Boeing did well at the Paris Air Show. Airbus will still very much be around for the next one.
Airbus SE sales chief John Leahy conceded defeat to Boeing Co. at his last European air show, marking a rare show of humility from the American who confirmed his plans to retire after racking up $1.7 trillion of jet orders over two decades.
The time-frame for Leahy’s exit isn’t yet clear, and the executive will work on a smooth transition to deputy Kiran Rao, he said at Airbus’s closing press conference at the Paris Air Show. Airbus had no new civil models coming to market at the expo, unlike Boeing, which racked up more than 300 sales and commitments for the Max 10 stretch of its 737 single-aisle workhorse.
“The fact is, this is a slower year for orders than previous years,” Leahy said at the briefing Thursday. “Are we conceding that Boeing sold a few more airplanes than we did? Yes. Every dog gets his day.”
Airbus secured $39.7 billion of new jetliner business at the show, Leahy said, comprising firm orders for 144 aircraft worth $18.5 billion at list prices and looser commitments for 182 planes valued at $21.2 billion. In terms of firm deals — those that can be included in the manufacturers’ backlogs — it came out roughly neck-and-neck with Boeing, he added.
Toulouse, France-based Airbus will “work out a good time” to make the sales transition, Leahy, 66, told journalists. Rao, executive vice president of strategy and marketing at the commercial-plane unit, has already been bloodied at the sharp end of the sales process, having led talks with AirAsia Bhd. CEO Tony Fernandes that secured an order for 14 A320ceo aircraft valued at $1.4 billion and led a late order spurt for his company.
Rao, 53, “spent all night negotiating with Tony until he got it done,” Leahy said. The Indian-born executive — who joked that his boss plans to take up yoga in retirement — has a tough act to follow, with Leahy having racked up more than 15,500 orders since becoming commercial chief more than two decades ago, catapulting Airbus from an 18 percent share of the jetliner market to a 50-50 balance with Boeing.
Airbus isn’t overly concerned about the U.S. company’s plans to develop a new middle-of-market model to replace its defunct 757 and soon-to-go 767, Leahy said, reiterating his assessment that the European company has an 80 percent share of the market that the new plane will address.
“We don’t see it as a major threat,” said the executive, predicting the plane, dubbed the 797 by some, will cost $12 billion to develop. “If you’re sitting in Toulouse you don’t see the need to develop something in that market.”
Rao said that Boeing is “flying all these kites” to suggest it will have a game-changing aircraft for 2025 in part to disrupt A321neo sales, when in reality it won’t be able to make the aircraft as cheaply as suggested because 70 percent of its cost lies with suppliers and outside of the airframer’s direct control.
He compared the Boeing plane to the Sonic Cruiser, a model that the U.S. company sought to develop in the late 1990s but later scrapped when it became clear that airlines wanted lower operating costs rather than more speed. Boeing subsequently came up with the best-selling 787 Dreamliner.
Leahy said that Dubai-based Emirates, the world’s biggest long-haul airline, is “very interested” in an enhanced version of Airbus’s superjumbo, dubbed the A380plus. The New Yorker added that he held 90 minutes of talks with the carrier’s president, Tim Clark, during the show and found him very receptive to the improvements, which include 4.7-meter (15-foot) winglets designed reduce drag and pare fuel consumption by as much as 4 percent.
Emirates is in early talks about the purchase of 20 A380s to add to the 140 it ordered previously, people familiar with the discussions said earlier month. With the next main air show to be held in Dubai in November, that raises the prospect of Leahy going out with a flourish in the form of a near $9 billion order, though landing a deal will also be tough after Clark said he’s concerned about Airbus’s commitment to sticking with the slow-selling A380 program.
Leahy wouldn’t specify if he’ll still be in charge then, saying only “This is definitely my last big air show. I’m going to leave before the end of the year.”
©2017 Bloomberg L.P.
This article was written by Christopher Jasper and Phil Serafino from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.
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Photo Credit: Airbus sales chief John Leahy will be retiring soon. The company didn't do particularly well at the Paris Air Show in 2017 but Leahy and Airbus have had quite a run. Bloomberg
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