That judgment was seconded Monday at the conference by Airbus Chief Operating Officer John Leahy.
Yet the force of Hazy's comments clearly took his audience by surprise.
Afterward, in an interview, Hazy said the first airplane offering from one of these overseas rivals ("China would rank number one," he said) could begin to emerge by 2020, perhaps just five years into the life of the 737 replacement jet.
The threat to the Boeing-Airbus duopoly will grow slowly, but Boeing needs to think about it now.
"The reason I mention this so strongly," he said, "is that this next step, the A320/737 replacement cycle, is a long-term decision that has to take into consideration what the competitive landscape is from people like China, Russia and Japan."
Dominic Gates: 206-464-2963 or firstname.lastname@example.org
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