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No bulls for gold, but other metals shin... Zimbabwe leads Africa in equity revoluti... Boeing surprises by leaving super-jumbo ... Central banks hold each other to ransom ...
Boeing
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Boeing surprises by leaving super-jumbo skies to rivalSIX weeks ago Boeing, master of the world's passenger jet business, shook the industry by announcing its $14-billion merger with McDonnell Douglas to create a huge group with $48-billion sales. While McDonnell's share of the civilian aircraft market had slipped to around 5% of estimated 1997 orders, its addition was expected to beef Boeing's global control to 65%. But the biggest plus for Boeing was that the deal would make it the world's second-biggest defence company with pro forma sales of $18-billion, just behind US rival Lockheed Martin's $19,4-billion. At the time commentators noted that the new force sent a ripple of alarm through the four-nation European consortium plane maker Airbus Industrie which, with a market share of some 35%, is effectively the sole competitor to Boeing.
It boiled down to the expectation that Boeing-McDonnell would be much better placed to finance development of the next generation of long-haul super jet, the Boeing 747X with 550 seats against the current top-line aircraft's 400. Airbus has yet to catch up with the Americans. The A330, its biggest wide-body aircraft, has 330 seats. Airbus is looking at stretching its A340 from 295 to 380 passengers - but is also planning for an entirely new jet, the 550-seat A3XX. With Boeing rolling out enhanced models of its long-haul, twin-engined 767 and 777-300 (370 passengers), the scene was set for a battle royal between the two builders even before the advent of their competing super-jumbos. Meanwhile the rivals waged a war of words. Boeing reckoned that with its proven 747 design as a basis, it could develop the new jet relatively cheaply.
Demand for the 550-seaters was put at 500 over 20 years, chiefly because of the shortage of landing slots at key hub airports such as London, Tokyo and New York- a situation which would be solved by fewer but bigger planes. Airbus, without anything yet in the air to compare with the Boeing 747 family, would bust itself financially by trying to compete in the super range partly because development costs would be much higher.
But last week the picture changed dramatically. Boeing cancelled the 747X project and left the field clear for Airbus - a highly uncharacteristic move for the Seattle-based giant. Boeing revealed that despite intense lobbying, only two carriers, British Airways and Singapore Airlines, had expressed any interest in an aircraft of that size - and both had steadfastly refused to sign up. In addition, potential buyers were not that happy with specifications: there was no significant improvement in economy of operation.
Airbus was not deterred by Boeing's doubts even though the A3XX will be a completely new design to its current range - a two-deck format with the capability of being stretched well beyond 550 seats. Unit operating costs are put at up to 20% less than the Boeing 747. The group is also sticking to its view that demand for the new giants of the sky will rise to around 1 380 by 2014.
It has even forecast that Boeing will be back in the hunt in the super-jumbo market by the time Airbus test-flies its prototype four years from now. If Airbus is as good as its word, it will be committed to one of the biggest financial gambles of the aircraft industry since Boeing made the quantum leap from the 707 to 747. But if it is right, Airbus will be up and away before Boeing gets onto the runway of the new market, where some analysts believe there will be room for only one manufacturer of super jumbos.
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