Airbus and Boeing A Comparison of Two Airline and Aerospace Rivals PREPARED FOR: BUSINESS COMMUNICATION CLASS PREPARED BY: JOSEPH D’AMATO BUSINESS INSTRUCTOR September 30, 2014 CONTENTS Airbus and Boeing A Comparison of Two Airline and Aerospace Rivals EXECUTIVE SUMMARY…………………………………………………………….iii Introduction……………………………………………………………………....1 Differing Approaches to Manufacturing…………………………….1 Competitive Tactics Backfire for Boeing…………………………….2 Opposing Views of the Future……………………………………………..3 Market Gambles—Both Firms “Bet the Company”…………………4 Reference List ii EXECUTIVE SUMMARY Boeing has been defined by its sheer technical bravado—and at times by its almost willful disregard for financial realities. The Seattle company designed the B-52 in a single weekend and launched the 747 jumbo jet in spite of the many observers who declared it financial suicide. Boeing is the world’s largest aerospace company and the largest exporter in the United States. It has built some 85 percent of the world’s jetliners and has dominated commercial aviation since the 1950s. But in 1999, the once unthinkable happened: rival Airbus sold twice as many planes as Boeing. This report is a comparison of these two competitors. iii Airbus and Boeing A Comparison of Two Airline and Aerospace Rivals Introduction Boeing has been defined by its sheer technical bravado—and at times by its almost willful disregard for financial realities. The Seattle company designed the B-52 in a single weekend and launched the 747 jumbo jet in spite of the many observers who declared it financial suicide. Boeing is the world’s largest aerospace company and the largest exporter in the United States. It has built some 85 percent of the world’s jetliners and has dominated commercial aviation since the 1950s. But in 1999, the once unthinkable happened: rival Airbus sold twice as many planes as Boeing. Airbus was founded in 1970 as a consortium of four European partners with homes in Great Britain, Germany, France, and Spain. Airbus would never have gotten off the ground without subsidies from the partners’ governments. In 2001, confident that Airbus could finally stand on its own, the partners turned it into a single private company. Like Boeing, Airbus manufactures a full fleet of planes. Unlike Boeing, it has no jumbo jet. As a result, when it approaches an airline with a package deal, it has no big plane to clinch the sale. Differing Approaches to Manufacturing Airbus and Boeing build their planes differently. At Airbus, large airplane components, such as wings, cockpits, engines, and landing gear, are produced by suppliers all over the world and flown in giant cargo jets to a final assembly building in Toulouse, France. There, a handful of employees operating giant machines snap the large plane sections together. The finished aircraft are sold by Airbus Industry, a sales and marketing joint .

1. Airbus and Boeing
A Comparison of Two Airline and Aerospace Rivals
PREPARED FOR:
BUSINESS COMMUNICATION CLASS
PREPARED BY:
JOSEPH D’AMATO
BUSINESS INSTRUCTOR

2. September 30, 2014
CONTENTS
Airbus and Boeing
A Comparison of Two Airline and Aerospace Rivals
EXECUTIVE
SUMMARY…………………………………………………………
….iii
Introduction…………………………………………………………
…………....1
Differing Approaches to
Manufacturing…………………………….1
Competitive Tactics Backfire for
Boeing…………………………….2
Opposing Views of the
Future……………………………………………..3

3. Market Gambles—Both Firms “Bet the
Company”…………………4
Reference List
ii
EXECUTIVE SUMMARY
Boeing has been defined by its sheer technical bravado—and at
times by its almost willful disregard for financial realities. The
Seattle company designed the B-52 in a single weekend and
launched the 747 jumbo jet in spite of the many observers who
declared it financial suicide. Boeing is the world’s largest
aerospace company and the largest exporter in the United
States. It has built some 85 percent of the world’s jetliners and
has dominated commercial aviation since the 1950s. But in
1999, the once unthinkable happened: rival Airbus sold twice as

