Airbus Finds the Friendly Skies | Business| Economy and finance news from a German perspective | DW | 11.05.2002
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Airbus Finds the Friendly Skies

Following a dreadful last half year, Europe's mega air consortium, Airbus, has reason to smile and gain some ground on old nemesis Boeing.


The megajumbo that will lead the way

Like their colleagues in the flight business, the Europe’s aircraft builder Airbus had a rather disappointing half year.

The economic aftermath of the Sept. 11 attacks forced company execs to dramatically reduce the amount of planes they planned to deliver this year from 400 down to 300. The European plane-maker was forced to juggle worker schedules so as to cut costs. And its majority shareholder, the European Aeronautic Defence & Space Co., demanded it tighten the belt further and save a total of 600 million euro this year.

The only consolation came from the fact that its main competitor across the pond, Boeing, was going through the same headaches.

But after months of bad news, things have started looking up – and Airbus is hoping to use the current slowdown to gain some ground on the worldwide aeronautics leader.

Europe’s oldest business consortium still has orders for 1,600 aircraft this year and pending agreements with British cheap flier Go and a joint military order by eight European nations are futher reason for optimism.

Stop and Go

Airbus execs say the deal with Go is anything but final. The biggest competitor, of course, is Boeing. Still, negotiators close to the deal told Financial Times reporters last week that Go was leaning heavily in Airbus’ direction.

The deal for 75 new planes would bring Airbus $3 billion (3.2 billion euro) and position it well as a supplier to Europe’s booming cheap airline market.

Europe's Megajumbo

There are also positive developments in the status of Europe’s future flagship airplane: the Airbus A380.

The aircraft will be the largest on earth when it takes to the skies in 2006. Airbus says it has 100 orders already on the books from nine clients, including Germany’s Lufthansa. Construction is already getting underway, more than 3 years after the megajumbo was first conceptualized.

The jet should be more good news for Airbus' already prominent position in the civil avaition market. Still, company execs said they plan to shift their focus from the topsy-turvy civil aircraft market to the more stable defense market in the coming years.

Head-on with Boeing

The market is currently dominated by Boeing and the United States, from whom Europeans buy 20 percent of their defense equipment.

A protectionist attitude by the US administration following the Sept. 11 attacks has made it even harder for European companies like Airbus to sneak into America's profitable defense market.

For now, Airbus has decided to place its hopes on this side of the Atlantic. Construction of the A400 Airbus Military transport plane will hopefully begin at the end of May. The 196 planes are part of the largest joint military venture in European history. Eight countries are in on the 18 billion euro deal, which Europe sees as an important step away from its military dependence on the United States.

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