Airbus vs Boeing:

1
Airbus vs Boeing Advantage Through Unfair
Competition
Group 3 Inge-Lise Peetz Vanessa Bertelli Kapil
Sharma Tom Farrell Eric Heurtaux
2
Aircraft Industry Background

• Dominated by 2 players Boeing and Airbus
• Strategic sector supported by governments (e.g.
  due to links with defense)
• New designs require substantial investments and
  sales to breakeven
• Cyclical demand, economies of scale, barriers to
  entry
• Increasing competition promotes rationalization
  and consolidation

3
Boeings Concessions and Airbus Broken Promises

• Dumping
• 1978 Airbus-Eastern dumping case
• 1979 GATT treaty forbidding uneconomic pricing
  for airlines
• Subsidies
• 1980s 10B EU subsidies for Airbus
• 1988 German 2.4B subsidies. US plans Super
  301 action
• 1992 Airbus Accord govt subsidies capped at
  33 of RD
• Merger Concessions
• 1997 EC approval for merger with MDD subject to
• Boeing sharing spillover bonus from govt-funded
  defense contracts.
• Boeing not interfering with supplier-manufacturer
  relationships.
• Canceling exclusive supplier contracts with AA,
  Delta and Continental.

4
Airbus is a Flawed Entity

• Politics and Ideology
• 26B State Intervention
• Lack of Transparency
• Huge Inefficiencies
• Poor Management / Governance

• Boeing Maximises Shareholder Value
• Huge Strategic Bet (747)
• Brutal Re-engineering (40,000 jobs cut)
• but still subject to market forces (178m loss
  in 1997)

5
Airbus Competes Unfairly

• Strategic trade policies exist. Airbus and the EU
  have used them unfairly
• Airbus has forced unfair concessions from Boeing
  and has broken its promises
• Airbus is not subject to market forces while
  Boeing is