Your Marketing Vision!

Your Marketing Vision!

Tuesday, November 12, 2013

Boeing Pays a price for its line in the sand

Shortly before Boeing commercial boss Alan Mulallynamed a new jetliner sales chief in January 2002, he considered whether the company needed someone like the hard-charging John Leahy of Airbus.


The American-born Leahy is brash, aggressive and tenacious. He's a pit bull who doesn't take no for an answer. And he never stops selling Airbus and its airplanes -- or trash-talking the competition. Like him or not, Leahy is largely credited with taking Airbus to the top as the world's No. 1 airplane manufacturer.


Mulally, however, picked someone very much the opposite, at least in style. Although he wanted to win just as badly as Leahy, Toby Bright was personable and soft-spoken with a relaxed manner.
But after several high-profile sales victories by Airbus, Bright was replaced last week in a major shakeup of Boeing's jetliner sales team.
The order came from Boeing Chief Executive Harry Stonecipher, according to people familiar with the matter. Stonecipher has long felt that Boeing could be doing better at sales and marketing, on both the military and commercial sides of its business, they said.
He became convinced that sweeping and immediate changes were needed in the commercial sales unit after a recent overseas visit with Boeing customers, especially those in the Middle East that have been swelling the Airbus order book the past couple of years.
At least one airline customer that Stonecipher visited complained that no one from Boeing had even bothered to knock on its door, said one person familiar with Stonecipher's fact-finding trip.
"I've heard for a while now that Airbus really does have more sales people on the ground," said industry analyst Byron Callan at Merrill Lynch. "Perhaps Airbus has been better at selling than Boeing."
But replacing Bright with Scott Carson, the executive who has been leading Boeing's in-flight Internet business known as Connexion, doesn't solve what Callan and others believe is a much more serious problem for Boeing -- it can't, or won't, match Airbus on price.
Boeing's line in the sand -- no unprofitable jetliner deals -- was drawn long ago by the tough-talking Stonecipher.
"In a nutshell, the Boeing planes were more expensive," Tim Clark, president of Emirates Airlines, said earlier this year in explaining why the carrier opted to buy A340-600 jets from Airbus rather than Boeing's new 777-300ER.
Boeing commercial executives have acknowledged losing key jetliner competitions because Airbus offered substantially higher discounts.
In 2002, shortly after Bright took over as sales chief, Air New Zealand, at the time an all-Boeing customer, ordered A320s from Airbus rather than Boeing's 737.
"We went as far as we could go to make a reasonable business out of it and then we stopped," Bright said later in an interview. "Our competitor chose to go significantly further."
Later that year, it was the same story again when low-cost carrier easyJet in the United Kingdom, another all-Boeing customer, placed a mega-order for A320s. That was a watershed for Airbus. Since then, Airbus has dominated the low-cost market segment that Boeing's 737 once owned.
Last month, Air Berlin, Europe's third biggest low-cost airline, said it will order 70 A320s to replace its 737s.
AirAsia, that region's biggest and fastest-growing low-cost airline, is expected to announce this month an order for up to 80 A320 jets to replace its fleet of Boeing 737s.
"It's very intriguing," said Merrill Lynch's Callan. "Why is Airbus cleaning Boeing's clock?"
The only answer that makes sense, he said, is that Airbus is making lower bids.
"We don't believe this has anything to do with some newfound product competitiveness at Airbus," Callan said.
There can't be much difference in the unit price of Boeing and Airbus single-aisle jets, he said.

No comments:

Post a Comment