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Mon, Apr 18, 2005

In The Trenches Of The Airliner Wars

Success Is All In The Timing

Korean Air orders ten Boeing 787s with an option on ten more. In just days, Northwest Airlines is expected to order more than a billion dollars' worth of the next generation aircraft. Boeing appears to be regaining ground lost to Airbus in one of the world's most remarkable financial flip-flops ever -- and it looks like it's all in the timing.

"Objectively, they've got the high ground right now," Airbus sales chief John Leahy told the Chicago Tribune. "I wanted Korean and Northwest.... I guess we screwed up."

Leahy's comments to the paper came as he learned Boeing Commercial Aircraft sales honcho Alan Mulally had landed a lunch meeting with Yang Ho Cho, CEO of Korean Air.

Getting that crucial lunch date with the CEO or a presentation before the board of directors is just one battle in the $50 billion war between Boeing and Airbus to sell commercial aircraft to the world. Right now, Boeing has a firm target: stop the 787's chief rival, the Airbus A350. The Korean Air and NWA deals might be enough.

"They seem to be doing everything they can to stop the A350 from being an industrial launch," Leahy told the Trib. "My job is to make sure that doesn't happen."

The Chicago paper reports Mulally may actually have Leahy to thank for his sales force's success. Over the past ten years, Airbus' market share has increased 18-percent to top Boeing. As a result, Boeing's sales staff has become more responsive to its customers and the company itself is much quicker to decide on how best to win the business.

Boeing Chairman Lewis Platt admits his company has been sluggish and bureaucratic to respond to its customers. "We weren't aggressive, we weren't visiting customers. We kind of just blew them off."

So Boeing has a mission and a methodology. It also has deep pockets. The key to the Northwest deal may be upfront financing on Boeing's part.  

"We'll be on top in terms of orders earned in 2005," Boeing's new commercial sales chief Scott Carson promised the Tribune.

That's the kind of talk that makes Airbus' Leahy sit up and look around. "When they say stuff like that, and they start to getting very aggressive on pricing, all of a sudden you get to a situation where these guys could really turn it around this year.

"Mulally has the ability to change things," Leahy continued. "He gets an hour and a half, maybe two hours with the chairman of Korean Air, and he can reach across the table and have a handshake with the guy. That's damn near impossible for me to recover from."

But if there is a reversal of fortune in the airliner wars, Leahy's confident it won't last forever. This business, he said, simply favors the underdog.



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