Boeing Vs Airbus

International Business Report

Submitted To Tahir Ameen Submitted By Binte Zainab Sundas Munir Anum Fayaz Iqra Butt Ramsha Naeem BT-08-17 BT-08-22 BT-08-26 BT-08-31 BT-08-61

Table of Contents
Table of Contents..................................................................................................................................2 ..............................................................................................................................................................2 Preface...................................................................................................................................................2 Acknowledement..................................................................................................................................3 Boeing vs. Airbus.................................................................................................................................4 Company overview...............................................................................................................................4 BOEING................................................................................................................................................4 AIRBUS..............................................................................................................................................11 Competition between Airbus and Boeing .........................................................................................17 The fight for flight..............................................................................................................................24 Conclusion..........................................................................................................................................27 References...........................................................................................................................................29

Preface

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Acknowledement

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Boeing vs. Airbus Company overview BOEING

Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. A top U.S. exporter, the company supports airlines and U.S. and allied government customers in 150 countries. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing has a long tradition of aerospace leadership and innovation. The company continues to expand its product line and services to meet emerging customer needs. Its broad range of capabilities includes creating new, more efficient members of its commercial airplane family; integrating military platforms, defense systems and the warfighter through network-enabled solutions; creating advanced technology solutions; and arranging innovative customer-financing options. With corporate offices in Chicago, Boeing employs more than 170,000 people across the United States and in 70 countries. This represents one of the most diverse, talented and innovative workforces anywhere. More than 140,000 employees hold college degrees -- including nearly 35,000 advanced degrees -- in virtually every business and technical field from approximately 2,700 colleges and universities worldwide. Our enterprise also leverages the talents of hundreds of thousands more skilled people working for Boeing suppliers worldwide. Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Defense, Space & Security. Supporting these units are Boeing Capital Corporation, a global provider of financing solutions; the Shared Services Group, which provides a broad range of services to Boeing worldwide; and Boeing Engineering, Operations & Technology, which helps develop, acquire, apply and protect innovative technologies and processes.

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Boeing Commercial Airplanes Boeing has been the premier manufacturer of commercial jetliners for more than 40 years. With the merger of Boeing and McDonnell Douglas in 1997, Boeing's leadership in commercial jets, joined with the lineage of Douglas airplanes, gives the combined company a 70-year heritage of leadership in commercial aviation. Today, the main commercial products are the 737, 747, 767 and 777 families of airplanes and the Boeing Business Jet. New product development efforts are focused on the Boeing 787 Dreamliner, and the 747-8. The company has nearly 12,000 commercial jetliners in service worldwide, which is roughly 75 percent of the world fleet. Through Boeing Commercial Aviation Services, the company provides unsurpassed, around-the-clock technical support to help operators maintain their airplanes in peak operating condition. Commercial Aviation Services offers a full range of world-class engineering, modification, logistics and information services to its global customer base, which includes the world's passenger and cargo airlines, as well as maintenance, repair and overhaul facilities. Boeing also trains maintenance and flight crews in the 100-seat-and-above airliner market through Boeing Training & Flight Services, the world's largest and most comprehensive provider of airline training. Boeing Defense, Space & Security Boeing Defense, Space & Security (BDS) provides end-to-end services for large-scale systems that enhance air-, land-, sea- and space-based platforms for global military, government and commercial customers. In addition to designing, producing, modifying and supporting fighters, bombers, transports, rotorcraft, aerial refuelers, missiles, munitions and spacecraft for military, civil and commercial use, BDS is developing enhanced capabilities through network-enabled solutions, communications and intelligence, surveillance and reconnaissance technologies. BDS supports the U.S. government as a system integrator on several programs of national significance, including NASA's International Space Station and, the Missile Defense Agency's Ground-based Midcourse Defense program. BDS is also expanding into new markets and adjacencies, including unmanned systems, cyber security, energy management, and support and logistics.

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Boeing Capital Corporation Boeing Capital Corporation is a global provider of financing solutions. Working closely with Commercial Airplanes and Defense, Space & Security, Boeing Capital Corporation arranges structures and provides financing to facilitate the sale and delivery of Boeing commercial and military products. With a year end 2011 portfolio value at approximately $4.3 billion, Boeing Capital Corporation combines Boeing's financial strength and global reach, detailed knowledge of Boeing customers and equipment, and the expertise of a seasoned group of financial professionals. Engineering, operations and technology EO&T enhances Boeing's growth and productivity by driving technical and functional excellence across the enterprise. Its primary objectives are to support the company's business units by delivering high-quality, low-cost technical services in information technology, research and technology, and test and evaluation; integrated enterprise strategies that ensure technology is ready when needed, competitively protected and environmentally progressive; and highly disciplined and efficient engineering, operations and supplier management support that ensures program success. The organization pays particular attention to ensuring the success of development programs, and strives to attract, develop and retain a world-class technical and functional work force. Shared Services Group Shared Services Group allows business units to focus on profitable growth by providing the infrastructure services required to run their global operations. The group provides a broad range of services worldwide, including facilities services, employee benefits and services, staffing, recruitment, wellness programs, security, fire protection, site operations, disaster preparedness, construction, reclamation, conservation programs, virtual workplace, creative services, transportation, business continuity and the purchase of all non-production goods and services. It also offers comprehensive travel services to Boeing employees and manages the sale and acquisition of all leased and owned property for Boeing. By integrating services, Shared Services Group delivers greater value, creates "lean" processes and operations, leverages buying power and simplifies access to services for all of Boeing.

