June 2005 
Volume 04, Issue 2 
Leadership Message

Level setting for the Paris Air Show

James Bell
President and CEO

James BellJune—in odd-numbered years—is when the aerospace industry gathers for the Paris Air Show. Boeing will be participating in this year's event, which runs June 13 to 19. There is no doubt in my mind you'll have many opportunities from the media to learn all about it.

But before the show starts, I'd like to share my perspective on this event.

First, some background: The Paris Air Show is only one week out of the year—a week when companies gather to strengthen relationships with their customers and suppliers, showcase their products and services, and discuss the state of the industry. More than anything else, the Paris Air Show (and its counterpart, the United Kingdom's Farnborough International Airshow, held in even-numbered years) is a marketing and media event.

Over the years, the big air shows have come to be characterized by many as a "horse race" between Boeing Commercial Airplanes and Airbus—a contest to see who can announce the greatest number of orders. Despite how the media covers it, Boeing chooses not to play that game. We don't hoard announcements for this or any other air show. Instead, Boeing announces orders at times of our customers' choosing; if we do announce orders at an air show, it is because that particular customer wants to do it then.

With that in mind, here's what Boeing considers important and what we'll be focusing on:

  • This year is one of momentum for Boeing. We've won significant orders and are executing well on contracts that are vital to our customers. Our strategies have been validated, and we are carrying out those strategies and building sustained value for Boeing.
  • On the commercial side of the house, we're focusing on the flying public's preference for point-to-point travel—as evidenced most recently by customers' strong response to our 787, 777 and 737 offerings. In Paris, our new 777-200LR Worldliner—the longest-range passenger jet ever built—will be on static display.
  • On the defense side, we're continuing to discuss the importance of network-centric solutions. We'll be showcasing the first 767 tanker/transport, which the Italian government has permitted us to place on static display. We expect our F-15E and AH-64D will be on static display, too. And our F/A-18E/F Super Hornet will provide flying demonstrations.

In terms of competitive insight, we think the news will focus on BCA's European competitor as it showcases its A380 "super jumbo," which recently started flying and will be making its first appearance at an air show. And we wouldn't be at all surprised to see the launch of the A350, an A330 derivative that Airbus hopes will compete with our all-new 787 Dreamliner in the middle-of-the-market segment.

Text QuoteOf course, we expect the subject of "launch aid" subsidies to Airbus to be a hot topic, as it was last year at Farnborough. Boeing Chairman Lew Platt is our principal spokesman on that issue, but I'd like to take this opportunity to provide some background. This is a subject I get asked about in almost every meeting I have with employees.

Launch aid is a low- or no-interest loan from European governments to Airbus for the development of individual airplane programs. If Airbus doesn't meet its projected sales of an airplane, it doesn't have to pay back the government lenders. When Boeing develops an airplane, we have to pay for development with cash from operations or through market-rate loans that must be paid back on firm schedules regardless of whether the program is successful. Boeing shoulders the full risk of developing a new airplane; Airbus does not.

Airbus will undoubtedly counterpunch, claiming that Boeing receives "subsidies" in the form of tax breaks from the state of Washington, and as a result of our U.S. government contracts. Those paths are just distractions from the real issue. Similar tax benefits are available to Airbus, including in France and Germany as well as in Washington state. Airbus' parent companies—European Aeronautic Defence and Space, and BAE Systems—have combined defense and space revenues that exceed Boeing's. So if there is a benefit from having space and defense in the corporate portfolio, Airbus benefits equally from these kinds of contracts.

Don't lose sight of the issue that sets us apart: launch aid. European government launch-aid subsidies to Airbus distort competition, violate World Trade Organization rules and must cease.

Not everyone can attend the Paris Air Show. But we can all stay attuned to what happens there and be prepared to provide the Boeing viewpoint to our friends and neighbors who may be following the coverage of it.

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