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Thousands of jobs could be shed by British Aerospace and its three partners in Airbus Industrie under plans for a radical overhaul of the European aircraft manufacturer. Proposals for restructuring the consortium with the eventual aim of turning it into a conventional public company will be presented to the Airbus board in late June. The four partners employ about 30,000 in Britain, France, Germany and Spain. Jean Pierson, Airbus managing director, said yesterday that the restructuring could enable it to make large cost savings of up to 20 per cent, making Airbus more competitive with its American rival Boeing. This could entail up to 6,000 job losses across the board, including more than 1,000 in Britain, but Airbus executives would not be drawn on the numbers. Mr Pierson said the biggest scope for cost-savings was in the ranks of white collar staff where there was vast duplication of activities such as purchasing. British Aerospace employs around 7,000 directly on Airbus work at two main sites in Bristol and Chester, but the total number of jobs in Britain dependent on Airbus work is put at 25,000. A 20 per cent cost reduction could result in up to 1,500 job losses in the UK. A further 8,000 workers are employed by Aerospatiale in France. The two other partners are Deutsche Aerospace and Casa of Spain. Airbus employs 2,000 people in Toulouse. The report on the restructuring of the consortium, drawn up by Airbus chairman Edzard Reuter will set out several options. These will range from retaining Airbus as a group of economic interests (GEI) to a much more fundamental overhaul whereby the four partners become equity shareholders in a conventionally structured company. Another option is to create an intermediate structure short of full plc status. Mr Pierson ruled out a flotation of Airbus in the foreseeable future. Under the present structure the workload of Airbus is parcelled out according to the shareholdings of each partner. BAe, which has a 20 per cent stake, makes aircraft wings. But this has been criticised as an unwieldy and inefficient system that increases costs massively. Converting Airbus into a plc would allow it to award work on the basis of competitive tendering. Crucial issues still to be resolved include what assets each partner would put in, how they would be valued and what overall authority Airbus would have. Germany has already warned that it will not help fund the next Airbus project, the $8bn (pounds 5.3bn) development of a 500-plus seater super-jumbo, unless the consortium is restructured. BAe has been pressing for Airbus to become a plc for nearly a decade. With Aerospatiale now apparently also committed to overhauling Airbus Mr Pierson said support for change was becoming overwhelming. "We are in the last hundred yards of the race and we are approaching crucial decisions," he said. "The enthusiasm is there now whereas 10 years ago there wasn't the spirit. Now all that has changed. The competition is tougher not just on price but on product and service and we have reached the point where

a full-length double-deck aircraft now in service. Some A380 launch customers deferred [2][3] delivery or considered switching to the 747-8 and 777F aircraft. then canceled. Airbus' advertising claims the A380 to have 8% less fuel consumption per passenger than the 747-8I and emphasizes the longer range of the A380 while using up to 17% shorter [5] runways.Northrop Grumman KC-45A vs Boeing KC-767 The announcement in March 2008 that Boeing had lost a US$40 billion refuelling aircraft contract to Northrop Grumman and Airbus for the EADS/Northrop Grumman KC-45 with the United States Air [8] Force drew angry protests in the United States Congress. As of April 2009 no airline has canceled an order for the passenger version of the A380. For airlines seeking very large passenger airliners. For the first [9] .4bn and will exceed the $4. as an option. with a lower price. Boeing's advertising claims the 747-8I to be over 10% lighter per seat and have 11% less fuel consumption per passenger. it was revealed that projected development costs rose $1. from 2012 Airbus will offer. [edit]EADS A330 MRTT . FedEx and the United Parcel Service canceled their orders for the A380-800 freighter. they also speculated that the company could [10] perhaps break even with maintenance and spare parts contracts. compared to the A380. On the other side. Boeing later won the contest.everyone realises it is time to do something. the two have been pitched as competitors on various occasions. In July 2011. Korean Airlines (5) and Arik Air (2). 2011. The price was so low some in the media believe Boeing would take a loss on the deal. with a trip-cost reduction of 21% and a seat-mile cost reduction of more than 6%. Upon review of Boeing's protest. In order to counter the perceived strength of the 747-8I.9bn contract cap by $300m. the entire call for aircraft was rescheduled. The precise size of the increase in maximum take-off weight is still unknown. the latest modification of Boeing's largest airliner. Later. The 747-8F's empty weight is expected to be 80 tonnes (88 tons) lighter and 24% lower fuel burnt per ton with 21% lower trip costs and 23% lower ton-mile costs than the [4] A380F. the Government Accountability Office ruled in favor of Boeing and ordered the USAF to recompete the contract. Boeing currently has only three commercial airline orders for the 747[7] 8I: Lufthansa (20). with a new call decided upon in March 2010. Following another delay to the A380 programme in October 2006. Airbus A380 vs Boeing 747 Cross-section comparison of the Airbus A380 and the Boeing 747-400 The wide-body Boeing 747-8. on February 24. is notably in direct competition on long-haul routes with the A380." Cost-cutting would be concentrated on the Airbus "bureaucracy". improved maximum take-off weight allowing for a better payload/range performance. British Airways and Emirates will be the [6] first customers to take this offer.

