BUSINESS Bloomberg Businessweek March 1, 202113THE BOTTOM LINE With the pandemic pinching long-haul travel,
Airbus is counting on its edge in smaller jets to win market share
while it develops a new generation of hydrogen planes.one of the worst periods in its
history. Airbus is generating cash
again after a flurry of late plane deliver-
ies last year. When Covid-19 struck in 2020,
Airbus held $16 billion in cash and equivalents, vs.
$10 billion at Boeing. One reason: Airbus kept its
financial powder dry while Boeing shoveled about
$40 billion back to shareholders via stock buy-
backs in the years before the crisis. That’s given
Airbus an advantage, particularly in the market
for single-aisle planes, the backbone of the civil
aviation industry.
The coming Airbus A321XLR, a long-distance
single-aisle model due in 2023, is already eat-
ing into orders of larger planes—and Boeing
has no response. While it pours resources
into getting the Max airborne again and ser-
vices its $65 billion debt, Airbus is invest-
ing in designs that stand to redefine air travel.
“You could say you make your own luck,” says
Robert Stallard, an analyst at Vertical Research
Partners. “It was a very deliberate decision [for
Airbus] to not spend that money, save it for a rainy
day—and it came.”
Boeing CEO Dave Calhoun has hinted his com-
pany could introduce its response to the A
within a year or two. A small team of engineers
has continued to work on future aircraft, according
to people familiar with the matter, including con-
cepts for single-aisle jets that seat 200 travelers with
the range to cruise the North Atlantic. It’s a niche
where Airbus’s largest narrowbody jet is racking up
sales unchallenged by Boeing.
Boeing is taking a straightforward approach to
making its fleet more environmentally friendly:
looking at advanced composites to lighten the
weight of the wings and fuselage and at engines
that would run on sustainable fuels instead of ker-
osene. Airbus could counter with such incremental
improvements, but it’s chosen to develop a totally
new aircraft it aims to introduce by 2035 that’s
based on hydrogen propulsion, a so-far unproven
technology. A hydrogen turboprop plane is gaining
momentum internally, according to people familiar
with Airbus’s thinking who asked not to be identi-
fied because the plans are confidential. The pro-
peller plane would carry 100 passengers and have
a range of 1,000 nautical miles—about the distance
from Rome to Dublin.
The hurdles to Airbus’s plan are significant. It
needs to develop a massive global infrastructure
for storing hydrogen at airports and fueling air-
craft while figuring out how to make it affordable
enough for airlines to switch from conventional jet
fuel. Airbus’s development timetable means it has
only seven or eight years to bring
an entire ecosystem into being, and there’s no
shortage of skeptics. “I don’t think we’re anywhere
close to having hydrogen or electric power anytime
soon on the mainstream aircraft, but I do know
Airbus is working on these concepts very meaning-
fully,” says John Plueger, CEO of aircraft financier
Air Lease Corp. He says Boeing’s approach rep-
resents “a much easier step.”
The Boeing CEO has called out his rival’s strat-
egy, without mentioning Airbus by name. Boeing
studied hydrogen and determined it wouldn’t be
ready for decades, Calhoun said on a call with
analysts in January.
Faury points to Airbus’s pioneering role bring-
ing so-called fly-by-wire technology to civil aircraft
cockpits in the 1980s. The system, which steers
a plane using an electronic interface rather than
heavier hydraulic links, was first deployed on the
A320 family. “Fly-by-wire was seen as risky or too
innovative,” Faury says. “Thirty years later it’s an
absolute must. We have to be very careful with the
‘it will never work’ attitude, which has proven so
many times to be wrong in so many industries.”
Boeing is under particular pressure to defend
itself in the longer-haul single-aisle jet market that
the A321XLR is targeting. The Airbus model has
already racked up more than 450 orders from
two dozen customers, including U.S. carriers
American, JetBlue, and United.
Any misstep by Boeing or Airbus could also
leave space for China to get into the market.
Chinese aircraft manufacturer Comac has devel-
oped a narrowbody jetliner called the C
intended to compete with the 737 Max and the
A320neo. The company plans to make its first
delivery of the aircraft by the end of the year, and
that could undercut sales for Airbus and Boeing
in the important Chinese market.
It’s uncertain whether China will emerge as
a credible threat, but there’s still plenty of time
for it to make its move. Given that aircraft have
among the longest life cycles of any industrial
product, the next battle for dominance will likely
be waged a decade from now. “It’s a 10-year-long
chess game,” says Vertical Research Partners’
Stallard. “You make a move, and 10 years later it
plays out.” —Charlotte Ryan and Julie Johnsson,
with Siddharth Philip A computer
simulation of
Airbus’s hydrogen
turboprop plane2006 20202006 2020 Gross plane orders
Airbus
BoeingWidebodySingle-aisle1.5k1.0.06004002000 BUBUUSSBUUSSBBUSSBBUSBUSBUBBBUBUSBUBUBBBUSSBUSBBBUBUSBUSUSUSSSSSSSINNININEINEINEEIINNEEINNEEINEINNINNEINEINNEENNENENEEEEESSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS BBBlBlBBBloBloBloBBlBBBBloBlBBBlBloBBloBBBlBBllBBBBBlBBBBloBBBlBBBBBBBBlolBBBlBBloBloBBBBlBBBBBBBBBloBBlBBBBBBBBBBBBBBlBBBBBBBBBBBBBBlBlooBlolollllllolllollloolllollllllollollololllolollloooooooooooooooooooooooooooooomboooombombomommbombomomommboooooombombomombommbooooomoomoooomombmbooooommbooomombombmooooommoooooooomoommommomommomombomombmbmmmmmbbmmmmmmmmmmmmbmmmmmmmmmmmmmmmbmbbmmmmmmmmmmmmmbmmmmbmmmmbmmmmmmbmmmbbmbmmmbmmmmmmmbmmmmmbmbmmbbmbbmmmbmmbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbebergeergeergeeeeeeeeeeerergeeeeeeee gerggggggggggggggggggggggggggggggggggggggggggggggggBusinessweekk MMaaMaraMMMMMaMaMMMMMMMMMMMMMMMarMMMarMMMMMMMMMaMarMMMMMMMMMMMMMMMaaaaaa aMMMMMMMMMMMMaMarMaMarMarMMMMMMMMMMaMaMaararaaaaarraaaaaraaraaaarrrrrrrrrrchhcccccchhch ccccccccchhchhchcchhcccccchchhch chchhhh 1111111111111111111111 1, 1111 1, 1 1,1, , 1 1, 1 , 202, 200222022222002222202202202220202220020202222200202202222222222220020222022222220220002220222020022022020000002000022222222220000022222222222222222222222222222222222212111111111111111111111111111111111111111111111111111111one of the worst periods in its
history. Airbus is generating cash
again after a flurry of late plane deliver-
ies last year. When Covid-19 struck in 2020, only seven or eight years to bring A computer^
simulation of