4. many planes as Boeing. This report is a comparison of these two
competitors.
iii
Airbus and Boeing

5. A Comparison of Two Airline and Aerospace Rivals
Introduction
Boeing has been defined by its sheer technical bravado—and at
times by its almost willful disregard for financial realities. The
Seattle company designed the B-52 in a single weekend and
launched the 747 jumbo jet in spite of the many observers who
declared it financial suicide. Boeing is the world’s largest
aerospace company and the largest exporter in the United
States. It has built some 85 percent of the world’s jetliners and
has dominated commercial aviation since the 1950s. But in
1999, the once unthinkable happened: rival Airbus sold twice as
many planes as Boeing.
Airbus was founded in 1970 as a consortium of four European
partners with homes in Great Britain, Germany, France, and
Spain. Airbus would never have gotten off the ground without
subsidies from the partners’ governments. In 2001, confident
that Airbus could finally stand on its own, the partners turned it
into a single private company. Like Boeing, Airbus
manufactures a full fleet of planes. Unlike Boeing, it has no
jumbo jet. As a result, when it approaches an airline with a
package deal, it has no big plane to clinch the sale.
Differing Approaches to Manufacturing
Airbus and Boeing build their planes differently. At Airbus,
large airplane components, such as wings, cockpits, engines,
and landing gear, are produced by suppliers all over the world
and flown in giant cargo jets to a final assembly building in
Toulouse, France. There, a handful of employees operating
giant machines snap the large plane sections together. The
finished aircraft are sold by Airbus Industry, a sales and
marketing joint venture owned by the partners. Many once-loyal
Boeing customers now find innovative Airbus designs to be
technologically superior and more comfortable for passengers.
1

6. 2
Besides offering wider planes that accommodate wider
passenger seats, more overhead bin space, and more aisle space,
all Airbus jets share the same cockpit design. This uniformity
allows pilots to easily shift from flying one model to the next,
which can slash pilot training from 30 days to less than 8 and
save airlines millions of dollars annually.
Until recently, Boeing customized a cockpit for every model
and built airplanes like customized houses: Airlines could select
from 109 shades of white paint or 20,000 galley and lavatory
configurations. Worse yet, Boeing relied on a manual
numbering system to track the 4 million parts and 170 miles of
wiring needed for any one airplane. Compared to Airbus,
Boeing’s assembly lines were a beehive of activity, and its
systems were woefully inefficient. Boeing is now rebuilding its
operations and systems, but only after learning its lesson the
hard way.
Competitive Tactics Backfire for Boeing
With Airbus gaining ground in the mid 1990s, Boeing decided
to deal this challenger a crippling blow. Banking on its ability
to overhaul operations, cut production costs by 25 percent, and
double production of its profitable 747 line, Boeing offered
customers deep discounts on smaller jets to win multi-aircraft
orders. But its plan backfired. The company was besieged with
more orders than it could deliver on time. Production problems,
management turmoil, and a market slowdown (spurred by the
Asian economic crisis) collided head-on with Boeing's planned
system upgrades, sending the aerospace giant into a tailspin.
The company took years to recover, and the crisis triggered a
massive reengineering attempt. Boeing is now following in its
rival’s footsteps by outsourcing the manufacturing of more
components. “The goal is to transform Boeing into a company
focused on design, marketing, and assembly while letting others
build the parts,” says one Boeing spokesperson.

