When Boeing took 17 Airbus A340 jets from Singapore Airlines in 1999, the ripples went across the world of aviation. This was part of a larger arrangement that had taken place in 1995 when Singapore Airlines ordered 34 Boeing 777s-a surprise blow in the competitive environment between the two aerospace corporations.
Until the mid-90s, Boeing delivered only one version of the 777, the 777-200IGW- Increased Gross Weight, which later was dubbed the 777-200ER. During the 80s, Boeing understood that to give the 777-200ER a fighting chance on the market, it would have to secure an order for at least one plane from Singapore Airlines, obviously because the company was one of the most important operators for the Boeing 747 at the time. Still, Singapore Airlines officials claimed to be pleased with their A340-300 fleet, and Boeing continued to court the airline fervently, stating the 777 was to be its long-haul fleet’s eventual workhorse.
The deal was publicly announced in June 1999, on the last day of the Paris Air Show. Boeing announced it had reached an agreement to take over Singapore Airlines’ order for 17 A340-300s placed back in 1995. At the time, the airline ordered 34 777s with options for a further 43. The revelation came as a surprise to industry observers, leaving Boeing triumphant and Airbus infuriated.
John Leahy, at the time Airbus Senior Vice President and Commercial Director, was quick to evidence discontent, referring to the move on the part of Boeing as “an act of desperation.” He promised some sort of counter-attack but he would not give any details. Leahy also said that airlines had approached Airbus with a similar swap idea, this one having Airbus buying 777s, but it didn’t work due to economic viability.
The result of Boeing’s brave gamble was that Airbus ran ads extolling four-engine aircraft over twinjets such as the Boeing 777. A gigantic billboard was shown at the Farnborough Air Show in 2002 and full-page ads were taken out in London newspapers. Unfortunately for Airbus, this ad campaign sparked outrage among jet engine manufacturers, as they openly felt the ad campaign did more damage to their business than help it.
At the time, David Calhoun, president and CEO of General Electric’s GE Aircraft Engines-most didn’t mince words about Airbus’ campaign: “We are vehemently opposed to what Airbus is doing here… An ad like that is the last thing this industry needs right now.” The irony: Calhoun is now Boeing’s CEO.
But this strategic buy by Boeing massively paid off, for during a decade, Singapore Airlines had flown 46 777-200ERs and 12 -300s, whereas nowadays, it flies 23 777-300ERs, thus firmly setting the jet as a long-haul workhorse. The A340, on the contrary, was never able to achieve commercial success due to its rivalry with some fuel-efficient twinjets, such as the 777.
For Singapore Airlines, it was a win-win deal: the airline got to modernize its fleet with minimum financial impact from early retirements of the A340s. Thus, this audacious move by Boeing not only reconstituted the competitive dynamics between the two aerospace giants but also framed the future of long-haul aviation.