Airbus Vs Boeing

Essay by lafdaCollege, UndergraduateB-, September 2009

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Airbus and Boeing compete in manufacturing large commercial airliners. Airbus' product line includes the A330, A340, and the mammoth A380 which first flew in April 2005. In 2005, Airbus received orders for 1111 aircraft and earned revenue of €22.3 billion. Boeing's product line includes the 737, 777, and 747. In 2005, Boeing received orders for 1031 aircraft and earned revenue of $22.7 billion from sale of commercial aircraft.

Until 2001, Airbus was a marketing consortium established under Frenchlaw as a "Groupe d'Intérêt Economique". The four shareholders - Aerospatiale- Matra (37.9%), British Aerospace (20%), Construcciones Aeronauticas (4.2%) and Daimler Aerospace (37.9%) - performed dual roles as owners and industrial contractors.

Most major decisions required unanimous approval of the shareholders.

Airbus was obliged to distribute production work among its shareholdersaccording to political as well as economic considerations.

Then, Airbus was re-organized into a single fully integrated limitedcompany. The objective was to streamline operations across nationalboundaries, reduce costs, and speed production.

The re-organization coincided with a consolidation of Airbus marketposition. As Figure 1 shows, from 31% in 1996, Airbus had steadily increased its share of the market to 57% in 1999, but then dipped sharply to 47% in 2000. Following the re-organization, Airbus recovered and maintained its share in the mid- to high 50s until 2005.

Figure 1: Market share, 1996-2005In April 2004, Boeing launched the new 787 Dreamliner with 50 firm orders from All Nippon Airways of Japan. The deal was worth about $6 billion at list prices, with deliveries scheduled to begin in 2008. With domestic and international capacity of 70.0 billion and 25.4 billion available seat kilometres respectively, All Nippon Airways is a major Japanese and international carrier.

Boeing had earlier denoted the 787 Dreamliner as the 7E7, and targetedthe new plane at the market segment of twin-engine medium to...