7. 3
Opposing Views of the Future
Boeing and Airbus have very different visions of the future of
aviation. Airbus believes that the number of people traveling
between the world’s biggest airports will grow faster than
airport capacity, boosting demand for a new generation of
gigantic planes. Airbus projects that the market potential for a
super jumbo is about 1,500 planes. So it is spending $12 billion
to develop the world’s biggest passenger jet, which it claims
will revolutionize air travel just as the 747 did. The wide A380
super jumbo double-decker will seat 555 passengers (and can be
configured to seat 800), surpassing Boeing’s 416-seat 747-400.
The A380 will showcase the latest technology and use light-
weight composite materials currently found in military aircraft,
making the A380 cheaper to operate per seat-mile than Boeing’s
747-400. But the super jumbo will fly no faster than today’s
jets. “Not worth it,” says Boeing chairman Phil Condit. After
taking a close look at the super jumbo, Boeing concluded that it
couldn’t make the plane pay. Boeing sees demand for new jets
in the 400 plus category ranging between 400 and 1,000 units
over the next 20 years. The company plans on servicing this
growth with its current 747 model and a new longer-range
version that could fly an additional 775 miles without
sacrificing airspeed or cargo capacity. In fact, Boeing thinks the
Europeans “have gotten themselves in a terrible jam. They just
won’t be able to meet their commitments,” says Joe Sutter, the
engineer who led the design team that produced the original
747. Airports would need to spend hundreds of millions of
dollars to upgrade terminals and taxiways to service the A380
and its two levels of jet ways. Furthermore, the super jumbo’s
huge capacity limits its use to only the most densely traveled
routes.

8. In contrast, Boeing is betting that airlines will begin using
moderately smaller planes to fly passengers directly between
smaller cities, bypassing congested hub airports.
4
The company anticipates that new airports will be developed to
accommodate passenger needs—especially in trans-Pacific and
intra-Asian markets. So instead of building a super jumbo,
Boeing will spend about $10 billion to develop a near-
supersonic plane that will be able to fly 20 percent faster than
today’s conventional planes without breaking the sound barrier
and without increasing operating costs. The Sonic Cruiser 20XX
will save one hour of flying time for every 3,000 miles flown,
which could change the way the world flies (perhaps as
dramatically as the introduction of the jet engine.
Market Gambles—Both Firms “Bet the Company”
If the Airbus vision is right, the newcomer will likely steal
some of the most lucrative sales from large markets such as
Japan, where Boeing holds a commanding market share. For
instance, if the Japanese buy the A380, Airbus could become the
undisputed world leader in the market for big jets, ending
Boeing’s 30-year jumbo-jet monopoly. Furthermore, if it turns
out that customers like the A380 better than Boeing’s current
747 or its planned long-range version, they may be tempted to
buy their smaller jets from Airbus as well as their larger jets.
On the other hand, if Airbus has misjudged the market demand
for super jumbos, the company and its backers would be facing
a financial catastrophe. For one thing, developing the proposed
A380 could zap resources from existing lines, which would hurt
the company's overall competitiveness at a time when Boeing is
devoting its engineering efforts to squeezing costs out of planes
and manufacturing processes while developing a smaller plane
for faster travel.

9. 5
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11. 6
Reference List
Cole, Jeff. “Flight of Fancy.” Wall Street Journal, 3 November
1999, A1, A10.
Edmondson, Gail, Janet Rae-Dupree, and Kerry Capell, “How
Airbus Could Rule the Skies.” Business Week, 2 August 1999,
54.
Holmes, Stanley. “Boeing Jettisons a Plant.” Business Week, 2
February 2001, 14.
Michaels, Daniel. “Europe’s Airbus Ready to Spread Wings as a
Company.” Wall Street Journal, 23 June 2000.
Michaels, Daniel. “Flying High.” Wall Street Journal, 25
September 2000.
Michaels, Daniel. “Giant Jet Gets Orders It Required.” Wall
Street Journal, 30 November 2000.
5 Pages
APA
SOURCES:7
You will be asked to use market sensing techniques to locate
new product concepts for your company. You select the firm
characteristics and the particular industry involved. In your

12. report, explain and apply the relevant concepts of market
sensing, research market sensing techniques and describe as
well as utilize sources germane for the particular market,
providing actionable findings and strategies.
In your paper on location of new product concepts, you will
address both industry and company market position within its
industry. The company may be interested in entering an industry
that is a new challenge e.g., an oil company that seeks to market
office systems, or find new opportunities in a market in which
they currently have a presence.