Boeing plans bumpy ride for Airbus

FOR wine connoisseur Lew Platt, a trip to France should be an opportunity to taste some prized vintages. But when he flies into Paris today from his San Francisco home, there will be little time to indulge his passion.

Platt, who owns a vineyard in California, is chairman of Boeing, the world's biggest defence and aviation company. He is in Europe to do battle with his arch-enemy, Airbus.

The venue for the confrontation is the Paris Airshow, where the world's aviation elite gather every two years. Platt intends to show his opposite numbers at Airbus that he means business and has no intention of backing down on the vexed question of state subsidies for aircraft development.

The World Trade Organisation is mediating in the dispute between the globe's two biggest plane makers. The EU claims that Boeing has received billions of dollars of US government cash while the Americans claim Airbus has relied on generous European aid to launch new models.

Platt, a tall and quietly spoken 64-year-old grandfather, has a reputation for being charming. But his pleasant manner disguises a core of steel. In his previous job, he almost singlehandedly turned computer giant Hewlett-Packard into a world-class company.

And the mailed fist emerged again when he fired Boeing chief executive Harry Stonecipher, who was caught in a relationship with a member of his own staff.

Before flying to Paris, Platt spoke in uncompromising terms about how he sacked his old friend: 'Harry was doing an excellent job and certainly it was a shock when the crisis came,' he says.

'But we had to ask Harry to leave after we looked at all the details behind the affair. In the end, we lost all confidence in his ability to lead the company.'

Stonecipher, who was married with children, had led a campaign at Boeing to raise ethical standards. He had also encouraged staff to blow the whistle on any suspected 'dodgy' behaviour. In the end, a whistleblower took action and Stonecipher was the victim. Platt says: 'We take ethics very seriously. Luckily, we have a very strong team and the company is powering ahead.'

What gives Platt confidence in the future is the strength of the company's management team. While the company searches for a replacement for Stonecipher, it has installed its former finance director, James Bell, as acting chief executive.

Bell was not one of the five candidates earmarked originally for the new job by the Boeing leadership, but his performance since March appears to have earned him a place on the shortlist.

But while Platt is an admirer of Bell's abilities - 'he is doing a terrific job' - he believes he lacks one vital skill necessary for running a global aviation company. That is experience.

Platt's years at Hewlett-Packard and later at the giant winery Kendall-Jackson Vineyards Estates, then as an adviser to President Clinton on trade, convinced him there is no substitute at the highest level for experience.

'This is not the place to learn on the job. It's not just a matter of running the operation, you have to make huge strategic decisions.'

In his short time at the helm at Boeing, Platt has insisted on a more modern, enlightened policy towards women. While at Hewlett-Packard in the 1960s and 1970s he faced the problem of middle-ranking women leaving the company. Platt insisted that they be allowed plenty of time off to have children and the result after a few years was that they returned to the company in droves.

In Paris, Platt must sell Boeing, which, as well as the management changes, has been going through a rough time. And he has to tackle the issue of Airbus and subsidies. He is confident of success. After a sluggish start, orders for the Boeing 787 'Dreamliner' have shot up to 266 and the planemaker hopes to reach more than 320 by the end of the year.

In sharp contrast, sales for the giant Airbus 380 appear stuck at about 150 and Airbus has been forced to announce a six-month delay before delivery at the end of 2006. Plus, the announcement for a launch of the mid-sized A350, which was expected to be made at the Paris Airshow, has now been put back to September.

Platt reckons he has the wind behind him on sales and financial performance. 'We like to think of ourselves as an engine operating on all cylinders,' he says. But the message on subsidies is blunt.

'Airbus is a profitable company and it does not need launch aid,' he says. 'We will not carry on discussions [with the EU and Airbus] until launch aid is taken off the table. This launch aid is the most egregious of things.'

Asked if Boeing would consider giving up its highly beneficial tax breaks, he answers simply 'No'. 'Both companies get tax breaks,' he says. 'We will not give up ours. If Airbus stops launch aid, we will put the tax breaks on the table, but not until then.'

It looks more than likely that both sides are heading for a costly legal battle at the WTO. Platt does not seem to mind. 'Look, this is not a trade war,' he says. 'This is not a war. No one is going to get killed. It is a dispute. At the end of the day, we are going to have to accept the verdict of the WTO.'

War or no war, Platt seems destined to be kept busy for the next two years. That will leave the wine buff, who owns more than 3,000 bottles, with little time to enjoy his 28-acre vineyard in the Napa Valley.

As he forcefully puts it: 'Damnit, I only spent one day at the vineyard this year.'