Doug Parker, CEO of American Airlines, appeared on CNBC’s Squawk Box and says that Donald Trump isn’t the only one that has a problem with Boeing’s prices.
We have a great relationship with Boeing. Donald Trump’s not the first person that’s complained about their prices, I can assure you that.
Parker is no stranger to pushing back aircraft orders, American has delayed delivery of Airbus A350s.
However Boeing’s commercial aircraft prices are a whole different universe from Air Force One.
- Commercial aircraft manufacturing is a highly competitive business, and in many ways becoming increasingly so (although demand for large narrowbodies may exceed supply in the short term) as Bombardier becomes a more significant player now that Delta has placed a large order for their CSeries.
- Air Force One is a bespoke product ordered by a single customer. There are high end VIP jet models, but something that not only offers secure communications but can sustain a nuclear blast and repel missile attacks simply doesn’t have a well developed competitive market.
- Large airline aircraft orders and government aircraft orders follow distinctly different processes.
American Airlines Boeing 787-9
So while Parker was trying to be funny, and deflect questions like what the appropriate cost of Air Force One ought to be (it’s really hard for anyone to offer a right answer to that question) but more importantly whether a company ought to be concerned by a political environment where the President lashes out at individual companies and potentially punishes them in business dealings after they criticize him in the media, there’s really not a whole lot of similarity to the negotiating tactics of American Airlines and Donald Trump over Twitter.