Boeing Company\'s Competitive Position

Boeing: Competitive Position

The name of the Boeing Corporation, the "world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems" is synonymous with the production of commercial and military aircrafts (Boeing in brief, 2011, Boeing). It is organized into two branches: Boeing Commercial Airplanes and Boeing Defense, Space & Security. Its products include aircrafts; satellites; weapons; communications, informations, defense and logistics systems (Boeing in brief, 2011, Boeing).

The commercial passenger airline industry has been amongst one of the most hard-hit by the recent economic downturn. The 2008 recession curtailed business and tourist-related travel. Also, more businesses are communicating remotely rather than face-to-face. The rising costs of fuel and labor disputes have hurt the major airlines, resulting in a decline in demand for aircrafts in the short-term. However, Boeing believes that in the long-term, demand for its products will continue: "passenger air traffic rose 8% in 2010, after declining about 2% in 2009. The persistent resilience of air travel is expected to sustain 6% growth in 2011 and keep the growth rate at or above the historical trend through the middle of the decade" (Long-term market, 2011, Boeing).

Boeing believes that the replacement of obsolete aircrafts, and the desire for newer, smaller planes will be beneficial for its market position: "the twin-aisle market, which includes efficient long-range airplanes such as the Boeing 787 and 777, is the fastest-growing segment of the market, accounting for 22% of the delivery units and 43% of the delivery dollars" (Long-term market, 2011, Boeing: 1). The need to replace older airplanes for safety and fuel-efficiency reasons "will account for 40% of the projected market for new airplanes" (Long-term market, 2011, Boeing: 2).

Boeing's fiercest competitor in the market is Airbus, an intense rivalry that has caused some to call the market for airplanes a 'duopoly.' Boeing has recently struggled in relation to its rival in terms of bringing successful projects to completion. For example, one of its most-anticipated projects, the fuel-efficient 787 'Dreamliner' has been beset by delays. The plane's state-of-the-art plastic exterior "allows for a nicer cabin with bigger windows and fresher, less depressurized air" and its light weight allows it to use less fuel (Nightmareliner, 2011, The Economist). But despite a record number of pre-orders, it was found that the plane's highly-touted composite plastic fuselages were defective and had to be rebuilt. Airbus has since created its own plastic airframe models. But Boeing has not secured a first-mover advantage, given that the "787's seal of approval from the American and European aviation authorities on August 26th and its first delivery -- to All Nippon Airways in late September -- come more than three years behind schedule" (Nightmareliner, 2011, The Economist)

Although Airbus may seem to be playing 'catch-up' in this regard, it is outpacing its rival in other critical industry sectors. Airbus recently announced that it had received 1,200 orders for its single-aisle A320 (Nightmareliner, 2011, The Economist)). Boeing has not yet created a new replacement model in the all-important single aisle market, since it had "been hoping to hold off until it could offer an all-new single-aisle aircraft, based on the 787's plastic technology. But in July American Airlines -- one of Boeing's core customers -- decided to give Airbus the lion's share of its order (the world's biggest) to renew its single-aisle fleet" (Nightmareliner, 2011, The Economist).