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Culture and values

Boeing is a company of amazing people working in one of the most exciting industries in the world. When you consider our many accomplishments -- from designing and building the earliest biplanes to creating and supporting today's supersonic aircraft and spacecraft -- you might think we would be content with how far we've come. But a company of our size and scope doesn't succeed by resting on its laurels; we are constantly re-examining our capabilities and processes to ensure that our company is as strong and vital as our heritage. In fact, our culture mirrors the heritage of aviation itself, built on a foundation of innovation, aspiration and imagination. Value At Boeing, we are committed to a set of core values that not only define who we are, but also serve as guideposts to help us become the company we would like to be. We truly live these values every day. Vision The Boeing Vision is: People working together as a global enterprise for aerospace leadership. How will we get there? o Run healthy core businesses o Leverage our strengths into new products and services o Open new frontiers

Corporate Social Responsibility

Boeing has a responsibility to its stakeholders - including the communities where its employees live and work, and globally where its products are used - to be a good "corporate citizen" and lead by example. Corporate social responsibility at Boeing means creating positive changes in all we do - through the products and services they provide and the way they operate their business in the interconnected world in which they live.

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Commitment to employees Employment Employment by Group Commercial Airplanes Defense, Space & Security Corporate Engineering, Operations & Technology Shared Services Group Other Total Company

81,031 61,620 19,019 7,877 2,639 172,186

Safety & Health @ Work Boeing is committed to fostering a safe and healthy workplace for its employees. Through the rigorous application of preventative and corrective measures, the company has reduced lost work days from injuries sustained on the job and has received numerous awards recognizing its commitment to safety and health in the workplace.

Diversity Diversity and inclusion are part of Boeing's values at the highest level. Having diverse employees, business partners and community relationships is vital to creating advanced aerospace products and services for our diverse customers around the world. The company's commitment to diversity means providing a work environment for all employees that is welcoming, respectful and engaging, with opportunities for personal and professional development. This in turn increases productivity, quality, creativity and innovation.

University Relations Boeing works closely with selected colleges and universities to enhance undergraduate curricula, support continuing education of Boeing employees, recruit for internships and employment, and collaborate on research that benefits the long-term needs of our businesses.

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Global Corporate Citizenship The simple description of a corporation implies three elements: products/services, business practices; and community engagement. Our core competencies direct us to a systems approach to citizenship that challenges us to constantly seek ways to channel our resources for greater impact. GCC partners with our business units and functions like Global Diversity, Environment Health and Safety, Ethics, Government Operations and Human Resources to integrate our corporate citizenship profile.

Boeing in the States Boeing in the States 2011: The Boeing Company and its subsidiaries had over 151,000 employees working in 48 states as of December 31, 2010. In the past 12 months, Boeing paid over $32 billion to more than 22,000 businesses, supporting an additional 1.2 million supplier-related jobs across the country. These businesses include production suppliers and non-production vendors, as well as subsidiaries of companies to which Boeing made other payments. In the past year, The Boeing Company contributed over $89 million to U.S. nonprofit organizations. In addition, Boeing employees contributed $51 million to their Employees Community Fund.

The way they govern their business: Ethics The purpose of the Ethics and Business Conduct program is to: o Communicate the Boeing Values and standards of ethical business conduct to employees o Inform employees of company policies and procedures regarding ethical business conduct o Establish companywide processes to assist employees in obtaining guidance and resolving questions regarding compliance with the company's standards of conduct and the Boeing Values

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o Establish companywide criteria for ethics education and awareness programs

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Governance The Boeing Company's business is conducted by its employees, managers and corporate officers led by the chief executive officer, with oversight from the Board of Directors. The Board's Governance, Organization and Nominating Committee periodically reviews the Company's corporate governance principles and current practices

Code of Basic Working Conditions This Code of Basic Working Conditions and Human Rights represents the commitment of The Boeing Company to fundamental standards that make Boeing a good place to work. People are Boeing's most vital asset. The individual and collective contributions of Boeing people at all levels are essential to the success of the company. In recognition of this, Boeing has developed policies and practices designed to assure that our employees enjoy the protections afforded by the concepts set forth in this Code. Boeing is committed to the protection and advancement of human rights in its worldwide operations, and the concepts in this Code are generally derived from Boeing policies and practices already in place, but which have not previously been summarized in a single document. While parts of this Code reflect our review of working standards and human rights concepts advanced by other groups, such as the International Labor Organization, the Universal Declaration of Human Rights, and the Global Sullivan Principles, this Code represents Boeing's statement of its own standards on these subjects, rather than those of a third party. Boeing's worldwide operations take place in an increasingly diverse universe, so circumstances can arise where legal, regulatory or other requirements may necessitate applying or interpreting this Code in ways that assure compliance with applicable local law. In any event, however, we believe that the concepts in this Code represent important fundamental values that should underlie all aspects of the employment relationship.

