Airbus (AIR.PA) and Boeing (BA.N) have drawn up plans for the next chapter in their huge rivalry by remodeling two of the world’s biggest buildings – gutted by changes in air travel.
As the last Boeing 747 leaves its factory later on Tuesday, part of the company’s historic wide-body factory has been designated for the production of in-demand smaller jets, similar to a change of focus at the home of the defunct Airbus A380.
The moves relieve doubts over the future of Boeing’s under-used Everett factory north of Seattle, the world’s biggest building by capacity, and the empty Jean-Luc Lagardere A380 assembly hall in Toulouse, the world’s second-biggest by usable space.
Everett’s industrial activity has also been sharply decreased by a decision to move 787 production to a single base in South Carolina because of a fall in demand for large planes. The smaller 737 will fit into a bay currently used for some remaining 787 work.
Boeing said on Monday it would install a new 737 MAX production line in Everett mid-next year, adding to three already in place at the Renton plant, 36 miles to the south.
That happens as Airbus is mid-way through adding a new production line for its best-selling A321neo narrow-body jet in the deserted Lagardere building. It has also unveiled plans to enlarge a plant in Alabama.
Once exclusively acting as fortresses in an economic war over large twin-aisle jets, the huge plants will become an industrial beehive for profitable single-aisle models, representing a rise in demand for short and medium trips.
Analysts said Boeing’s move indicated confidence in demand including from China, despite recent trade tensions. But they noted both sites will still have additional capacity as future production strategy and automation move center-stage in the jet market duopoly, ahead of jet designs or new orders.
“At this stage in the industry evolution, with no new programme starting in the near future, production strategy is coming to the fore,” said aerospace consultant Jerrold Lundquist, managing director of The Lundquist Group.
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Airbus and Boeing were for years at neck and neck in the single-aisle market which brings in most cash. But Airbus shot quickly ahead owing to robust sales of the A321neo and a safety crisis over the 737 MAX, from which Boeing is just recovering.
Boeing wants initially to scale up monthly single-aisle output to 50 from 30, and Airbus intends to go as high as 75 from nearly 45, though analysts question how fast this can be achieved. But reducing the gap is key to conserving Boeing’s main cash cow and building up the platform for future launches.
“(Boeing) don’t want to be in a situation where Airbus moves to 70 and they are stuck at 50. They want to have the possibility of matching what Airbus does,” said economist Adam Pilarski, senior vice president at consultancy AVITAS.
“So this is a very important statement (to Airbus): ‘We are not going to withdraw from the market’,” he added.
Boeing refused to expound on Monday’s announcement. Airbus would not comment.
Boeing’s move is also seen as an attempt to boost its appeal to investors, some of whom have expressed fears that it is drifting after Chief Executive Dave Calhoun ruled out unveiling a new plane within the next decade – even though many analysts concur it makes financial and technological sense to wait.
“This is Calhoun’s way of signaling: don’t count us out, we’re in this for the long haul,” Lundquist said.
Boeing has not said how the line would be designed but both firms are expected to take the chance to test the most recent automation in part of the market where unit costs are critical.
