Paris Air Show hands Boeing some setbacks

WASHINGTON — Analysts say there's little doubt that Boeing got roughed up at the 49th annual Paris Air Show this week.

The Chicago-based company had to watch as its chief rival, European-based Airbus, announced record orders for its A320neo, a new single-aisle airplane that's attracting buyers who want to lower fuel costs and lower carbon-dioxide emissions.

"They took a few blows — I guess they got their hair muffed," Richard Aboulafia, an analyst with the Teal Group, an aerospace and defense consulting group in Fairfax, Va., said Friday.

While Boeing generated plenty of chatter at the show, opinions differed as to whether its performance marked a temporary setback for a vibrant company or if it signaled reason to fret about its ability to compete in coming years.

The short-term future, at least, looks bright.

With an accelerating production pace at its Puget Sound aircraft assembly plants, Boeing has added nearly 3,000 workers to its Washington state payrolls in the past five months. The company also is fighting the National Labor Relations Board to open a new plant in South Carolina.

And the company will employ thousands more as it fulfills a $35 billion contract with the U.S. Air Force to build a new fleet of aerial tankers. The contract calls for producing 179 new tankers. But the deal eventually could be valued at more than $100 billion as the Air Force replaces its fleet of 600 or so Eisenhower-era tankers.

"I'm not worried about this at all — Boeing is in a big growth mode," said Rep. Norm Dicks, D-Wash., known as "Mr. Boeing" on Capitol Hill.

In a note on Thursday, AirInsight aviation consultant Addison Schonland wrote that Boeing actually had a pretty good week in France, with the Airbus orders just suggesting pent-up demand by customers who wanted something new and updated. "It is not like we have seen Boeing 737 customers defect en masse for neo," Schonland said.

But Aboulafia said "the main takeaway" from the French show is that Boeing must move quickly — "faster than they would like" — to develop a strategy for a new narrow-body product.

"They don't have one, that's the thing," Aboulafia said. "This industry is like steering a supertanker. Just because you're in calm waters one day doesn't mean you don't have to worry about what's coming soon. And yes, that's right, they've got plenty of business. However, that's completely irrelevant for this business. They need to be thinking about their long-term strategies." He said Dicks was offering "a strong and brave defense of complacency."

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