Boeing gets jetliner lift from Asia with new Chinese and Thai orders
The Pacific Rim region is smiling on the Boeing Commercial Airplane Company these days. Boeing scored two important sales victories in Asia in quick succession late last year. It gave the company a welcome lift.Skip to next paragraph
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First was the surprise decision by Thai International Airways to switch its order for two new airplanes from Airbus Industrie, the European consortium, to Boeing. Not only was it the first new order for a Boeing 767 since the plane was first rolled out in August 1981, it was the first time an airline had canceled an Airbus order and replaced it with one from Boeing.
Shortly thereafter, the People's Republic of China announced it was buying 10 new 737 jetliners and two additional 747s to modernize its domestic airlines and strengthen its international flights. Unlike the Thai deal, this one was not unexpected, but it was a reminder that China has a large inventory of aging air transports, many propeller-driven, that will have to be replaced in the not-too-distant future.
These two events are significant because Asia is crucial to Boeing's plans to weather lean years ahead until national and world economies recover and sales of its new line of jetliners pick up.
(Another element in Boeing's planning is a careful reduction in the company's work force. Boeing's year-end employment in the Seattle area was about 67,000, down about 8,900 from the beginning of the year. The company plans to reduce this figure by another 9,000 this year.)
Asia is the world's third-largest market for commercial airplanes after the United States and Europe, and the region still has expanding economies that project a need for more air travel. It is also a primary arena of competition between American aerospace companies and Airbus.
In fact, until Thai Airways decided to switch to Boeing, Airbus Industrie had been on a winning streak among the countries of Southern Asia.
As of this writing the Thai deal is not final. Although approved by the airline, it must still be ratified by the Thai government. Airbus is pulling out stops to save the deal, including lowering the price by $10 million a plane. This will undercut Boeing's price.
Still, it seems that the decision is already having an impact among other regional airlines. For example, Singapore Airlines recently announced it is again weighing the possibility of adding Boeing 767s or 757s to its fleet.
''There is evidence that everybody is paying attention to the decision and wondering why the Thais made it,'' said Richard Albrecht. Mr. Albrecht, who used to be vice-president for international business at Boeing, was recently promoted to head the 747 division.
Although production delays for the Airbus have been cited by some as one reason for the switch, Boeing officials here say range and fuel efficiency were the deciding factors.
The tentative sale was the first for the extended-range version of the 767, which is capable of carrying 200 passengers more than 4,000 miles. ''A lot of Southeast Asian airlines have routes covering that kind of range, which makes the airplane very appealing,'' Mr. Albrecht said.
Farther north, in China and Japan, Airbus has a weaker market presence and the competition tends to be between Boeing and the McDonnell Douglas Corporation.
The market in China is the approximately 150 aging Soviet- and British-made airplanes that make up the bulk of China's state-owned airline, the Civil Aviation Administration of China. Boeing has been fairly successful in selling airplanes in China. It sold the airline ten 707s in 1972 and three 747s in 1978, in addition to the most recent sale.
McDonnell Douglas, however, has been courting the Chinese for some years even if it hasn't yet gotten any contracts. It hopes to sell China some of its new fuel-efficient DC-9 Super 80s. Airbus hasn't sold China any airplanes, either, but can't be counted out. Mr. Albrecht noticed several ads for the Airbus in China's English-language publications during a visit in October.
The Chinese market is difficult to predict, Mr. Albrecht said. ''We could hypothesize an airline using 737s to serve domestic needs, but they don't have a large support infrastructure, and it can't be built overnight.''
China is also a potential market for Boeing's new 757, but that depends a lot on how air traffic grows and how fast it gets its new 737s into service. Mr. Albrecht, who toured China last year with a Washington State delegation headed by Gov. John Spellman, said he was never on a flight in China that wasn't absolutely full.