AIRBUS
Airbus SAS is an aircraft manufacturing subsidiary of EADS, a European aerospace company. Based in Blagnac, France, a suburb of Toulouse and with significant activity across Europe, the company produces more than half of the world's jet airliners.

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Airbus began as a consortium of aerospace manufacturers, Airbus Industry. Consolidation of European defense and aerospace companies in 1999 and 2000 allowed the establishment of a simplified joint-stock company in 2001, owned by EADS (80%) and BAE Systems (20%). After a protracted sales process BAE sold its shareholding to EADS on 13 October 2006. Airbus employs around 52,000 people at sixteen sites in four European Union countries: France, Germany, the United Kingdom and Spain. Final assembly production is at Toulouse (France), Hamburg (Germany), Seville (Spain) and, since 2009, Tianjin (People's Republic of China). Airbus has subsidiaries in the United States, Japan, China and India. The Company produced and markets the first commercially viable fly-by-wire airliner, the Airbus A320, and the world's largest airliner, the A380. A challenging environment for a high-performing company Headquartered in Toulouse, Airbus is owned by EADS, a global leader in aerospace, defense and related services. This group which is comprised of Astrium, Cassidian and Eurocopter, in addition to Airbus has a presence on every continent, and employs a total workforce of more than 119,000. Airbus itself is a truly global enterprise of some 55,000 employees, with fully-owned subsidiaries in the United States, China, and Japan and in the Middle East, spare parts centers in Hamburg, Frankfurt, Washington, Beijing and Singapore, training centers in Toulouse, Miami, Hamburg and Beijing and more than 150 field service offices around the world. Airbus also relies on industrial co-operation and partnerships with major companies all over the world, and a network of some 1,500 suppliers in 30 countries. Airbus today consistently captures about half of all commercial airliner orders. Quality and safety first Delivering aircraft on time on cost and on quality getting it right first time drives Airbus policy with safety as number one priority in the design, building and performance of its aircraft. Striving for the highest standards Airbus customers expect quality in the aircraft they buy. Safety, reliability, comfort and maintenance costs are key areas where quality is crucial in an airlines judgment of an aircraft.

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To achieve the very highest standards in these and other aspects of an aircrafts facets and performance the question of quality is addressed by Airbus at every stage from design to final assembly and beyond. Repeated checks are made. Tests are applied. Airbus ensures every supplier of parts meets the strictest standards on quality. Defective work, parts and materials are rejected. Delivering aircraft on time, on cost and on quality getting it right first time is the goal Airbus continually strives for. Airbus has a network of key employees who identify problems at various stages of design, production and assembly and recommend action to eradicate them, pre-empting possibly costly delays at a later point. These employees also ensure continuous improvement in standards and efficiency by pinpointing ways in which people could work better or where tools and materials could be improved. As it ramps up production of both single-aisle and long-range aircraft, including the A380, to meet demand, Airbus knows setting even higher standards in quality is critical to maintaining its success. The constant focus on safe operations Around 500 million passengers fly in Airbus aircraft each year. They trust the airlines to get them safely to their destinations. In turn the airlines and other operators trust Airbus. The Airbus name means reliability, quality, and performance. But above all it means safety, the first priority for Airbus. At every point in the design, manufacturing and assembly process Airbus ensures its work complies with certification targets laid down by the European Aviation Safety Authority and the US Federal Aviation Administration. Before an aircraft achieves its final type certificate it must undergo around 1,200 hours of test flying. But Airbus also works continually in the most effective way to improve the safety of its aircraft: by pro-actively identifying areas and events from which knowledge can be gained. Airbus works with air safety organizations around the world to find new ways of improving standards. Safety is not a matter of competition in the aviation industry. Airbus shares its knowhow with others to improve safety for everyone.

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Aircraft families
Airbus highly successful jetliner product line ranges in size from the 107-seat single-aisle A318 to the double-deck A380 wide body, which is the worlds largest commercial aircraft in service today. Passenger aircraft Airbus jetliners have become the aircraft of choice for operators worldwide from lowcost carriers to full-service airlines flying many of the longest routes around the globe. The companys product line of passenger aircraft is characterized by high comfort, unmatched economics and versatility. Airbus A320 Family is the undisputed leader in the single-aisle category; while its A330/A340 families of twin-engine and four-engine aircraft cover all long-range requirements. At the top of Airbus product range, the double-deck A380 has introduced an entirely new way of travelling, leveraging a variety of key innovations. Airbus 30 years of experience and expertise are being applied to the new-generation A350 XWB, which once again will shape the future of air travel by offering a new-generation aircraft family that meets market requirements for size, range, revenue generation, passenger comfort and the environment. Corporate jets Airbus offers the most modern and comprehensive corporate jet family in the world, giving customers the greatest choice of the widest and most spacious cabins. The companys corporate jets range from the Airbus ACJ318 all the way to the double-deck ACJ380, allowing customers to select the comfort they want in the size that they need. Freighter aircraft Airbus builds highly capable freighters to fulfill a full range of cargo lift requirements. The A330-200F is the only new-generation cargo aircraft available today that meets operations needs in the mid-size, long-haul segment. For A330s that have completed their useful operational service as passenger jetliners, the A330P2F freighter conversion option offers a solution that is both cost effective and highly efficient.

