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A new Captain at Airbus

Airbus SE is hunting for a new captain (CEO) to steer it through some of its worst turbulence in years.

The plane maker is facing investigations around the world over alleged corruption at a time when many of its most senior executives have laid plans to depart or already exited. While Airbus has secured orders for jets that have lengthened its backlog for years, it and rival Boeing Co. face big production challenges—including tight supply lines—to deliver those planes.

Airbus on Friday confirmed Chief Executive Tom Enders wouldn’t seek an extension to his contract beyond April 2019. His No. 2, Chief Operating Officer Fabrice Brégier, who runs the commercial plane division that delivers most of Airbus’s revenue and profit, will leave in February.

Boeing'a attraction to Embraer

Boeing Co.’s attraction to Embraer SA fits one of the goals Chief Executive Dennis Muilenburg has set for the aerospace giant: creating a level playing field in the commercial jetliner business.

Boeing this week confirmed a Wall Street Journal report that it was in talks with Embraer.  But factors such as potential VETO from the Brazilian government could thwart a tie up. Analysts said that the chances of a full takeover were slim and that an expansion of the companies’ existing joint venture was a more likely outcome.

 

Airbus and Indigo

Airbus SE said this week it had completed a record-setting order for 430 jets from four airlines.  These four airlines are linked to a U.S. private-equity firm.  This one announcement narrows the gap opened up by rival Boeing Co. on new plane deals in 2017.

The European plane maker booked the order first outlined at last month’s Dubai Airshow for A320neo family jets.  These 430 jets are destined for carriers linked to Indigo Partners LLC: Frontier Airlines in the U.S., Hungary’sWizz Air Holdings WIZZ PLC, Mexico’s Volaris and JetSmart, a new Chile-based carrier.

The sale is the biggest-ever bulk buy of planes in terms of aircraft number, with the jets carrying a list price of $49.5 billion before discounts that analysts estimate could run as high as 60%. Airbus and Indigo didn’t disclose the actual terms.

Boeing 797

Boeing says its time for a new aircraft.  The next new Boeing, known as the “new midsize airplane,” and unofficially, the 797, would likely be a double-aisle jet.  The long process of design, building, testing, etc would mean the aircraft is not  intended for delivery until around 2025.

The goal is to meet airlines’ needs for a plane bigger than the single-aisle 737, and smaller and with less range than the 787 Dreamliner. The new plane would overlap with the discontinued but still widely used 757 and 767, ferrying 200 to 280 passengers up to around 5,000 nautical miles.

The market for such a plane is questionable, which is one reason Boeing has not started developing it yet. The last 757 came off the line in 2004, and while airlines might like a replacement, it hasn’t been a major priority.

And Airbus has an aircraft in that space already.  It can elongate the popular single-aisle A321.  This would be at a lower cost and lower execution risk, since it wouldn’t be a completely new plane.

That doesn’t mean pursuing the 797 is a bad decision, just one that needs to be done with caution.

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