Saved Planemaker Five Percent On 400-Plane Sale

According to New Yorker writer John Newhouse, Airbus ex-CEO Jean Pierson did many colorful things to promote his company, but none as strange and audacious as dropping his trousers to push through a key 400-plane sale to US Airways.

In his book 'Boeing Versus Airbus', Newhouse recounts how Pierson traveled to US Airways headquarters in 1997 where he thought he would put the finishing touches on the large order. Instead, he was hit with an eleventh-hour bargaining tactic, as the airlines' then-chairman Stephen Wolf demanded a five-percent discount on the price.

According to the book, "Pierson began slowly lowering his trousers and saying 'I have nothing more to give.' He then allowed the trousers to fall around his ankles."

Wolf replied: "Pull up your pants. I don't need any more money," thus sealing the deal. Newhouse says he got the anecdote from Pierson himself and confirmed it with another person who was present.

And the rest, as they say, is history. Shortly thereafter, US Airways announced a 124 plane order with options for 276 more, a deal viewed by many experts as the one finally allowing Airbus a foothold in US markets, and making it competitive with Boeing.

Two short years later Airbus overtook Boeing for the first time in annual orders -- a status quo that's endured until last year. Although Airbus has yet to release its order totals for 2006, most industry observers believe Airbus' stumble with its A380 program will allow Boeing to surpass its European rival for the first time in six years.

In his book, Newhouse makes many cogent observations about the airliner manufacturing industry, not the least of which is its unpredictability. He speculates, perhaps not inaccurately, Boeing's lack of direction in the 1990 contributed to Airbus' success in US and world markets. He says, "Boeing's leadership during those years is a reminder that it may be better to be lucky than to be smart. Boeing was lucky."

In researching his book, Newhouse says he spent time at the headquarters of both companies speaking with past and present executives. He says although competition between to the rivals is hotter than ever, executives are much less interesting than in times past.

"There were more larger-than-life characters then by far," he said. "Now they are all tedious bureaucrats, most of them."

I wonder how Pierson's tactics might work at the dealership, next time I need a new car...

FMI: www.airbus.com, www.boeing.com