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Airbus from Challenger to Leader

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Airbus from Challenger to Leader
CARPCS11_013145353x.QXD

Case

1/18/06

8:41 AM

Page 508

11

“In prior years we found customers somewhat cautious about supporting Airbus. This year it has become acceptable and, frankly, even stylish to laud Airbus and to chastise Boeing.”
–Excerpt from Bear Stearns Analyst Report as reported in Fortune in August 1999
“We are not here to buy market share.”
–Noel Forgeard, Chairman, Airbus Industrie, in August 1999

Airbus—From Challenger to Leader
BSTR/046
BOEING’S NIGHTMARE
In October 2002, The Seattle Times, a local newspaper published from Seattle, USA, where Boeing is headquartered, carried a headline story, Boeing Is Slipping to No. 2. According to the newspaper report, Boeing’s sole competitor,
Airbus Industrie (Airbus) had bagged an order from easyJet1 for 120 A-319 jets. easyJet was one of Boeing’s most loyal customers (Refer [to] Exhibit 1 for a profile of Boeing).
Analysts felt that after easyJet’s shift away from Boeing, other low-cost airlines would follow suit in opting for Airbus.
Airbus seemed all set to take market leadership in the low cost segment from Boeing for the first time. From the mid1990s onwards, Airbus had steadily increased its market

share. By the late 1990s, Boeing and Airbus had an equal share in the market.
Rival Boeing accused Airbus of resorting to heavy price cutting in order to beat off the competition. It also accused Airbus of producing aircraft for which it had not received orders and creating a glut in the market. But Airbus rejected the allegations, saying that it was in the market to make money and not to buy market share. Some analysts were of the opinion that Airbus was able to increase its marketshare because of the financial support it received from its consortium partners. However, others attributed
Airbus’ success to its fuel-efficient jets, which were economical to run.

THE TAKEOFF
This case was written by K. Subhadra, under the direction of Sanjib Dutta, ICFAI Center


References: 1. Healy, Tim, Competition: Battle for Asia, www.asiaweek.com, March 29, 1996. 2. Can Airbus Partners Unite? BusinessWeek, July 22, 1996. 3. Edmondson, Gail & Browder, Seanna, Angst at Airbus, BusinessWeek, December 23, 1996. 4. Edmondson, Gail & Browder, Seanna, A Wake Up Call for Airbus, BusinessWeek, December 30, 1996. 5. Peace in Our Time, The Economist, July 24, 1997. 6. Guyon, Janet, The Sole Competitor, Fortune, January 12, 1998. 7. Henkoff, Ronald, Boeing’s Big Problem, Fortune, January 12, 1998. 8. Edmondson, Gail, Up, Up, and Away at Last for Airbus? BusinessWeek, February 9, 1998. 9. Airbus Highflier Grounded, BusinessWeek, February 2, 1998. 10. Hubris at Airbus, Boeing Rebuilds, The Economist, November 26, 1998. 11. Boeing Admits It “Let Clients Down,” www.news.bbc.co.uk, September 8, 1998. 12. Fearful Boeing, The Economist, February 25, 1999. 13. Taylor, III Alex, Blue Skies for Airbus, Fortune, August 2, 1999. 14. Edmondson, Gail, Overhauling Airbus, BusinessWeek, August 2, 1999. 16. Airbus Gets a Boost, The Economist, April 6, 2000. 17. Rivals in the Air, www.news.bbc.co.uk, June 23, 2000. 18. Airbus Steals Boeing Ground, www.news.bbc.co.uk, November 30, 2000. 19. Useem, Jerry, Boeing vs Boeing, Fortune, October 2, 2000. 20. Airbus Draws First Blood, www.news.bbc.co.uk, June 18, 2001. 21. Matlack, Carol & Holmes, Stanley, Trouble Ahead for Airbus? BusinessWeek, October 1, 2001. 22. Bettering Boeing, The Economist, July 18, 2002. 23. Holmes, Stanley, Showdown at 30,000 Feet, BusinessWeek, July 22, 2002. 24. Airbus Just May Win This Dogfight, BusinessWeek, August 5, 2002. 25. Bashing Boeing, The Economist, October 17, 2002. 26. Matlack, Carol & Holmes, Stanley, Look Out, Boeing, BusinessWeek, October 28, 2002. 27. Boeing vs Airbus, The Economist, April 17, 2003. 28. Boeing Can Assemble 7E7 in 72 Hours, The Economic Times, June 6, 2003.
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