For example. China for production of its A320 series airliners. Boeing has since stated that it "outsourced too much" and that future airplane projects [14] will depend far more on Boeing's own engineering and production personnel. With Boeing being wholly responsible for the additional $300m [11][12][13][clarification ceiling breach. Outsourcing was extended on the 787 to the extent that Boeing’s own involvement was reduced to little more than project far) the Boeing 747-8 (GEnx-2B67). Partly because of its origins as a consortium of European companies. both companies use advanced technology to seek performance advantages in their products. aircraft procurement decisions are often taken according to political criteria in addition to commercial ones. assembly and test operation. [16] the Dreamliner's battery troubles will not cause customers to switch airplane supplier. [edit]Competition through provision of engine choices The competitive strength in the market of any airliner is considerably influenced by the choice(s) of engine available. needed] [edit]Competition [edit]Competition and comparison by outsourcing Because many of the world’s airlines are wholly or partially government owned. For example. and by automating the flight engineer's functions. airlines prefer to have a choice of at least two engines from the major manufacturers General Electric. Airbus has had fewer opportunities to outsource significant parts of its production beyond its own European plants. . a process which has helped Boeing achieve almost total dominance of the Japanese market for commercial jets. design. Rolls-Royce and Pratt & Whitney. and the Boeing 777[17] 300ER/200LR/F (General Electric GE90). For example. In general. the A300 made the most extensive use of composite materials yet seen in an aircraft of that era.S. Boeing and Airbus seek to exploit this by subcontracting production of aircraft components or assemblies to manufacturers in countries of strategic importance in order to gain a competitive advantage. and often succeed in striking commercial deals with Boeing and Airbus to achieve their objective. Boeing has maintained longstanding relationships with Japanese suppliers including Mitsubishi Heavy Industries and Kawasaki Heavy Industries by which these companies have had increasing involvement on successive Boeing jet programs. However. According to Airbus' John Leahy. was the first large commercial jet to have a two-man flight crew. In the 1980s Airbus was the first to introduce digital Fly-bywire controls into an airliner (the A320). Since then Airbus has established itself as a viable competitor to Boeing. in 2009 Airbus [15] has opened an assembly plant in Tianjin. Several notable aircraft have only provided a single engine offering: the Boeing 737300 series onwards (CFM56).$1bn increase (from the award price to the cap). the Airbus A350 (Rolls-Royce Trent XWB . the Boeing 787 Dreamliner is the first large airliner to use composites for most of its construction. the Airbus A340-500 & 600 (Rolls-Royce Trent 500). [edit]Competition through use of technology Airbus sought to compete with the well-established Boeing in the 1970s through its introduction of advanced technology. However engine manufacturers prefer to be single source. Boeing would be responsible for a total of $700m of the additional cost. the U. outsourcing most of the actual manufacturing all around the world. government would be responsible for $600m under a 60/40 government/Boeing split.

