CASE STUDY ON

AIRBUS

Abhishek Aggarwal Abhishek Mahajan Abu Bakar Agraj Bhartiya

Amarnath Mishra

GROUP 1

Introduction • Growth of Airbus • The competition in the aerospace industry• How Airbus achieved a leadership position in the

aerospace industry • market share increasing from 13% in 1995 to 57%

in 2002• Airbus's A-380 aircraft and how the success of

this model could provide a competitive advantage for Airbus.

Boeing's Nightmare

• October 2002, The Seattle Times : Boeing's sole competitor, Airbus Industries (Airbus) had bagged an order from Easy Jet for 120 A-319 jets.

• From the mid-1990s onwards, Airbus had steadily increased its market share.

• It also accused Airbus of producing aircraft for which it had not received orders and creating a glut in the market.

• Analysts were of the opinion that Airbus was able to increase its market share because of the financial support it received from its consortium partners.

• Analyst also attributed Airbus' success to its fuel-efficient jets, which were economical to run.

History of AIRBUS• In late 1960’s Britain, France and West Germany launched the

Airbus Project.• Airbus was a desperate attempt by the European governments

to end the monopoly of American manufacturers in the aerospace industry.

• Big three of Europe - Britain, France and West Germany - came together to salvage European pride and industry.

• Due to differences with the other partners, Britain quit the project in July 1967.

• In 1970 the Airbus Project was reorganized and named Airbus Industries, a Franco-German company under French law.

• In 1971, Spain joined the consortium with 4.2% stake through state-owned Construccciones Aeronautics S.A (CASA).

• Initially, Airbus had its headquarters in Paris; in 1974 the headquarters were shifted to Toulouse (France).

Cont…• Airbus' first product was the A-300-B - a wide body twin-jet plane with a

capacity of 226 passengers. • The next product was the A-300-B2, a 250-seater. • By the end of 1975, Airbus had orders for 55 aircraft. By 1978, Airbus' orders

had increased to 133, and it had a 26% market share by value. • It also launched A-310 with a 218-passenger capacity in the two-class

configuration. • In 1979, British Aerospace Systems (BAE Systems) entered the consortium

with a 20% stake, and in the same year, Airbus announced that it would launch a single-aisle aircraft with a seating capacity of 130-170; the aircraft was later called the A-320.

• In 1979, British Aerospace Systems (BAE Systems) entered the consortium with a 20% stake, and in the same year, Airbus announced that it would launch a single-aisle aircraft with a seating capacity of 130-170; the aircraft was later called the A-320.

Problems

• In the early 1980s, Airbus experienced difficulties in financing the A-320 project.

• While the French government had approved the project, both British and German partner governments wanted more time to measure the market potential for the plane.

• Another problem was that the consortium had not yet made money on products already in the market .

• With Airbus's increasing market share, Boeing began to accuse Airbus of using unfair trade practices by getting heavy subsidies from its European governing partners.

• The US government too started pressurizing the EU to reduce subsidies to Airbus.

Conclusion• Airbus succeeded because of its production efficiency

and innovative product development. • Airbus decided to enter the super jet category (400

seater). • In 1998 it announced that it would be developing a super

jumbo jet with a planned initial investment of $10 billion.• Airbus's (A-3XX)ended the monopoly of Boeing's 747 in

the over-400 seats category by introducing A-380 that was a double-decker plane with a seating capacity of 555 passengers (137 more than the Boeing 747).

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