Boeing Bonanza

TWA "buys American"

On Thanksgiving Day in London, officers of Trans World Airlines and Europe's Airbus Industrie smiled, bantered and made a handshake deal. TWA, the last of the major U.S. lines to order an intermediate-range jet fleet for the 1980s, indicated that it would choose the European-made Airbus A310. But then Boeing, the apparent loser, put its flaps up and accelerated. The Seattle company dispatched E.H. ("Tex") Boullioun, president of its commercial airplane operation, to TWA headquarters in Manhattan. Boullioun improved Boeing's terms and worked some blue-yonder magic.

Last week TWA got off the Airbus and decided instead to buy ten Boeing 767s at a cost of $500 million, with an option for ten more. TWA had difficulty choosing between the 767 and the A310 because the planes are so much alike: both are snub-nosed, wide-bodied, twin-engined, fuel-efficient craft. But the Boeing seats seven passengers abreast and the Airbus eight. The TWA order for 767s will probably grow to 40 or 45 by 1987. Total cost: $2 billion. Coming on top of orders from United, American and Delta, the TWA deal further assures Boeing's world supremacy in commercial plane manufacturing.

In fact, the aerospace industry is the U.S.'s second largest exporter (after agriculture), and sales of commercial jets and spare parts make up $5 billion of the industry's $9 billion contribution to the U.S. balance of payments. Until the mid-70s, U.S. planemakers had about 80% of the commercial market in the non-Communist world. But the technological success of the Anglo-French Concorde convinced Europeans that they could become powers in mass-transport aircraft competition. The Airbus consortium of West Germany, France, Britain, Spain, The Netherlands and Belgium rolled out the economical A300 and smaller, more advanced A310 models, and lately they have captured 40% of the commercial market.

Still, several factors tipped the balance in Boeing's favor. For TWA, Boeing increased the 767's seating capacity from 198 passengers to 203, the same as the Airbus; agreed to speed up delivery schedules; gave generous financial terms and new guarantees on fuel economy, performance and maintenance requirements. Says a senior TWA executive: "This was hardball playing all the way, and Boeing's offer simply got better and better. They were determined not to let this one get away."

The TWA order highlighted a recent trend: U.S. lines are continuing to buy American-made planes, while some big non-American carriers are starting to switch to the Airbus. Historically, Air France and Lufthansa bought Boeing but, although they continue to acquire 747s, neither line has ordered any of the new mid-range Boeings since the Airbus A310 was introduced. Among the reasons: Airbus is more fuel efficient than the 767 for trips under 500 miles and better suited to shorter European distances. Except for the planes that it sold to Eastern two years ago, Airbus has yet to crack the U.S. or Canadian market. The battleground is spreading to the Middle East and North Africa, but with an astonishing backlog of almost $20 billion in orders, Boeing is still way ahead.

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