Boeing Co. (BA:US) and Airbus SAS must be careful not to cut into their own markets in their quest to outdo each other with new aircraft, said Steven Udvar-Hazy, who claims to have bought more jets than anyone else in the world.
Boeing risks encroaching on its new 747-8I jumbo jet with a more powerful wide-body 777, while Airbus may find that an improved A330 siphons off interest from the A350 family that the European planemaker is building, Udvar-Hazy said yesterday.
“It’s a cat-and-mouse game,” he said in an interview in Beijing at the annual meeting of the International Air Transport Association. “Both manufacturers want to out-do each other” without wandering into territory that they already occupy with another model, he said.
The two biggest commercial-plane makers are circling each other in an industry worth $80 billion annually, where new jets need investments of $10 billion and typically fly for decades. While Airbus and Boeing are about equal in the market for single-aisle planes, Boeing dominates in wide-bodies, a lead it seeks to defend as it considers upgrades to its popular 777.
Udvar-Hazy, 66, estimated that he has acquired about 2,100 jets during his career. He founded International Lease Finance Corp. in 1973 and built it into the world’s biggest such lessor before selling to American International Group Inc. (AIG:US) in 1990, making him a billionaire. He left in 2010 and started Los Angeles-based Air Lease Corp. (AL:US) the same year.
Airbus risks order cannibalization as any improvement of its A330-300 wide-body may hurt the case for the A350-800, the smallest member of the A350 group of jets, Udvar-Hazy said. Mary Anne Greczyn, an Airbus spokeswoman, didn’t immediately respond to telephone calls and e-mails seeking comment on his remarks.
At Boeing, any improvements in the successor to the current 777, the planemaker’s biggest twin-engine model, may create competition with the four-engine 747-8I, Udvar-Hazy said. They are Boeing’s most-expensive passenger jets, with the 747-8I listing for $332.9 million and the 777-300ER for $298.3 million.
The 747-8I is the latest iteration of the iconic humped jumbo jet and just entered the fleet of Deutsche Lufthansa AG (LHA), one of three carriers that have ordered it for passenger service. Airlines typically buy at a discount to catalog prices.
The 747-8I seats 467 in three classes and flies 8,000 nautical miles (14,800 kilometers). The 777-300ER has room for 365 passengers, covering 7,930 nautical miles in range.
Boeing’s strategy calls for “a full array of products with seat-count capacity in 15-20 percent increments to provide customers maximum flexibility,” Karen Crabtree, a spokeswoman, said by e-mail. Buyers of the previous 747 version will have an “easy transition” to the new model, she wrote.
Improvements that Boeing is considering on the 777 include a new wing and improved engines. That would boost passenger capacity and range, bringing the plane into close competition with the 747-8I, for which deliveries began this year.
“There’s a lot of overlap, and I think that’s one of the things Boeing’s thinking about,” Udvar-Hazy said. “By stretching the 777-300ER and adding additional seats, it kind of goes into 747 territory.”
Boeing, based in Chicago, has called an “off-site-summit” for eight or nine of its biggest customers this month to explore which moves would make most sense, Udvar-Hazy said. The executive, who has called himself the godfather of the aircraft leasing industry, would be a participant in that event, he said.
Airbus’s twin-aisle A330, which can carry 295 passengers and fly 6,000 nautical miles, has won almost 1,000 orders since the early 1990s. To keep the momentum, the Toulouse, France- based planemaker is pressing engine makers for incremental improvements and considering ways to boost fuel efficiency.
While such upgrades on Airbus’s only wide-body jet outside the super-jumbo category may help fend off challenges from Boeing’s 787 Dreamliner, it may also attract customers who would otherwise go for the twin-engine A350-800, Udvar-Hazy said.
Airbus, the largest maker of commercial jets, has pushed back the first version of the A350, the A350-900, by about a year to the first half of 2014. It was originally set for delivery by July 2013, to Qatar Airways Ltd., and Udvar-Hazy predicted the plane may slip further.
First delivery will come “hopefully within six months or less of what they’re targeting,” he said. “It’s hard to tell because so many elements are coming together.”
To contact Bloomberg News staff for this story: Andrea Rothman in Beijing at firstname.lastname@example.org
To contact the editors responsible for this story: Ed Dufner at email@example.com; Benedikt Kammel at firstname.lastname@example.org