Airbus comes to US, puts more pressure on Boeing

July 30, 2016

By GlobalPost WriterPhilip LeBeau, CNBC

Photo taken on Jan. 17, 2012 shows an employee of aircraft manufacturer Airbus works on an Airbus A320 plane under construction at a production hall of Airbus in Hamburg, northern Germany. Airbus opened a factory in Mobila, Ala. capable of building up to 40 single-aisle A320 airliners per year from 2016.
Johannes Eisele

After years of battling Boeing for commercial and military jet orders in the US, Airbus is taking the battle to American soil. It is breaking ground on its first US final assembly plant in Mobile, Ala. and many believe this is just the start of Airbus' expansion in America.

"It is a great day for us," said Fabrice Bregier, CEO of Airbus. "It means we will be the only company in the world having assembly lines in America, Europe and Asia."

1,000 jobs now, more later?

Airbus plans to hire 1,000 workers for its final assembly plant in Mobile. The first employee was hired last month and hiring will ramp-up over the next 18 months as Airbus works toward the start of production in 2015.

As of right now, the Mobile plant will only build the Airbus A320 and A320neo models. Given the massive backlog in orders for the new narrow body plane, this is where Airbus needs the capacity.

However, the Airbus Alabama plant is about more than the A320. It's also about giving the European plane maker a better shot at landing US commercial and military orders in the years to come.

Airbus has no plans to build military planes in Mobile, but don't be surprised if that changes in the years to come. Washington has long given Boeing the leg up on major military aircraft contracts in part because the planes are built here in the US by American workers. Airbus will now be able to make that same offer when bidding on Pentagon contracts.

"It will enhance our image because we are procuring $13 billion from US suppliers, we have more than 1,000 employees so far but we are not seen as a US manufacturer," said Bregier. "We will be seen as a very good US citizen which is always helpful when deals with military contracts."

Airbus Pulls Ahead on Orders

The Mobile ground breaking comes just weeks after Airbus wrapped up a first quarter where it outpaced Boeing in orders and deliveries. Some of that was due to Boeing being unable to deliver any Dreamliners from mid-January through March.

Still, Airbus has been able to raise the pressure on Boeing in areas where Boeing has long been dominant.

Last month it landed an order for more than $20 billion with Lion Air out of Indonesia. Lion Air has long been one of Boeing's most loyal customers.

That order helped Airbus beat Boeing in the first quarter. It was a welcome rebound after Boeing edged Airbus in orders and deliveries last year.

British Air and the A350

Meanwhile, Airbus is close to landing another highly coveted order with another long-time Boeing customer.

British Air is negotiating with Airbus to buy more than $7 billion worth of A350 wide body planes. The new A350s would replace aging Boeing 777 models.

Boeing is working on a next-generation of the 777, called the 777X. However, a final design has yet to be approved and while it works on a new 777 many believe it leaves the door open for British Air to order A350s.

The wide-body commercial plane market is far more lucrative than the single aisle segment. The planes have book prices that are more than double the price on narrow body aircraft. It's also a segment Boeing has dominated for years with the 747, 777, and now the 787 Dreamliner.