Friday, February 23, 2007

What Boeing Needs To Do (Part 4)

In previous posts, I proposed Boeing split their proposed Y1 project into two aircraft, one in a smaller category, 100-150 seats, and another to target the 180-250 seat market. This article suggests Boeing might do just that:

Boeing may offer two 737 replacement solutions

I also said Boeing needs to act now. Why?

One thing I have learned in business is, companies have the ability to shape the market and drive the behavior of competitors. They also have the ability, through inaction or the wrong actions, to be held hostage to the decisions of competitors.

Airbus is struggling. They are under severe pressure from Boeing in the long-ranged widebody airliner market currently defined by the Boeing 777 and Airbus A330/A340, and the future Boeing 787 and Airbus A350. The success of Boeing's 787 project has put extreme pressure on Airbus. It not only forced them to create an response (the A350), but to scrap the original A350 design and completely redesign it as the A350XWB. Now Airbus has internal problems, as this article covers:

Ex-Airbus boss says EADS structure doomed to fail

Despite these problems, Airbus is quite successful in the medium ranged narrow-bodied market where their A320 aircraft outsells the Boeing 737 about two to one. But larger aircraft are more profitable.

But Boeing has a unique opportunity. Not necessarily to vanquish a competitor (I for one despise monopolies), but to further define the future airliner market. As a result, Boeing can force its primary competitor to either cede a major market segment to Boeing, or force Airbus to further dilute its efforts.

This is why Boeing needs to act now. An aircraft targeting the Boeing 757, Boeing 767-200, and A310 markets would give Boeing a "hammer and anvil" strategy against Airbus. It would limit Airbus' markets or spread it too thin. And it would put Boeing firmly in the driver's seat of the commercial aviation industry.

Part 1 | Part 2 | Part 3

1 comment:

Peter said...

Your analysis is far more detailed than mine could be, but I like what I think Boeing is focusing on right now.
1 Boeing is putting the necessary resources and money to make sure the 787 is delivered on time and meeting the promised weight and fuel efficiencies. A important reason that the 787 was ordered by the Airlines.
A This keeps and enhances your credibility with your customers, about promises made and highlights that, as opposed to the credibility lost by Airbus ,with the delays and weight problems of the A380.
B This credibility helps keep current orders and in getting future orders. This is fundamental to a healthy company.

2 Increase the productive capacity to meet demand for the 787.

A increased profits
B Meets demand for the 787 and increases the available time slots
C shrinks the available universe of demand for the A350EWB, making it a much more risky aircraft.

About 6 months to a year after the 787 dreamlanders is delivered to its first customer I would start to design and take orders for the next aircraft.