Boeing Versus Airbus by John Newhouse

Perhaps no industry offers such high-stakes, high-profile bets as aerospace. When the engineers at Chicago-based Boeing Co. or its archrival, France-based Airbus SAS, decide to build a new airplane, they put their companies on the line and draw the wealth of nations into the battle too.

Careers are made and broken. Tens of billions of dollars are laid at risk. Governments line up huge subsidies, tax breaks and research grants. Success in the effort requires the most precise and creative output modern industry has to offer.

Such is the battle of invention and exasperation that has consumed Boeing and Airbus for the last five years. Boeing, which had suffered devastating losses of market share and prestige, has stormed back thanks to its high-tech new airplane, the 787. Airbus, which had taken the lead in sales and buzz, has dashed that all with a production-line breakdown that has put its new airplane, the super-jumbo A380, two years behind schedule.

In the midst of this dogfight, Boeing has changed chief executive officers two times. Airbus, finding fault for the A380 breakdown, forced out one CEO. His successor then threw up his hands and left after only 99 days on the job. A purge there has taken out other high-profile executives who once seemed the best in their business.

The battle isn’t only in the corner suites though. Boeing has cut thousands of U.S. jobs and moved much of its new-plane production overseas, a huge chunk of it to Japan. Airbus is formulating a major restructuring that could lead to large-scale layoffs for the first time in the company’s 36-year history.

The converging, then diverging, flight paths of the two companies makes their battle for supremacy one of the great business stories of our times. And John Newhouse, a former New Yorker correspondent, takes up the challenge of relating it in Boeing Versus Airbus.

Newhouse describes Boeing — set in its ways, sometimes arrogant, but formidable in its planning and prowess — taking on Airbus. The corporate embodiment of European unity, Airbus built an astounding record of success and briefly topped Boeing in sales and orders before running aground amidst problems with the A380 and a French-German tussle over control.

Newhouse has the industry knowledge to tell this story well. His 1982 book, The Sporty Game, is a primer for an earlier era of competition. Back then, Boeing trounced its domestic rivals, Lockheed and McDonnell Douglas, while Airbus grew from improbable upstart to big-time player.

In Boeing Versus Airbus, Newhouse’s authority and insight pay off frequently for the reader. His analysis of Boeing’s decision in mid-2005 to cajole the U.S. government into launching history’s largest trade dispute is the most thoughtful writing on the topic to date. And a chapter on how Japan, and China, may be setting the stage for “an Asian Airbus” is the first in-depth analysis of a potential threat to both Boeing and Airbus.

Still, there are failings that compromise the book’s success.

The biggest issue — timing — Newhouse could do little about. By the time Airbus’ production line broke down last summer, Newhouse’s book was mostly finished. The Airbus troubles materially changed the competitive landscape and may jeopardize the A380.

Open nationalist hostility between German and French design engineers, a hectic rush to rewire new airplanes by hand and redesign substantial parts on the fly, a stock-trading scandal involving former chief executive Noel Forgeard — these events consumed the attention of the industry and its millions of interested observers most of last year. The reader is left with a sense that Newhouse gamely tried, but did not quite succeed, in keeping his reporting and analysis up to date.

Other problems are more self-inflicted. Newhouse too often provides lengthy discourses on events and decisions that are decades old and competitors that have turned to dust. Important as historic perspective can be, it comes at the expense of the more up-to-date events that cry out for Newhouse’s reportage and insight.

Newhouse also makes an unfortunate decision to repeatedly shift forward and back in time. His last chapter describes decisions leading to the launch of Boeing’s 787, events that would better have been examined early in the book. And he closes with a perfunctory look at Airbus’ decision to launch a challenger to the 787. The time-warp structure robs the book of narrative flow and leaves the reader without an ending coda offering the sort of thematic and original analysis at which Newhouse excels.

Newhouse delivers a book that is must reading for anyone in the aviation industry. And it’s an interesting and informative read for those who merely want to know more about the people and companies who build the planes on which they fly.

Newhouse smartly navigates the nuances of Boeing’s decision to launch a trade dispute over Airbus’ subsidies from European governments. In doing so, Boeing exposed itself to counterclaims about support from NASA and the Defense Department, not to mention the billions in Japanese government aid to Boeing’s Japanese suppliers.

Newhouse sniffs out a main Boeing tactic: Distract and delay Airbus from offering an alternative to the 787. And he astutely wonders whether the subsidy fight was a good idea, given that it started a tit-for-tat dispute that ultimately could jeopardize the industry’s access to billions in public support.

Newhouse also captures the difficulty of transforming companies on the scale of Boeing and Airbus. He describes the cultural crack-up that occurred after Boeing merged with McDonnell Douglas in 1997 and executives from the latter rankled Boeing employees with their hard-nose, bottom-line approach. And he shows how Boeing’s effort to modernize its production methods failed abysmally in the late 1990s, a time when its production line shut down because the company sold more airplanes than it could build. When suppliers and workers could not keep up with the pace of production, Boeing first had to shut down in order to sort out the mess.

The industry is filled with larger-than-life characters, and Newhouse describes many quite well. He is particularly astute on Harry Stonecipher, the complex, contentious former McDonnell Douglas executive who took charge at Boeing for a key two years until he was forced to quit after conducting an affair with a female executive.

Airbus’ leaders can be intriguing as well, but Newhouse never captures the new crop of leaders whose egos and unfortunate decisions have caused such calamity. Forgeard, whose possible implication in insider trading remains a potent political issue because of his close ties to French President Jacques Chirac, is just the start. Charles Champion, the engaging engineer who steered the A380 line directly into disaster, is not even mentioned by name. And the French-German tussle for control of Airbus is handled in antiseptic terms that do not match up to the monumental egos and nationalistic maneuvering involved.

There are passages when Newhouse shows a flair for storytelling. In one, he engagingly tells about the time Airbus sales executive Jean Pierson dropped his pants in the office of Steve Wolf, then chief executive of US Airways, a gesture designed to prove Airbus had run out of concessions. “I have nothing more to give,” Pierson said.

Strong as that tale is, it occurred in 1997, as did the Boeing merger with McDonnell Douglas. Boeing’s production-line shutdown is nearly a decade old too. The current fight has produced dozens of telling anecdotes, some of them repeated by Newhouse and credited to newspaper and magazine reports. Had Newhouse concentrated on finding such stories on his own, he might have much better informed the reader about the current state of events.

The battle between Boeing and Airbus is important and dramatic. Newhouse focuses on what is important — and even offers new insight that extends the debate on issues that matter. What Boeing Versus Airbus misses, though, is the human drama that propels this epic battle, and an up-to-date, forward focus that helps it come to life.