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In the very large freighter category, the A380F is based on Airbus 21st century A380 flagship and is designed to haul more cargo, over farther distances, and at lower cost than its nearest competitor. For the airlift of oversized cargo loads, Airbus operates a fleet of A300-600ST Super Transporters that support its own manufacturing flow within the companys European production network with these aircraft also available for third-party charter through the Airbus Transport International affiliate. Military aircraft Airbus highly capable family of military aircraft covers a full range of airlift and support missions, from the C212, CN235 and C295 tactical transports to the A330-based Multi Role Tanker Transport (MRTT) and the A400M multi-role airlifter.

People & culture

Airbus takes pride in the diversity of its employees, and values the special experience and expertise that come from more than 80 nationalities represented among its 55,000 employees. The company thrives on the mix of ideas, vision and knowledge such a combination of cultures creates. At the same time, Airbus encourages its employees to develop individual talents and to be proud of their heritage. Diversity is the essence of Airbus. With its global presence growing Airbus is now an even bigger international family. For an Airbus employee it is usual to work side by side with people from a range of cultures. Career advancement within the company can take an employee not just to another floor or another building but to another country. Airbus takes pride in the diversity of its employees, valuing the special experience and expertise people from different backgrounds bring to the industry. The company thrives on the mix of ideas, vision and knowledge such a combination of cultures creates. At the same time, it encourages employees to develop their individual talents and experience and to be proud of their roots. But diversity is not just about nationality. An increasing number of Airbus employees are women, who are working in a full range of jobs and responsibilities including those considered as traditional male roles.

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In addition to its many sites around Europe, Airbus has subsidiaries in North America, China and Japan, an engineering center in India, and a joint engineering venture in Russia. As a result, the pool of talent from which Airbus selects its employees has truly become global.

Corporate Social Responsibility

As a responsible corporate citizen and industry leader, Airbus day-to-day operations are guided by a strong commitment to the highest ethical standards ensuring integrity, transparency and professionalism across its operations. Support and development Day after day, social responsibility plays a vital role in how Airbus conducts its business, makes decisions and sets priorities. This initiative takes many forms at Airbus, including employee development, building strong supplier partnerships and maximum safety for all its workers. Airbus is an active corporate citizen, and believes in contributing to the communities where its employees live and work. In 2008, the company created the Airbus Corporate Foundation which manages all of its charitable activities around the world, and brings together the international employee network with associations and other international organizations. Building on existing Airbus charitable projects, the Foundation emphasizes and focuses its support on three key themes: youth development, humanitarian and community support, and the environment. Creating value with less environmental impact From the very beginning, Airbus has put the highest priority on environmental performance. Over the course of its 40-plus-year history, the company has adhered to a philosophy of increasing the number of passengers (or amount of freight) per flight, while reducing overall emissions, energy consumption and perceived noise. To meet its environmental targets, Airbus continually invests in improvements for its in-service jetliners, and applies cutting-edge technologies to enhance new aircraft throughout their lifecycle.

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This company-wide effort extends to Airbus production sites, all of which have received International Organization for Standardization (ISO) 14001 certification recognizing Airbus achievements in monitoring and minimizing the effect its operations have on the environment. Airbus Corporate Foundation Social responsibility, coupled with a greater responsibility to protect the environment, has been at the heart of Airbus business activities for many years. The Airbus Corporate Foundation was created to facilitate the companys worldwide charitable activities by placing them within one organization that brings together the resources of Airbus international employee network with associations and international organizations. Created in December 2008, the Foundations purpose is to support programs and projects in which Airbus employees are involved, and it focuses its support on three themes: youth development, humanitarian and community support, and the environment. Airbus President and CEO Tom Enders serves as the Foundations President of the Board of Directors, which has secured the support of four international members that bring specific experience and know-how: Kriss Akabusi, Marcel Rufo, Manuel Toharia Cortes and Henning Voscherau. We invest our time and expertise, and focus our resources on projects where we can really make a difference. We all at Airbus want to help making the world a better place. Tom Enders, Airbus CEO and President of the Airbus Corporate Foundation Board of Directors

Competition between Airbus and Boeing

How did the battle begin?
Competition between Airbus and Boeing is a result of both companies' domination of the large jet airliner market since the 1990s, a consequence of mergers within the global aerospace industry over the years. Airbus began as a consortium from Europe, whereas the American Boeing took over its former arch-rival, McDonnell Douglas, when the latter became defunct and merged with the former in 1997. Other manufacturers, such as Lockheed Martin and Convair in the United

