He cites JP Morgan with an observation that not all of the delivery slots for A320ceo's are filled for 2015 (2014 is full) and therefore it would be a good decision not to boost output further.
Let's have a look at the current number of open orders for the A320ceo as well as those of the B737NG.
Here is how the backlog of A320ceo's develops if there would not be any new sale nor any cancellations. Of course there are some "risk positions" in the backlog: Kingfisher, the remaining Delta (Northwest) and United order and Mandala come to mind...
If we suggest a steady output of 42 aircraft a month (11.5*42 for the whole year as we have to subtract a few aircraft due to the summer and winter vacation times), there would be around 420 A320ceo still to deliver when the A320neo will hit the market in October 2015. This is probably not enough to hold production steady in 2016 and 2017 at a rate of 42/month, as the production of the neo model cannot be ramped up fast enough. But if there are not too many cancellations, it seems to be manageable to get enough orders to come through the transition phase with around 40 deliveries per month.
Now let us have a look at Boeing - there are 2174 open orders for the B737NG and 451 firm orders for the B737MAX (May 1st, 2012):
We can see that Boeing needs another 500+ orders for the NG to hold the line steady at the 42/month rate that Boeing will reach in 2015 until the B737MAX will be ready in late 2017. So there is considerably more pressure for Boeing to "generate" sales. The result will probably be evident at the Farnborough Airshow, when UnitedContinental will announce their decision. John Leahy already acknowledged said that Boeing won this deal on price...
So it could very well be that Airbus started the "price war" by offering the A320neo with no or very little premium compared to the B737NG but of course (although otherwise suggested by Boeing) superior performance and forcing Boeing into the MAX. Now, to fill up the delivery slots until the MAX hits the market, Boeing has to undercut the price of the A320neo with the NG even further.
This price war has a secondary effect on the "newcomers" such as Bombardier with their CSeries, Irkut with the MS-21 and COMAC with the C919. They have to compete against products that are not only well established with a production system that is "learned out" (or very cost effective), but also against two giants who are fighting against each other with big money.