Case Analysis: THE RISE OF AIRBUS, 1970-2005
I. Brief Summary of the Case
Airbus’s early history dates back to 1960s. Unable to develop a commercially viable passenger jet during the post war years, French aircraft manufacturers decided to form alliance with other aircraft manufacturers to compete with the American jet makers. During the Paris Air Show of June 1965 the French aircraft executives initiated a series of informal meetings between representatives of the major European airline carriers and aircraft makers to discuss the possibilities of building a European short-to-medium-range 250 to 300 seats wide body jet called “AIRBUS”. During the next two years, representatives of the major French, British, and German aircraft companies lobbied their government for financial assistance in support of the Airbus project. In 1967, government officials representing the three European nations signed an agreement approving the joint development and production of an airbus. The approved airbus model was A300. The project was launched shortly thereafter, but not a single A300 was ordered by any air carrier during 1967, 1968, and 1969. With no orders in sight, the British government was reluctant to keep on investing in the risky venture, and in 1969 announced its decision to withdraw from the project (it rejoined ten years later). In 1970, French and German governments went ahead and formalized their partnership, creating Airbus Industrie – a cooperative partnership (or consortium) registered under French law as a “Grouping of Economic Interests” (GEI). In 1971, Spanish aircraft manufacturers associated with Construcciones Aeronauticas SA (CASA) joined Airbus Industrie as a junior partner. Throughout the first five years of operation, Airbus Industrie struggled as total orders fell well below the minimum set by the partners as a precondition for launching the project. Bernard Lathiere took the helm of Airbus – February 1975 – total orders of the A300 numbered 20...
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