Order is icing on Boeing cake

FARNBOROUGH, England — Boeing wrapped up its last day of presentations at the Farnborough Air Show on Wednesday with a bellwether order that sealed the show's success for the commercial-airplane division.

The influential chairman and chief executive of International Lease Finance Corp. (ILFC) gave Boeing a huge boost with an order worth $1.2 billion at list prices, covering three Boeing models including the new 787.

And in comments after the news conference, ILFC's Steven Udvar-Hazy offered only a reserved welcome to the new A350 XWB, which Airbus announced this week as the big fix for its ailing wide-body strategy.

In an interview before leaving for Seattle, Boeing Commercial Airplanes CEO Alan Mulally gushed over the day's strong endorsement from Udvar-Hazy.

Mulally also spoke about the next jet-development program just over the horizon — the 737 narrow-body replacement — but pointedly refused to be drawn into whether the Puget Sound region has an edge in winning final assembly of that jet.

ILFC ordered six 737 narrow-bodies, two large 777-300ER wide-bodies and two new 787 midsize wide-bodies. Udvar-Hazy said he's also interested in the 747-8 jumbo jet in both freighter and passenger versions.

Although ILFC later in the day ordered six Airbus A320 narrow-bodies to balance those 737s, it didn't order any Airbus wide-body jets, underlining their poor potential for leasing to airlines.

At ILFC's news conference on the Boeing order, Mulally described Udvar-Hazy as "our number one customer in a lot of different ways" and "arguably, absolutely the top in our business worldwide."

That perspective, Mulally explained later, is based on Udvar-Hazy's building a massive portfolio of airplanes, leased to a host of airlines across the globe. The executive has ordered 706 Boeing and 600 Airbus jets since founding ILFC in 1977.

"To have Steve again endorse, representing all the airlines in the world, the entire Boeing airplane family, absolutely thrills all of us at Boeing," Mulally said.

Udvar-Hazy also said Boeing and Airbus shouldn't rush their upcoming development programs, expected around 2012 to 2015, to replace their narrow-body 737 and A320 families.

He said he and Mulally had had "some off-site secret meetings ... to focus on what the airlines will need five, 10, 15 years from now."

"It's really looking at a crystal ball," he said. "It gets a little hazy."

That 737 replacement program will be important for jobs in the Puget Sound region, just as was the winning of final assembly of the 787, with a $3.2 billion tax-incentive package in 2003.

But asked if the region was favored for final assembly of that 737 replacement jet, Mulally was pointedly noncommittal.

"We are so early in the process that we haven't had any discussions about the final assembly of a 737 replacement," he said. "We have a great team on the 737 [at Renton]. They are doing tremendous work. It'll be a number of years until the place where we get to the production plan."

The Puget Sound region, Mulally added, must "continue to focus its competitiveness" to keep the next airplane.

The A350 XWB

In the run-up to Farnborough, Airbus suffered from constant bad news: poor wide-body sales, big A380 delays, financial penalties, stock-price collapse and resignations of top management.

No blockbuster orders had been expected at the show. The success of Airbus at Farnborough depended entirely on it effectively marketing its new A350 XWB concept.

After the ILFC/Boeing news conference, Udvar-Hazy answered questions from journalists on the new A350.

"[The A350] is pretty much what we've been telling [Airbus] back in March and April," Udvar-Hazy said. "We haven't seen the final pricing. We want to see the performance guarantees. I think it's a step in the right direction."

But the task ahead for Airbus is difficult, he indicated.

"The challenge for Airbus is to cover the 787 and 777 with one platform, with one wing and one engine," he said.

ILFC has the largest fleet of A330s in the world, and the airlines that operate those airplanes are the natural customers for the A350. Udvar-Hazy said some may switch to the 787 because the A350 will come four years after the Boeing jet enters service in 2008.

"We have seen a few airlines that are time-sensitive that are now more motivated to go 787. If everything else had been equal, they might have gravitated to the A350," he said. "We're seeing a little bit of that. But not on a large scale."

And the man who had in March lambasted the old A350 design as inadequate also offered some public reassurance that Airbus will work through its challenges.

"In the next three months, [the A350] is going to get a lot of their attention," Udvar-Hazy said. "And I have no doubt in my mind they are going to go ahead with the program. They have to go ahead."

Aviation fun

Udvar-Hazy, an immigrant from Hungary to the U.S., drew laughs with his explanation of the cultural differences between Airbus and Boeing.

"Being a Hungarian, I understand the French-German issues a little better," he said. "At least at Boeing, we don't have to deal with understanding history as well as we do at Airbus.

"Airbus, when everything is going well, they are Europeans," he said. "When things get rough, they are French, German, Spaniards, British."

Most top executives will have left the show by today, though officially two trade days remain. The show opens Saturday to the public, who'll flock to the flying displays.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com