Aircraft makers plan battle for new market

Press, 5 January 1987, Page 4

Aircraft makers plan battle for new market

PHILIP BARBARA

Reuters (through NZPA) Chicago The world’s top three aircraft manufacturers are preparing to battle for a potentially huge market for a new generation of long-range airliners seating about 300 people. McDonnell Douglas’s decision to go ahead with its new wide-bodied MDII jetliner confronted Europe’s Airbus Industrie consortium, which has plans for a similar aircraft called the A 340.

Boeing, the Seattlebased industry leader, is expected by industry analysts to introduce an offshoot of its 747 to compete in the market. “This is going to be a long, dragged-out battle”

for buyers who need a 300-seat plane to serve long-haul routes, said Jerry Cantwell, an analyst at First Manhattan Company. Wall Street analysts said McDonnell Douglas’s decision represents a huge investment that offers an uncertain chance for a profit The British and West German Governments, which have been asked to pump about SUSI.S billion into the Airbus project have expressed concern that the market for a new workhorse might be too small for two new longrange jets. McDonnell Douglas said it would spend up to SUSI. 4 billion by the time the first plane rolls off the assembly line in early 1990. This includes SUSSOO million for de-

velopment costs and the rest for tooling, inventory and labour. After an intense 18month marketing campaign, McDonnell Douglas decided to go ahead with building the 270 to 330seat, long-range jetliner, saying it had orders for 52 aircraft from 12 customers. Despite the huge investment McDonnell Douglas is committing to the MDII, that cost is substantially less than that for an all-new plane because it is a derivative of the DCIO, said Mr Cantwell. “It is a less expensive, and therefore a less risky, approach toward staying in the wide-body jetliner business,” he said. “There is less to be lost” The MDU will have three new fuel-efficient engines and new cockpit technologies, but it will use substantial portions of the DClO’s design, as well as existing facilities and tooling. The plane is an updated version of the widely-used DC 10, but will be more fuel efficient requires only two crew on the flight deck instead of three and has a greater range. The rival Airbus consortium — grouping West Germany, Britain, France

and Spain — has yet to find buyers for its A 340 I and the go-ahead requires V ' funding from the member - Governments. The A 340 is expected to !;; be launched in March W 1987 and to - become H operational by April 1992. vlgj McDonnell Douglas ex- I pects to sell 350 of the MDlls by the year 2000, C Mr James Worsham, president of its Douglas - Aircraft division, said at a < news conference. But Mr if Cantwell said that he put the total market for aircraft of the same size as the MDU at only 500. Mr Robert Kugel, an < analyst at Morgan Stanley, said McDonnell Douglas made the right decision to launch the programme ’ because it needs to re- : -W main in the wide-body jetliner business. The assembly line enables the company to " spread out the fixed costs of keeping its other commercial jetliner and milltary airlift lines running, as he said. Mr Worsham said talks were under way with American Airlines ’ and United Airlines. Delta Air j? Lines is also widely rumoured to be interested. “I think the company 53® has a fairly good shot at breaking even on the MDII over the next 10 to V 15 years,” Mr Kugel said.