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Dogfight Over Paris: Airbus and Boeing Battle for Supremacy

Sunday, 16 Jun 2013 | 4:08 AM ET
Balint Porneczi | Bloomberg | Getty Images

In the heated battle for leadership in commercial airplanes between Boeing and Airbus, the two companies believe they are positioned to have strong showings at the Paris Air Show which starts Monday.

The gathering of aerospace and defense companies will feature each company announcing major moves and orders for new airplanes.

For Airbus, much of the attention will be focused on the company's new A350 XWB, which made its first flight Friday.

Boeing will be countering with the expected announcement it will launch a third, larger edition of 787 Dreamliner.

As is almost always the case, both companies will go to great lengths at the air show to sell the idea their company is winning orders and taking business away from their competitor.

Two Companies Soaring

This year the Paris Air Show comes at a time when both Airbus and Boeing are riding high.

In fact, it's fair to say each company is in the best shape they've ever been in financially.

Both are growing earnings and order books thanks to a global boom in demand for new fuel, efficient planes. Order backlogs for most of the planes built by Boeing and Airbus stretch for years, and in some cases until the end of the decade.

In the historically boom and bust cycle of commercial aviation, Boeing and Airbus are enjoying an upswing some believe could last until the middle of this decade.

Against that backdrop, each company will be justified in saying they see strong prospects for their planes and their businesses.

A350 Takes Off
The Airbus A350 XWB makes its maiden flight today and is scheduled to be delivered in the next year. CNBC's Phil LeBeau reports.

Beyond the Big Orders

While Boeing and Airbus will gain plenty of headlines announcing big orders from airlines around the world, the real question is how successful each company is at boosting profit margins, and squeezing efficiency out of their manufacturing plants.

That story that gets far less attention, but is by far the most critical challenge facing the companies.

Airbus has improved in recent years stripping out inefficiencies in its production lines.

For its part, Boeing has said its profit margins need to increase and it believes that will happen as it ramps up production of the 787.

But for each company, it is the launch and delivery of new models that will determine their success in 2014 and beyond.

After the numerous and costly delays, not to mention an FAA mandated grounding, of the Dreamliner, Boeing is focused on avoiding similar problems with the 737MAX.

Airbus is now on the clock with the A350 XWB which is scheduled for first delivery late next year.

So while you will see lots of headlines about new orders and new planes coming out of the Paris Air Show, remember that the story behind the story is how these two aviation giants are doing back at the plant where their planes are built.

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