Boeing and Airbus Changing Focus

on Aug 5, 2013

iNVEZZ.COM Monday, August 5th: New strategies, designed to reflect the current economic reality, have been adopted by the two world leaders in plane manufacturing. Both Boeing (NYSE:BA) and Airbus (EPA:EAD) are shifting focus towards the market for more cost-efficient planes serving shorter routes.

After years of developing large transoceanic liners, the two manufacturing giants have realised it is time to respond to the changing demands of airlines. The new rules are set by the increasing volume of shorter flights between and within Asia’s fast emerging markets. 44 percent of world’s twin-aisle aircraft flights are realised by Asian airlines, with 70 percent of them staying within the region. Boeing’s previous versions of the 787 Dreamliner and Airbus’ A330, however, were not designed to serve such short distances, where cost-efficiency is of crucial importance for airlines’ performance.

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Asia’s market for air transport is expected to be the fastest growing in the course of the next twenty years, with an annual growth rate of 6.5 percent, compared to an average of 5 percent globally.
The industry is already responding to these forecasts. British plane parts producer Senior Plc. is about to open a new production plant in Thailand, thus lowering supply-chain costs for its main customers – Boeing and Airbus.

**Manufacturers’ answer to these developments**
Both Boeing and Airbus have already developed and put on the market new versions of their top planes.

With its stretched body, Boeing’s new 787-10 Dreamliner is specifically designed for regional flights, with a shortened range in comparison with the previous model and a 323-seat capacity, allowing for greater revenue per flight. Airbus, on the other hand, avoided re-designing their A350 by simply decreasing the maximum take-off weight allowed, thus decreasing landing and en-route charges for airlines.

!fm[Boeing and Airbus Adopting New Strategies](/uploads/story/4552/pic1.jpg)
30 new planes from both companies, presumably from the new models, were bought by Singapore Airlines in June in deals worth a total of $17 billion. IAG, Europe’s third largest airline group, also recently bought 12 new cost-efficient Airbuses as part of its cost-optimisation strategy.

**An Innovative Approach**
Boeing has now started to imitate a popular approach among car dealers in an attempt to ensure the market for its 747’s new model. It repurchases the old 747 planes from airlines, buying the new 747-8 version. Since the beginning of the year, 7 planes have returned to the producer, making Boeing the world’s top buyer of used planes.
**Boeing’s share price was $107.90 as of 05.08.2013, 07.56 BST.**
**EADS’ share price was €45.06 as of 05.08.2013, 07.58 BST.**


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