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States and British Aerospace, Dornier and Fokker in Europe, have pulled out of the civil aviation market after economic problems and declining sales. The 1990s changes in the Eastern Bloc and the former Soviet Union has put its aircraft industry in a disadvantaged position, although Antonov, Ilyushin, Irkut, Sukhoi, Tupolev, Yakovlev and the newly merged United Aircraft Corporation develop and produce several new passenger aircraft and have an increasing but currently small market share. The Chinese aviation industry is currently developing and producing two jet- (state owned merge Comac) and several turboprop-powered airliners in increasing but still small quantities, also two wide-bodies are proposed. Airbus and Boeing since the end of the 1990s possess a duopoly in the global market for large commercial jets comprising narrow-body aircraft, wide-body aircraft and jumbo jets. However, Embraer has gained market share with their narrow-body aircraft in the Embraer E-jets series. There is also a similar competition in regional jet manufacturing between Bombardier Aerospace and Embraer . In the last 10 years Airbus has received 7,181 orders while delivering 4,218, Boeing won 6,360 orders while delivering 3,871. Competition is intense; each company regularly accuses the other of receiving unfair state aid from their respective governments. Competition by product Though both manufacturers have a broad product range varying from single-aisle to wide-body, they do not always compete head-to-head. As listed below they respond with slightly different models. The Airbus A380, for example, is substantially larger than the Boeing 747. The Airbus A350 competes with the high end of the Boeing 787 Dreamliner and the Boeing 777. The Airbus A320 is larger than the Boeing 737-700 but smaller than the 737-800. The Airbus A321 is larger than the Boeing 737-900 but smaller than the previous Boeing 757-200.

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The Airbus A330-200 competes with the similar Boeing 767-400ER. Airlines benefit from this competition as they get an array of diversified products ranging from 100-500 seats, than if both companies offered identical aircraft.

Competition by outsourcing Because many of the worlds airlines are wholly or partially government owned, aircraft procurement decisions are often taken according to political and commercial criteria. 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. For example, Boeing has offered 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, a process which has helped Boeing achieve almost total dominance of the Japanese market for commercial jets. Outsourcing was extended on the 787 to the extent that Boeings own involvement was reduced to little more than project management, design, assembly and test operation, outsourcing most of the actual manufacturing all around the world. Boeing has since stated that it "outsourced too much" and that future airplane projects will depend far more on Boeing's own engineering and production personnel. Partly because of its origins as a consortium of European companies, Airbus has had fewer opportunities to outsource significant parts of its production beyond its own European plants. However, in 2009 Airbus has opened an assembly plant in Tianjin, China for production of its A320 series airliners. Competition through use of technology Airbus sought to compete with the well-established Boeing in the 1970s through its introduction of advanced technology. For example, the A300 made the most extensive use of composite materials yet seen in an aircraft of that era, and by automating the flight engineer's functions, was the first large commercial jet to have a two-man flight crew. In the 1980s Airbus was the first to introduce digital Fly-by-wire controls into an airliner (the A320).

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Since then Airbus has established itself as a viable competitor to Boeing, both companies use advanced technology to seek performance advantages in their products. For example, the Boeing 787 Dreamliner is the first large airliner to use composites for most of its construction. 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. In general, airlines prefer to have a choice of at least two engines from the major manufacturers General Electric, Rolls-Royce and Pratt & Whitney. However engine manufacturers prefer to be single source, and often succeed in striking commercial deals with Boeing and Airbus to achieve their objective. Several notable aircraft have only provided a single engine offering: the Boeing 737-300 series onwards (CFM56), the Airbus A340-500 & 600 (RollsRoyce Trent 500), the Airbus A350 (Rolls-Royce Trent XWB - so far) the Boeing 747-8 (GEnx2B67), and the Boeing 777-300ER/200LR/F (General Electric GE90). Effect of currency on competition Boeing's production costs are mostly in United States dollars, while Airbus' production costs are mostly in euros. When the dollar appreciates against the euro the cost of producing a Boeing aircraft rises relative to the cost of producing an Airbus aircraft, and conversely when the dollar falls relative to the euro it is an advantage for Boeing. There are also possible currency risks and benefits involved in the way aircraft are sold. Boeing typically prices its aircraft only in dollars, while Airbus, although pricing most aircraft sales in dollars, has been known to be more flexible and has priced some aircraft sales in Asia and the Middle East in multiple currencies. 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 - assuming Airbus has not purchased insurance against such fluctuations. Effect of competition on product plans The A320 has been selected by 222 operators (Dec. 2008), among these several low-cost operators, gaining ground against the previously well-established 737 in this sector; many full-service airlines also have selected it as a replacement for 727s and aging 737s, such as United Airlines and Lufthansa; and after 40 years the A380 now challenges the Boeing 747s dominance of the very large aircraft market. The Boeing 747-8 is a stretched and updated version of the venerable 747-

