Boeing in trouble, Austrian Airlines in fear and China’s launch of a homegrown jumbo jet company

Boeing’s 787 project and Airbus’ A380 appear to be more and more similar as regards delays and soaring costs. Most airlines suffer delays of more than two years for the airplanes they ordered either from Airbus or Boeing. Both the A380’s and the 787’s deliveries have been delayed steadily for years and these delays result in resentment on the side of the airlines and in huge financial losses for the manufacturers.

However, the problems which caused the series of delays are different. Boeing struggles with its new strategy of outsourced production. The component suppliers are overstrained with the cutting-edge technology of the “Dreamliner” and they don’t manage to deliver on time or  they deliver half-finished components. Boeing – that originally intended to focus on product development and final assembly – finally has to do the work itself what takes a lot of time. However, Boeing’s CFO James Bell trusts in their new concept of production. Now several airlines announced that they seek compensation and expressed their disappointment because of delays of more than 30 months for some airlines. And thinks could even get worse. Further disruptions could occur if the unions which are very confident at the moment decide to go on strike. The union leader Thomas Wroblewski said: “We are looking for improvements in every aspect of the contract.” The unions are aware that Boeing actually can’t afford any further delays and therefore would have no other choice than accepting the unions’ demands.

In Europe, consolidation might hit troubled Austrian Airlines. After the withdrawn participation of a billionaire from Saudi Arabia, AUA is in dire financial straits. The jumped off investor said the condition of AUA was worse than he had been told. Now, Austria’s minister of transportation is afraid that Lufthansa might take over AUA. He worries that this could threaten Vienna airports’ position as hub for Eastern Europe and that some flights could shift to Munich. AUA lost € 60 million in the first quarter of 2008 as a result of the high oil price and alleged bad management. Despite the governments’ concerns, the airlines CEO admitted that the airline would need a strategic partner.

In China, a new company was founded which will concentrate on large passenger aircrafts. The company called “Commercial Aircraft Corporation of China” is part of the nation’s large jet program which promises more independence from foreign manufacturers. The company’s president Jin Zhuanglong said that CACC would pose no threat to Boeing and Airbus. He expects that it will take CACC a long time for research and development to start large-scale production. Thus, Boeing and Airbus are likely to dominate the Chinese Aviation market for decades. And if a Chinese aircraft manufacturer can compete outside of China in the near future is to be seen but Chinese manufacturers wil concentrate on their domestic market in midle-term anyway. China has yet another major aircraft manufacturer which focuses on smaller planes like the ARJ21-700 with 90 seats. Read more in “Airbus and Boeing in trouble – could a competitor jump at the chance?” from April 24.


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