The History of the Boeing can be traced back to the year 1916. The Boeing defined the modern jetliner. It is committed to be the leader in commercial aviation industry by making and offering airplanes and services that offer high quality design, efficiency and value to customers all over the world. More than 12,100* Boeing commercial jetliners are in are in operation currently It flies passengers and freight more efficiently in comparison to the other carriers in the market.

The Airbus

Airbus was made official in the year 1970. The aircraft was given the name “Airbus” because it was an aviation term used by the airline industry for commercial airlines. Also, it was an acceptable term for the French linguistically (Wikipedia, 2006).The airline made its first maiden voyage in the year 1972, its first production model being the A300.

History of competition between Airbus and Boeing

Boeing is the world’s largest aerospace company in the world and a stiff competitor to the Airbus in the commercial aircraft industry.

The rival companies do not share comfortable diplomatic relations.

In 1992, an agreement between the companies stated the extent to which subsidies were allowed from their respective governments. This agreement has proved to be futile.

Both companies blamed one another for not following the rules and regulations of the agreement. The Boeing filed a formal complaint in October 2004 (WTO, 2006).

The current project status says that the A380 aircraft is intended to go head on with the Boeing 747. For the first time the Airbus had surpassed rival Boeing for delivering the more number of aircrafts in a single year.

Airbus introduced in January 2005 the double-decker A380 in hopes of being taken back to the market once again. The A380 is the world’s largest passenger plane with two decks and seating for 555-840 people.2005 was the fifth year in a row that Airbus swept over fifty percent of the market share in order intake. However, problems with the A380 are likely to bring this streak to a halt this year. The delays in the manufacturing and delivering of the A380 are 24 proving to be very damaging.

In June of this year, Airbus had mentioned a second delay in the delivery of expected aircrafts, which is leading to a decrease in orders and shares.

FedEx reversed its order for ten A380’s listed at $300 million dollars each.

Instead, the company will purchase fifteen of Boeing’s 777 freighters listed at $235 million each (Wilber, 2006).

Airbus still has 166 orders listed, but further delays and frustration can easily cause Airbus to lose more sales to Boeing. The year 2006 is the biggest year yet in the battle between Airbus and Boeing for market share.

1.2 Compare the development of aircraft-models between the two companies. Are there trends in the movements of profits, planes sold, planes produced etc. between these two firms over the last 20 years ?

Airbus

The first airplane introduced by Airbus was the 300 seats A300. The A300 was the world’s first twin-aisle aircraft with two engines. Then in 1984, Airbus announced the production of the A320 series aircraft. The A320 is smaller than the A300 because it seats about half as many people. The A320 has the widest single-aisle fuselage on the market. It is also the most modern because of its fly-by-wire technology used in the cockpit. In 2004,Airbus for the first time had surpassed rival Boeing for delivering the most aircrafts in a single year. Airbus introduced in January 2005 the double-decker A380 in hopes of taken back the market once again. The A380 is the world’s largest passenger plane with two decks and seating for 555-840 people.

Airbus falls under the umbrella of its parent company EADS. Their source of revenue is derived from two sectors of operations. Civilian aircraft manufacturing, lead by Airbus, accounted for 78% of its sales in 2005, and its military division the other 22%.Sales by countries and regions break down as follows: France 10%, Germany 9%,United Kingdom 8%, Europe 12%, North America 26%, Asia/Pacific 22%, Middle East6%, Latin America 3%, and others 4% (Euronext, 2006).In 2005, Airbus experienced their best year in company history, acquiring 1,055firm new orders for aircraft valued at around $95 billion. That gave Airbus a bigger market share in terms of aircraft units at 52% and 45% in terms of value (Airbus Annual Review, 2006). The addition of these firm orders enabled Airbus to maintain a strong backlog of 2,177 aircraft valued at $220 billion, the highest it has ever been, continuing to be ahead of the competition for the sixth consecutive year (Airbus Annual Review,2006). A majority of the orders came from Asia and the Middle East, in addition to many in Latin America and several low cost carriers in Europe. The largest orders came from China, with a boost from the orders for the A380, bringing the total to 219 aircraft. Leasing companies accounted for another 195 aircraft (Airbus Annual Review, 2006).

Boeing

The Boeing 747, the original “jumbo jet” with its distinctive upper-deck profile, is among the fastest airliners in service. The four-engine airplane, with seating capacity of more than 400, has been crisscrossing continents for four decades.Currently, Boeing engineers are developing a new and improved member of the 747 family. The larger 747-8 will offer the lowest operating costs and best fuel-efficiency of any large passenger freighter airplane. At the same time, the jet will set a new environmental benchmark with a substantially cleaner and quieter footprint than competitors in the large twin-aisle market.

Boeing’s commercial fleet consists of 14 models spread across 5 aircraft families. It has built approximately 85% of the industry’s current fleet and, until recently, regularly captured 60-80% of orders and deliveries. The flagship of the Boeing fleet, the 747-400, holds 412 passengers in the standard three-class configuration and as many as 550 in certain “high-density,” all-coach configurations used mainly on Asia routes. More than three decades after the jumbo was introduced, demand for it remains strong. Boeing delivered 25 747’s in 2000, down from47 planes in 1999, and had an order backlog for 80 more.4 At the corporate level, Boeing had revenues of $51.3 billion, net income of $2.1 billion, an equity market capitalization of $58 billion, and 198,000 employees at year-end 2000. Sales of commercial aircraft generate almost two-thirds of total revenue while sales of military aircraft, missiles, and space systems account for the rest. In addition to being the US government’s second

1.3 What are the facts and what are the main arguments in the dispute between the two companies over subsidies/governmental support

In the news recently Airbus and Boeing have been feuding with each other over subsidies. These subsidies make it possible for the two companies to make a new plane that will not be released for up to five years. It take almost five years from the time it is approve to be in production until its delivered to its customers (testing and research and7development are added into the five years). During this stage in the process from designing to delivery, Airbus and Boeing compile very large debt until the planes are sold and they make the money back. In 2002, the European Union (EU) and the United States agreed to keep subsidies fair between the two companies. Although Boeing consistently argues that Airbus has received too much government aid, while Airbus complains that Boeing receives bogus research and development subsidies from NASA and the military. The World Trade Organization (WTO) is consistently mediating Boeing and Airbus to settle these claims against one another.