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400 and will offer greater capacity, fuel efficiency and longer range. Frequent delays to the Airbus A380 program caused several customers to consider cancelling their orders in favor of the refreshed 747-8,[36] although none have done so and some have even placed repeat orders for the A380. However, all A380F orders have been canceled. To date, Boeing has secured orders for 78 747-8F and 28 747-8I with first deliveries originally scheduled for 2010 and 2011 respectively now, after certification the 747-8F, revised to 2011 and 2012 as the 747-8I is still (as of August 2011) being test-flown, while Airbus has orders for 234 A380s, the first of which entered service in 2007 and has delivered a total of 67 to customers (as of January 2012). Several Boeing projects were pursued and then canceled, like the Sonic Cruiser, launched in 2001. Boeing is now focused on the Boeing 787 Dreamliner as a platform of total fleet rejuvenation, which uses technology from the Sonic Cruiser concept. The 787's rapid sales success and pressure from potential customers forced Airbus to revise the design of its competing A350 . Boeing first ruled out producing a re-engine 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, instead airlines would be looking towards the next major redesign and a 30% fuel saving. The company is facing airline pressure to offer a direct re-engine 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. 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. 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 following quarter made the new product available to other customers . Safety Both aircraft manufacturers have good safety records on recently manufactured aircraft. By convention, both companies tend to avoid safety comparisons when selling their aircraft to airlines. Most aircraft dominating the companies' aircraft sales, such as the Boeing 737-NG and Airbus A320 families (as well as both companies' wide-body offerings) have good safety records as well. Older model aircraft such as the Boeing 727, the original Boeing 737s and 747s, Airbus A300 and

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Airbus A310, which were respectively first flown during the 1960s, 1970s, and 1980s, have had higher rates of fatal accidents.

Controversies
Subsidies Boeing has continually protested over launch aid in the form of credits to Airbus, while Airbus has argued that Boeing receives illegal subsidies through military and research contracts and tax breaks. In July 2004 Harry Stonecipher (then-Boeing CEO) accused Airbus of abusing a 1992 bilateral EU-US agreement providing for disciplines for large civil aircraft support from governments. Airbus is given reimbursable launch investment (RLI, called "launch aid" by the US) from European governments with the money being paid back with interest, plus indefinite royalties if the aircraft is a commercial success. Airbus contends that this system is fully compliant with the 1992 agreement and WTO rules. The agreement allows up to 33 per cent of the program cost to be met through government loans which are to be fully repaid within 17 years with interest and royalties. These loans are held at a minimum interest rate equal to the cost of government borrowing plus 0.25%, which would be below market rates available to Airbus without government support. Airbus claims that since the signing of the EU-U.S. agreement in 1992, it has repaid European governments more than U.S. $6.7 billion and that this is 40% more than it has received . Airbus argues that the pork barrel military contracts awarded to Boeing (the second largest U.S. defense contractor) are in effect a form of subsidy (see the Boeing KC-767 vs. EADS (Airbus) KC45 military contracting controversy). The significant U.S. government support of technology development via NASA also provides significant support to Boeing, as does the large tax breaks offered to Boeing which some claim are in violation of the 1992 agreement and WTO rules. In its recent products such as the 787, Boeing has also been offered substantial support from local and state governments. However, Airbus' parent, EADS, itself is a military contractor, and is paid to develop and build projects such as the Airbus A400M transport and various other military aircraft. In January 2005, the European Union and United States trade representatives, Peter Mandelson and Robert Zoellick (since replaced by Rob Portman, and then Susan Schwab, and the present office holder, Ron Kirk) respectively, agreed to talks aimed at resolving the increasing tensions. These

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talks were not successful with the dispute becoming more acrimonious rather than approaching a settlement. In September 2009, the New York Times and Wall Street Journal reported that the World Trade Organization would likely rule against Airbus on most, but not all, of Boeing's complaints; the practical effect of this ruling would likely be blunted by the large number of international partners engaged by both plane makers as well as the expected delay of several years of appeals. For example, 35% of the Boeing 787 Dreamliner is manufactured in Japan. Thus, some experts are advocating a negotiated settlement. In addition, the heavy government subsidies offered to automobile manufacturers in the United States have changed the political environment; the subsidies offered to Chrysler and General Motors dwarf the amounts involved in the AirbusBoeing dispute. World Trade Organization litigation On 31 May 2005 the United States filed a case against the European Union for providing allegedly illegal subsidies to Airbus. Twenty-four hours later the European Union filed a complaint against the United States protesting support for Boeing. Increased tensions, due to the support for the Airbus A380, escalated toward a potential trade war as the launch of the Airbus A350 neared. Airbus would prefer the A350 program to be launched with the help of state loans covering a third of the development costs although it has stated it will launch without these loans if required. The A350 will compete with Boeing's most successful project in recent years, the 787 Dreamliner. EU trade officials questioned the nature of the funding provided by NASA, the Department of Defense, and in particular the form of R&D contracts that benefit Boeing; as well as funding from US states such as the State of Washington, Kansas, and Illinois, for the development and launch of Boeing aircraft, in particular the 787.An interim report of the WTO investigation into the claims made by both sides was made in September 2009. In March 2010, the WTO ruled that European governments unfairly financed Airbus.[51] In September 2010, a preliminary report of the WTO found unfair Boeing payments broke WTO rules and should be withdrawn. In two separate findings issued in May 2011, the WTO found, firstly, that the US defense budget and NASA research grants could not be used as vehicles to subsidies the civilian aerospace industry and that Boeing must repay $5.3 billion of illegal subsidies.

