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Boeing vs. Airbus: Why Aviation’s Biggest Rivalry Is in Flux

Posted by Wolfgang Collection on

This is Boeing's 737 MAX, and this is its rival, the Airbus A320neo. These planes are at the center of the biggest rivalry in the aviation industry. (pleasant orchestral music) They're both competing for the same market and are mostly used on relatively short trips like Boston to Miami or London to Madrid. Now, also thanks to the A320neo, Airbus has had a solid year. The airliner has established itself as a best-seller since it first made its commercial flight in 2016. Boeing, on the other hand, has had a very rough year.

The 737 MAX, which started flying commercially in 2017, was supposed to strengthen Boeing's position as the world's largest plane maker. Instead, it became a symbol of one of the worst crises in the company's history. What does this all mean for the two companies that secure 99% of the world's large-plane orders? - It's really two old competitors, you know, battling it out in the ring, and they say there's no room in this ring for anybody else.

You'll see Boeing's total deliveries start to fall after the March grounding of 737 MAX jets, and, as it stands now, there's virtually no way Boeing can deliver more planes than Airbus this year, but Airbus might not hold the top spot for long. - This'll bounce back and forward between the two companies depending on the product they're selling, on the number of airlines they can get on board. It really is something you can sort of watch this go back and forward like a tide coming out and tide going in.

So what's behind this latest power shift in the aviation world? What's happening with Boeing's 737 MAX is a good place to start.

After two deadly crashes in five months, Boeing's 737 MAX became the subject of international investigations, public scrutiny, a flood of lawsuits, and some high-profile shakeups in the company's leadership. - We're gonna be issuing an emergency order of prohibition to ground all flights of the 737 MAX 8 and the 737 MAX 9.

The MAX situation has raised concerns about whether Boeing has done enough to make sure its planes are safe to fly. - Safety is our responsibility. We own it, and the work of our team will make the 737 MAX one of the safest airplanes ever to fly. - [Narrator] The company's business has taken a hit.

Many of those 737 MAXs are just sitting in Boeing facilities and other storage areas around the world. As of October, the MAX crisis had already cost Boeing $9 billion and wiped more than 40 billion off its market value. As the situation drags on, Boeing has tried to boost confidence, reiterating that safety is its top priority. In a September press release, CEO Dennis Muilenburg said that ensuring the safety of the flying public, pilots, and crew is Boeing's top priority as they work to return the 737 MAX to service.

Muilenburg was stripped of his chairmanship on October 11th, but he is still the CEO. (pensive mallet percussion music) So does this mean Airbus is benefiting from the 737 MAX's woes? Not necessarily. - Buying an airliner is not like going down to your local car showroom and saying, "I don't like a Ford, I'll pop down to Chevy "and see what they've got." You really are in a list, you're in a queue that's got a line that's gonna stretch back to maybe even three years if it's a really popular airplane.

Even without the MAX situation, Airbus was already on track to overtake Boeing's deliveries.

Now, it just appears to be happening a little sooner than expected, and that's thanks in part to the A320neo. Airbus has gone from producing 50 a month in 2017 to 60 the next year, with the CEO saying demand could possibly support more than 70 a month in the near future, but it's not all about these two planes. Airbus and Boeing make other models, and their facing challenges there, too. Airbus is phasing out its A380 model, which hasn't been selling well, but production on it was already so low, it's not having much of an impact on the company's overall output. Boeing has repeatedly had to push back the first test flight of its 777X due to production problems. In a September press release, Boeing said it doesn't expect further delays and, quote, "we remain fully focused on safety "as our highest priority, as we subject the 777X "to a rigorous test program prior to first flight." Not that delays on new planes are unusual. Both Boeing and Airbus have faced production problems before. It's just really bad timing for Boeing to take on another set of issues right now.

The company is still trying to get its 737 MAX back in the air after more than seven months on the ground, and that's just the planes. The aviation giants have a lot of other factors to think about, too, like geopolitics and tariffs. In October, the WTO said the U.S. can slap $7.5 billion worth of tariffs on EU-produced goods because of the subsidies Airbus gets from the EU. In a statement, Airbus said the only way to prevent negative effects of the tariffs is for the U.S. and EU to negotiate a settlement. There's also Brexit, oil prices, trade wars, regulation, and of course, competition. Supported by the Chinese government, Chinese-made planes may soon hit the market, though it could take years for the Chinese company known as Comac to scale up production. - The competition from the Chinese is maybe 10 years away from becoming significant.

As air travel continues to rise and both companies anticipate growth in the coming years, whatever happens with these planes will impact how millions of people move across the world.

 

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