June 3, 2019, © Leeham News: Airbus and Embraer are 50 years old this year.
Airbus broke out the party hats last Wednesday. It arranged a formation flying of all its in-production aircraft, including the Beluga XL. It launched a website microsite with its history. A new book, Airbus, The First 50 Years, has been issued. A celebration is planned for the Paris Air Show.
Embraer’s anniversary is Aug. 19, so at this point, its party plans haven’t been solidified, but there will likely be something at the Paris Air Show. Embraer plans to have its new specially painted E195-E2 at the air show.
Airbus now, by some measures, is the No. 1 airliner company in the world.
In most years in the recent decade, Airbus landed more orders than arch-rival Boeing. But Boeing, several years ahead of Airbus with the 787 vs the A350, and for many years a broader wide-body offering with the 777-300ER and cargo aircraft in the 767 and 777F leading the way, often out-delivered Airbus.
Airbus clearly has the better single-aisle product line in the A320neo and A321neo, vs the 737-8 and 737-9/10.
Competition between the 737-8 and A320neo tends to be about even. But the A321neo clearly is the preferred choice over the 9/10 MAX. The market has spoken clearly, ordering the 321 by a ratio of typically 3:1.
It’s a far cry from Airbus’ first 35 years.
The A300B was a mediocre airplane, good for medium haul routes but clearly inferior to the Boeing 767. Even the early A321 didn’t measure up to the Boeing 757. The A310, likewise, fell short when compared with the 767.
The first A330s were good airplanes but limited in range, as Airbus positioned the 330 to serve medium haul routes and the four-engine A340 for the long haul.
The 340 became handicapped before it got out of the proverbial gate.
It was supposed to be powered by the Pratt & Whitney “Super Fan,” an early concept from which today’s Geared Turbo Fan evolved. PW threw in the towel early in the program. Airbus had to go shopping for an engine, settling on the CFM56—something that didn’t offer anything new and provided no advantages promised by the Super Fan.
Later versions of the A340 used Rolls-Royce Trent engines. These proved expensive to operate and expensive to maintain.
In the meantime, Boeing’s new twin-engine 777-200 and, later, the 300/300ER, proved more popular and more economic than the A340.
When 9/11 occurred, striking at the heart of the US in New York and Washington and collapsing US demand followed by a decline in the rest of the world, Boeing—whose order book was then dominated by US carriers—cut production.
Airbus did not. Although roundly criticized, Airbus maintained production levels through one of the worst periods in aviation history. Orders flowed toward Airbus and by the end of the decade, the European company surpassed Boeing in orders on a regular basis.
Airbus climbed from an 18% market share in 1984 to 50% in the 2000 decade. It’s never looked back.
This is not to say Airbus didn’t make mistakes.
Airbus launched the giant A380 in 2000, predicting it would capture half of a 20-year demand for 1,300-1,700 (depending on the year) Very Large Aircraft. Boeing was much more conservative in its forecast as it placed its bet on the 777 and what would become the 787.
In February, Airbus threw in the towel on the A380. Officials announced it will terminate the program with the last delivery in 2021, with only some 300 sales.
Airbus misfired, several times, with the A350.
Officials were caught flat-footed by Boeing’s program launch of the 7E7, an all-composite airplane that was named the 787 with the official program launch in December 2003.
Dismissing the 787 as another of Boeing’s false start, paper airplanes, initially this seemed the right call. Only 54 787s were sold in 2004, four of them to an airline nobody had ever heard of and 50 to ANA.
Then Scott Carson became president of Boeing Commercial Airplanes. He dropped the price and sales took off.
Airbus responded with the A350. But the airplane at first was nothing more than a re-engined, re-winged A330.
Sales were tepid while Boeing began to run away with the market. After public criticism by Steve Udvar-Hazy, then-CEO of mega-lessor International Lease Finance Corp, followed by the CEO of Singapore Airlines, Airbus revised the airplane. But the revision drew criticism as well. Three more versions were done before landing on the A350XWB.
Even then, there was a misfire.
The A350-800, a shrink, was dropped. The A350-1000 needed a more powerful engine and some wing modifications to reach its desired range of more than 8,200nm.
Years later, Airbus launched the A330neo. Essentially, this was the first version of the A350. Sales have been slow.
But Airbus hit a home run with the A320neo. In fact, it was a grand slam, hit right out of the park.
Launched in December 2010, it reached 1,000 orders by the following summer, when Airbus landed one of the gold standards of the industry: American Airlines. American had an exclusive supplier agreement with Boeing. The defection caused Boeing to launch the 737 MAX, an airplane it didn’t want to build.
The A321neo propelled Airbus to a wide margin market share lead over the 737. It consistently has held a 55%-45% share or better since launching the re-engined A320 family, depending on the year.
This compares with struggling at times to win 50% of the wide-body market against Boeing’s line up.
Airbus in 2018 acquired 50.01% of Bombardier’s C Series program. It appeared this was going to be another home run, but so far it’s only a triple. Initial sales announced in July were left-over Bombardier negotiations. A nice set of orders were announced in December, but by and large, sales have been disappointing under the Airbus banner.
There are still high hopes. But there is no question the combination prompted Boeing to acquire Embraer Commercial Aviation in a joint venture. Government approvals are pending.
In its 50 years, Airbus moved from being government controlled and a jobs program to a true shareholders’ company with commercial returns the leading consideration. This doesn’t mean jobs within Germany and France aren’t a sometimes-limiting factor in decisions-they are. But the two governments no longer dictate terms.
Still, a different form of government influence overhangs Airbus.
Some five years ago, the UK’s Serious Fraud Office began an investigation into bribes and corruption. Probes expanded to Germany, France, Austria and the US. The investigations continue to this day.
The entire executive suite officers are gone as a result. Some retired, some were fired, some left for other reasons.
Below the executive level, a ruthless purge swept out some innocents along with those implicated.
The disruptions appear to have affected sales, which were down in the turmoil.
There’s now a new CEO, COO and CFO at the helms.
It’s the start of the next 50 years.
Coming: A look at Embraer’s first 50 years.