Discuss the differences between the strategies of Airbus and Boeing in the Jumbo Jet market up to 2001.

Question

What will be an ideal response?

Answer 1

Airbus industry was formed in 1970 as part of GIE. With the creation of EADS in 2000 by the merging of French, German and Spanish companies, Airbus was recognized as a subsidiary of EADS and a separate company. Prior to this Airbus was heavily subsidized by the European governments and had an unfair advantage against Boeing. The advent of the EADS was important in the history of Airbus because EADS made Airbus as flexible as any multinational company and enabled it to gain significant cost savings by switching production to the most efficient cycle. The Airbus A300 delivered in 1974 was the first short to medium-range aircraft seating 345 passengers and traveled 2000 to 4000 nautical miles. EADS had revenues of €24 billion in 2000 and 70% of its sales were from Airbus. At this time 60% of the world's airline traffic flew routes less than 2500 nautical miles and the short to medium-range airliner was virtually nonexistent. The Airbus A300 capitalized on this market need and further improved the company’s prospects by launching the A310 in 1983 with a smaller long-range wide body. Airbus realized that it was very important to have families of aircraft available to fill various niches for a variety of customers and this became their strategy at the time.
Boeing was founded in 1916 and Seattle, Washington. Boeing merged with McDonnell Douglas Corp. in 1987 and became the world's largest aerospace company. 60% of Boeing revenues of $58 billion came from commercial airplanes and 40% of sales were from exports. Boeing also sold aircraft to NASA and the military. Similar to Airbus’s strategy Boeing had a variety of body configurations, flight ranges and passenger capacity to offer in the market. It offered the 727, 737 as short-range aircraft; the 757, 767 and as large body, medium-range aircraft; the 777, a medium to long-range wide body aircraft launched in 1995; and the 747, a massive wide body aircraft that could carry 400 passengers and fly farther than any commercial airliner. Boeing cut inventory costs by streamlining supplies, reduced the number of special features produced for different airlines and reduced work force levels, thus achieving lower costs for its airplanes. Boeing moved headquarters from Seattle to Chicago in May 2001. The main advantage that Boeing had above Airbus was its dominance in the 747 sector.