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Airbus vs Boeing:

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New designs require substantial investments and sales to breakeven ... 1979 GATT treaty forbidding uneconomic pricing for airlines. Subsidies ... – PowerPoint PPT presentation

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Title: 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
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