When in Toulouse Do as the Toulousians Do...

My high number of blog postings today can be attributed to lots of time in air ports and not wanting to sleep. I got into Toulouse late tonight and saw ads for EADS (the parent company of Airbus) all over the airport. I'd been thinking about Airbus a lot lately both because my Econ Prof (smart guy, check out his website) loves to make fun of them (my favorite comment being when he said that France wanted to be a "real" country so they started to subsidize EADS to help them compete with Boeing) and because they've been in the news a lot. There' s actually a big article in The Wall Street Journal on a spat they're having w/ GE and about supplying engines for the A350 here (if you have a subscription or steal it from someone).

The article reminded me just how badly Boeing's 787 is beating the pants off of the A350. To date Boeing has 677 firm orders to the A350's 154! I believe the technical term for that is an ass whuppin' (but I'll have to double check). I think it's interesting because this is one of the few industries where you really get to watch companies make strategic decisions and see how they play out over time. I remember when both companies unveiled their respective designs there was a lot of back-and-forth about which company had the right approach (since they chose such divergent paths). The A350 is a gargantuan plane aimed at highly traveled long-haul routes whereas the 787 is an extremely fuel-efficient plane that isn't as large, but can be configured for different route lengths depending on what airlines want. Today I don't think there's much of a debate. Airbus has been saddled by delays and major order cancellations (even Fred Smith canceled FedEx's order and he LOVES buying airplanes). Incidentally, how many more times will Europe need to go through this before they stop throwing subsidies at commercial airplanes? The A350 is an engineering marvel (just like the Concorde was), but if no one buys it what good is it?

It's also interesting to see how this drags other companies into the mix. In the WSJ article Airbus is complaining about Boeing's apparent unwillingness to design an engine for them (I'm sure the lack of orders and massive production delays has nothing to do with it). My favorite quote:

"The problem we have with GE is they go to [Boeing in] Seattle and say, 'What kind of engine should we design for your airframe?' " said John Leahy, Airbus's chief operating officer for customers and its top salesman. "Then they come to [Airbus in] Toulouse and say, 'Here is the kind of airframe you need to build to fit our engine.' "

Airbus/EADS reminds me a lot of the Uncle Leo character on Seinfeld (hey, I haven't worked a Seinfeld thread into a post in a while). Uncle Leo thinks everyone is anti-semitic (I have some relatives like that actually). There's a great episode where he breaks up with his JEWISH girlfriend for laughing at a Jewish jokes. Of course he accuses her of being anti-semitic too. Throughout this whole A350 debacle Airbus blames everyone else but themselves. I'm sure if they have any problems they just drag the WTO or the EU in and accuse Boeing of being unfair.