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Secondly, the WTO Appellate Body partly overturned an earlier ruling that European Governments launch aid constituted unfair subsidy, agreeing with the point of principle that the support was not aimed at boosting exports and some forms of public-private partnership could continue. Part of the $18bn in low interest loans received would have to be repaid eventually; however, there was no immediate need for it to be repaid and the exact value to be repaid would be set at a future date. Both parties claimed victory in what is the world's largest trade dispute . On the first of December 2011 Airbus reported that it had fulfilled its obligations created by the WTO findings and called upon Boeing to do likewise in the coming year.On the first of December 2011 Airbus reported that it had fulfilled its obligations created by the WTO findings and called upon Boeing to do likewise in the coming year . On the 12 March 2012 the appellate body of the WTO released its findings confirming the illegality of subsidies to Boeing whilst confirming the legality of repayable loans made to Airbus. The WTO stated that Boeing had received at least $5.3 billion in illegal cash subsidies at an estimated cost to Airbus of $45 billion. A further $2 billion in state and local subsidies that Boeing is set to receive have also been declared illegal. Boeing and the US government have six months to change the way government support for Boeing is handled. Noncompliance will result in extensive sanctions being imposed by the WTO .

The fight for flight

According to Fortune Magazine July 5, 2011, the record number of orders for the Airbus A320neo aircraft at Le Bourget shows the European aircraft maker's success in bringing its current airline customers back on board. But while it was an impressive showing, Airbus failed to make any meaningful inroads into Boeing's core customer base, leaving in place a deadlock between the two aircraft makers in the heavily competitive and extremely profitable single-aisle jet market. For now, it looks like Boeing's customers are waiting it out to see what the aircraft maker will do with its aging single-aisle workhorse, the Boeing 737. But Boeing shouldn't make them wait too long. Airbus, along with a new crop of foreign competitors, namely the Chinese, is aggressively pitching Boeing's anchor customers. Boeing may need to act fast or it could find that even its most loyal airline clients, like American Airlines and Europe's Ryanair, sign big multi-billion dollar contracts with a competitor.

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The single-aisle jet market hardly grabs the headlines, but it is the most important profit center for jet makers. So while Airbus' superjumbo A380 and Boeing's futuristic 787 are important, the truth is, they aren't the big money makers. Boeing's 737 aircraft accounts for around 40% of the jet maker's commercial aviation revenue and well over half of its profits. Meanwhile Airbus still hasn't made a profit from selling its new superjumbo A380. What keeps these aircraft industry going are the small jets that whisk people several times a day from New York to Houston or from London to Madrid -- not the big transatlantic jets. The cash flow generated by those projects allow the jet makers to splurge on research and development and roll out sexy new products. That's not to say that bigger jets aren't important to the bottom line, they just aren't the backbone of the industry. For the last few years all the attention at the Paris Airshow has focused on the sexy new projects. This year, though, it was all about the workhorse. Airbus offered up for sale its latest version of the A320, the A320neo, which stands for "new engine option." As the name suggests, the jet really isn't a major redesign, it simply has a new engine. Airbus is selling the new plane as an "efficiency improvement package," over older models with improvements including a 15% reduction in fuel consumption allowing it to go farther and hold more cargo. Airbus clearly didn't reinvent the wheel here. But Airbus customers went gaga over the new jet, which won't even be ready to enter service until the fall of 2015. There was a whopping 667 orders for the new jet at the show, worth around $60.9 billion at market-list prices. Airbus now has 1,029 orders for the new jet, making it the most popular model in civil aviation history. The sheer number of orders at the show shocked analysts, who were expecting around half that. Leading the way were several Asian airlines, like Malaysia-based AirAsia with 200 orders. Garuda, the Indonesia flag carrier, also got in on the action ordering 15 jets. Most of the other orders came from long-standing Airbus champions, like JetBlue, which ordered 40 of the new jets. Analysts and insiders believe that the only real hit to Boeing was Garuda's 15 plane order, as the flag carrier had been staunchly Boeing for decades. A 737 tune-up?

