The time has come, there are now only two premier and innovative commercial airline manufacturers providing aircraft for airlines; Boeing and Airbus.
Boeing with their B series aircraft ( B-737 through B-787) and their European counterpart Airbus with their A series aircraft, (A220,A319,A320,A321,A330,A340,A350 and the A380).
These two giants have revenues in the vicinity of 200 billion dollars annually. They are now a modern day “duopoly.” And one of them seems to be snoozing on innovation as a result.
How did all this come about.
On July 15, 1916, Boeing (NYSE:BA) was founded in Seattle, Washington by William Edward Boeing. Bill Boeing was born in Detroit and came to Seattle in 1903 at the age of 23, the same year the Wright Brothers flew their first flight. He was the original high tech young entrepreneur that made Seattle home and I find it interesting that since Boeing’s move, so many giants of industry have located in Seattle. These include Microsoft, Starbucks, Amazon, Costco, and Expedia. Soon after Boeing started building his wooden aircraft, dozens of competitors also began making and selling flying machines. Henry Ford also had to compete with dozens of companies. A hundred years later only Ford Motor Company (NYSE:F), and General Motors Company (NYSE:GM) survive as American companies. Chrysler (NYSE:FCAU) is actually FCA (Fiat Chrysler Automobiles), and therefore one can argue that it is no longer a US company.
Boeing’s US competitors are all history now. I remember flying on the Lockheed (NYSE: LMT) wide body L-1011 before they stopped commercial aircraft production and the McDonald Douglas DC-10, which was merged into The Boeing Company.
But, it seems however that the US giant, with the- do no wrong- attitude and premium aircraft innovator has lost its Mojo. My favorite plane the B-747 affectionately known as “the Queen of the Skies”, has flown for 50 years, but has been dethroned by the double decker A-380.
Boeing CEO Jim McNerney explained how this 100 year old trailblazer has lost its nerve and is losing out to Airbus. Back in 2014 he said, “Every 25 years a big moonshot…then produce a 707 or a 787- that’s the wrong way to pursue this business. The more-for-less world won’t let you pursue moonshots.”
And so instead of building a new 737 from scratch, he took the original 737 design from the 1960’s and updated it to the 737-MAX which after two fatal crashes continues to be grounded costing the company and the Airlines that bought it billions of dollars in lost revenue.
In 2015 a small Canadian manufacturer, Bombardier (OTC) better known for building snowmobiles, introduced its C-Series single aisle 100-150 passenger jet that was considered a generation ahead of the competition because of it’s high tech innovations, cleaner cabin air, increased luggage space and great passenger ergonomics.
The problem for Bombardier was the development program cost the company $5.5 billion and put them on the brink of bankruptcy. Airbus saw this new plane at the Paris air show and loved it and Delta Airlines (NYSE:DAL) put their money in it and ordered 75 jets which have since been delivered and are being utilized by the airline. Boeing also saw the positive qualities of the jet and used their Washington lobby power to cry foul and the US government imposed a 300% tariff on every C-Series. Bombardier was going to collapse when on October 16, 2017 Airbus outsmarted and shocked Boeing by surprising everyone in the industry and buying a 51% stake in this innovative new jet; building it in Alabama instead of Canada avoiding tariffs.
The plane was renamed the A220 and to date has more than 500 on order. It is such an advanced aircraft that David Neeleman, the original founder of Jet Blue Airlines (NASDAQ:JBLU) wants to build a new airline using only the A220 aircraft. New jets all have growing pains and Swiss Airlines recently grounded their fleet of A220’s, but after inspecting the engines they have resumed service.
Boeing has found success with the Dreamliner, the B-787. However it was 3 years behind the promised delivery date, over budget and was initially grounded because of smoke in its innovative lithium battery pack. It is now flying and its a passenger favorite having all the qualities of the A220 in a twin aisle intercontinental airliner.
American Airlines has announced they will be flying the B-787 nonstop from Dallas to Tel Aviv starting 9/9/2020. United and Delta already have nonstops from Washington DC, San Francisco, Newark, and JFK to TLV. It is interesting that Israel’s tourism minister will award American Airlines a subsidy of 750,000 Euros or $184,000.00 for operating the route for one year. El Al Airlines who is also using the new B-787 was awarded a 250,000 Euro subsidy for launching a Las Vegas-Tel Aviv nonstop flight earlier this year.
Boeing is an aviation pioneer that created the legendary B-707 and B-747 both considered a moonshot moment.
Airbus has designed and currently builds a variety of jets that can transport 100 to 600 passengers and everything in between using interchangeable fly by wire avionics. This is not so for Boeing. The mantra “If it’s not Boeing I ain’t going” has been upended, due to the company seemingly losing its drive for innovation. I am confident that this iconic American company will find its moon shot moment again, and with the upcoming B-777X will regain its leadership status and do Mr. William Boeing proud.
Nonprofit and business leadership can take a lesson from Boeing and not be reactive by thinking short term. The goal is to have a forward thinking fundraising plan that will sustain the organization. GrantWatch provides a “grants calendar”, so that organizations can continue to fund their current programming and also look to the future and innovation.