To date. The 787's rapid sales success and pressure from potential customers forced Airbus to revise the design of its competing A350. [edit]Effect of competition on product plans The A320 has been selected by 222 operators (Dec. 2008). instead airlines would be looking towards the next major redesign and a 30% fuel saving. By convention. launched in 2001. which uses technology from the Sonic Cruiser concept. [edit]Safety Both aircraft manufacturers have good safety records on recently manufactured aircraft. like the Sonic Cruiser.[edit]Effect of currency on competition Boeing's production costs are mostly in United States dollars. and conversely when the dollar falls relative to the euro it is an advantage for Boeing. wheareas Airbus' production costs are mostly in euros. Industry sources believe that a re-engine of the 737 would be considerably more expensive for Boeing than it was for Airbus A320 due to the 737's design. many full-service airlines also have selected it as a replacement for 727s and aging 737s. When the dollar appreciates against the euro the cost of producing a Boeing aircraft rises relatively to the cost of producing an Airbus aircraft. such as Star Alliance members United Airlines and Lufthansa. and after 40 years the A380 now challenges the Boeing 747s dominance of the very large aircraft market. Most aircraft dominating the companies' aircraft sales. has been known to be more flexible and has priced some aircraft sales in Asia and the Middle East in multiple currencies. all A380F orders have been cancelled. while Airbus. the first of which entered service in 2007 and has delivered a total of 92 to customers (as of December 2012). Boeing first ruled out producing a re-engined version of its 737 to compete with the A320neo launch in 2016 saying it did not believe airlines would be willing to pay 10% more for only a few percentage gained in fuel efficiency. Boeing typically prices its aircraft only in dollars. There are also possible currency risks and benefits involved in the way aircraft are sold. Boeing is now focused on the Boeing 787 Dreamliner as a platform of total fleet rejuvenation.assuming [18] Airbus has not purchased insurance against such fluctuations. However. The company is facing airline pressure to offer a direct re-engined competitor including from Southwest Airlines who use the 737 for their entire fleet (680 in service or on order) saying they were not prepared to wait 20 years or more for a new 737 model and threatening to convert to Airbus. Frequent delays to the Airbus A380 program caused several customers to consider cancelling their orders in favour of the refreshed 747[19] 8. Depending on currency fluctuations between the acceptance of the order and the delivery of the aircraft this can result in an extra profit or extra expense . after certification the 747-8F. among these several low-cost operators. although none have done so and some have even placed repeat orders for the A380. fuel efficiency and longer range. revised to 2011 and 2012 as the 747-8I is still (as of August 2011) being test-flown. both companies tend to avoid safety comparisons when selling their aircraft to airlines. although pricing most aircraft sales in dollars. gaining ground against the previously well established 737 in this sector. Boeing has secured orders for 78 747-8F and 28 747-8I with first deliveries originally scheduled for 2010 and 2011 respectively now. The Boeing 747-8 is a stretched and updated version of the venerable 747-400 and will offer greater capacity. Several Boeing projects were pursued and then canceled. such as the Boeing 737-NG and Airbus A320 families (as well . Boeing eventually bowed to pressure in the summer of 2011 agreeing to supply a large quantity of a new version called the 737 MAX for one customer and the [20] following quarter made the new product available to other customers. while Airbus has orders for 262 A380s.

Airbus expects another WTO ruling that confirms once again its prior findings. Airbus A300 and Airbus A310." it said. it said. Read more: "Boeing repeats its old standby that European reimbursable loans destroyed jobs in America. Boeing charged that Airbus was continuing to get similar subsidies for its new wide-bodied A350 plane." These both companies' wide-body offerings) have good safety records as well. as received by Boeing." It said it would "support whatever steps the US government deems necessary to fulfill its WTO obligations. European planemaker Airbus and US rival Boeing have traded stinging barbs over controversial government support for aircraft development. based in Toulouse in southwestern France.smh." it said. were illegal.html#ixzz2JTL9U3sB . have been at odds for years over subsidies they receive from their government backers. on the Gulf of Mexico. "The WTO (World Trade Organization) dismissed such claims and has specifically found that Boeing's own management decisions and its outsourcing/offshoring policy were exclusively responsible for American job losses." it said. said it will roll out its first US-built plane by 2016. Airbus on Monday said it planned to build a $US600 million assembly plant in the US port city of Mobile. Airbus was first out of the blocks. and 1980s. rejecting claims by its arch-rival that it had caused job losses in the United States. the original Boeing 737s and 747s. charging Airbus with getting six times the government subsidies it had received. aimed to compete directly with its own 787 Dreamline. We expect the same commitment to compliance from Airbus and the European and both have won and lost complaints filed against the other at the WTO." it said. arguing that Boeing itself was responsible for destroying employment. Older model aircraft such as the Boeing 727." Airbus said in a statement issued after it unveiled plans Monday to open a factory on Boeing's home turf. which dominate the global aircraft business.0 billion of subsidies not already corrected against Boeing versus $18 billion of subsidies against Airbus. a subsidiary of the European Aeronautic Defence and Space Company (EADS). Worse still. have had higher rates of fatal accidents. "$3. Boeing and Airbus. Advertisement Boeing responded in kind. Airbus estimates 4600 new single-aisle aircraft will be needed in the United States over the next 20 years and the new US plant could more than double its share of the huge market. "Airbus and the EU must take immediate steps to comply with the WTO's ruling to deal with outstanding subsidies and it must finance the A350 and all other future programs on commercial terms. Alabama. accusing each other of bending the rules. to produce the popular A320 passenger planes. The firm. called on Boeing to "walk the talk: cut the cheap misinformation and the massive illegal government subsidies". The European firm said in Monday's statement that "as Boeing persists in misleading the public. 1970s. WTO findings "were crystal clear. "Yet they have singularly failed to meet the WTO requirement to remove outstanding illegal subsidies or their adverse effects. which were [21] respectively first flown during the 1960s. Airbus. that European government loans were a WTO-compliant private-public partnership mechanism while grants.