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The potential loss of Garuda as a core customer doesn't seem to be worrying Boeing's management in Chicago. Nor does the fact they received just 71 new orders for its latest 737 models, the -800 and -900ER, at the air show. Boeing hasn't introduced a radically different version of its 737 in some time, so it was expected to do poorly in the final tallies. Big aircraft orders usually come when there is a new model, and Boeing hasn't rolled out a new version of its 737 workhorse in six years. That's quite a long stretch to go without a gussied up new aircraft. The company seems to have focused all its energy in the last few years in launching its much-delayed mid-sized 787 aircraft, which finally enters service at the end of the summer. Boeing understands that it is time to roll out a new 737, but it hasn't decided if it should totally redesign the aircraft, possibly constructing it from the same futuristic composite materials used in the 787, or just slap a new set of fuel-efficient engines to its old aluminum body and calling it a day. It could take an estimated $15 billion or more to redesign the aircraft, Carter Copeland, the aerospace analyst at Barclays Capital, told Fortune. He argues that since the 737 is already so efficient in its current form, it may not be cost-effective for Boeing to make such a big capital expenditure to redesign the aircraft. "Frankly, there is a lot of financial and technical risk associated with doing a new airplane and Boeing need to be very comfortable with this because these are 'bet the company' type projects," Copeland says. This is at the root of why Boeing has yet to make a decision. Copeland feels that Boeing has up to a year to make the decision, but that may be too late. There are signs that some of Boeing's most loyal customers have started talking to the other side. Boeing's core customers are still the big U.S. airlines. American Airlines has been a loyal Boeing and McDonnell Douglas (acquired by Boeing in 1996) customer for decades. While it has bought non-Boeing planes for its American eagle regional jet fleet, American, as its name suggests, prefers American-made aircrafts for its mainline fleet. The company is now moving to totally revamp its fleet as it moves to retire the dozens of old MD80 jets it acquired in the 80s and early 90s. The airline at one point had 300 MD-80's up in the sky.

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But since 2008, the airline has moved to replace them with new 737s, ordering around 119 new 737-800s in 2009 and 2010. American's fleet is still in need of a major upgrade. But the Dallas-based carrier isn't just looking at Boeing. The new, more fuel-efficient A320neo has caught the eye of management, according to a person briefed on the matter. Airbus is pushing hard, offering steep discounts to get American to sign on, this person said. American was expected to announce a large order at the Paris Airshow, but it never came. The company is reportedly in heated negotiations with both Airbus and Boeing at this time with plans to order 250 planes worth around $15 billion. Grabbing American would be a coup for Airbus and would put a seal of approval on the A320neo. That could influence other U.S. carriers to follow its lead. The other mainline U.S. carriers -- US Airways, United Airlines and Delta Airlines already operate a mix of Airbus and Boeing jets. All of them are in need of an upgrade and finally have some money to put down a deposit -- thanks, in part, to all those new revenue streams, like baggage fees.

Conclusion
The disputes that have arisen periodically in the aircraft industry between Boeing and Airbus have only lead to adverse effects on both these companies. The long drawn out and complicated litigation, with accusation and counter-accusations being field in the WTO, have led to an unnecessary waste of resources that have harmed the companys profits and performance. For example, one of the reasons why the shares of the Boeing Company took a downward turn after its merger with McDonnell Douglas was the dispute it had to settle with the EU before the merger could come through. It is in the best interests of everyone concerned to bring an end to these disputes. The company that loses litigation has measures such as fines imposed upon them by other members of the WTO, which raise their costs substantially. This impacts not only the company itself, but also airlines that buy their planes, manufacturers of components, and ultimate the traveller as well. It is in everyones interest to avoid disputes as far as possible, and the only way in which this can be achieved is to reduce the number of subsidies granted in direct or indirect ways, and finally wipe them out entirely. This would increase the levels of competition between Airbus and Boeing,

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which would ultimately benefit the taxpayers, since subsidies are paid out through the taxpayers money. While the argument in favor of subsidies is that the industry is often unable to remain viable on its own, instead of support from the government, other measures may be sought out. For example, in the production of the newest model, the 7E7, Boeing has shared the risk with the manufacturers who have contracts on the various parts of the airplane. By seeking alternatives, government subsidies could perhaps not lead to costly trade wars in which each company tries to outdo each other in terms of the subsidies received. It has been seen through the example of Airbus and Boeing that the level of competition in a duopoly are very high, and often lead to unfair trade practices which violate of existing norms and agreements. Government usually ever since Airbus outdid Boeing for the first time in 2003. The question of subsidies has been an especially contentious one since then, since Boeing claims that Airbus is now healthy enough to survive on its own without government support. It levies these accusations at Airbus while being granted enormous subsidies on it latest project, the 7E7. If the situation continued in this manner, the international civil aircraft industry would never be free from disputes.

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References
Aris, S. (2004). Close to the sun: how Airbus challenged America's domination of the skies, Agate B2. Campos, L. M. B. C. (2001). "On the competition between Airbus and Boeing." Air & Space Europe 3(1-2): 11-14. Esty, B. and P. Ghemawat (2002). "Airbus vs. Boeing in superjumbos: A case of failed preemption." HBS Strategy Unit Working Paper No. 02-061, HBS Finance Working Paper No. 02061. Garten, J. E. (2005). "The Big Blowout: Why the Airbus-Boeing case could wreck the WTO, and how to stop it." Newsweek International, April 4. Irwin, D. A. and N. Pavcnik (2004). "Airbus versus Boeing revisited: international competition in the aircraft market." Journal of International Economics 64(2): 223-245.

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