Posted on 05/24/2006 8:19:08 AM PDT by ConservativeStatement
New York - In today's marketplace, distinct differences in the way competitive products work have become increasingly rare. But functional product differentiation is exactly what the rivalry between the Airbus A380 and the Boeing 787 Dreamliner is all about: Two companies with fundamentally different products, based on diametrically opposite visions of the future, engaged in a Hatfields versus McCoys battle with billions of dollars at stake.
(Excerpt) Read more at forbes.com ...
787 vs. A350 ----- 787 in a rout. It looks like USC vs. Temple in football. Way to go Boeing.
Since there are few airports even equipped to handle the A380, and it will take FOREVER to load and unload passengers on that monster, the Boeing gets my vote.
...except that Airbus is playing with "House Money" since EADS is essentially a state-sponsored European enterprise. Does anybody think that EADS will go out of business if they lose this bet?
--Boris
The rout is on due in large part to the 787 (avid supporter of Boeing and happy stockholder here) and with the variables in play favoring Airbus that is more reason to celebrate especially considering Airbus' deliveries of a few years ago.
I maintain that there was even less logic behind this wager. IMHO, Airbus decided that they were going to build the Largest Aircraft in the World as a political decision, and all the engineering and market analysis followed after the fact.
You can make bets like that when the House will cover your losses.
Same here.
I hate arriving at the gate and then being stuck in my seat for half an hour waiting for everybody in front to unload.
The 737 is one of my favorite planes precisely because it is relatively small and quickly loads and unloads.
I also hate making connective flights and try to fly direct if possible.
I think Boeing's made the right call on this one.
The very different experiences of Lockheed with the L-1011 and Airbus with the A300 and A310 vividly demonstrate the significance on industry outcomes of direct financial support of Airbus. These experiences are described in a recent OTA report in the following way:
"Lockheed was a company with a strong military business and experience producing commercial transports and had learned many of the skills needed to make wide-bodiedFor example, over a billion dollars of loans to develop the A300 and A310 were forgiven the German airbus partner by the German government in 1988.When Lockheed's defense operations were threatened in the late 1960s by its disastrous commercial performance with the L- 1011, the government did approve a small loan guarantee of $250 million to ensure the company's survival as a defense contractor, not as a commercial producer. Lockheed never called upon the guarantee.
See, Office of Technology Assessment, Competing Economies: , p. 90.This includes a substantial amount of unpaid interest on government loans at subsidized rates. Testimony of J. Michael Farren, Undersecretary of Commerce for International Trade, before the Joint Economic Committee, February 27, 1992. According to Boeing officials, total European subsidies of $26 billion amount to $8 million per Airbus sold. 26 aircraft in the military C-5 transport program. Airbus was a newly formed organization drawing on the technical skills of members none of which had previously designed or produced a wide-body transport. Lockheed sold 73 L-1011s during the first year it was offered. The A300 took 7 years to sell that many. During some of this period, Airbus was producing planes for inventory and financing costs. During the first ten years of production, deliveries of the A300 and A310 (a derivative of the A300 requiring additional investment) combined were almost the same as those of the L-1011. The L-1011 lost roughly $4 billion. No one knows what Airbus lost during this period, but it would be reasonable to expect the losses were at least as great as Lockheed's. Even so, Airbus shortly brought out four new models and two derivatives while Lockheed was forced to exit the commercial aircraft business.....The difference between Lockheed's fate and that of Airbus is largely attributable to the direct financial supports the members received from their governments."
Most of this support has come in the form of launch aid or low-interest loans with long repayment periods (Table 5-4).
By the end of 1990, the governments of France, England, and Germany had provided $5.6 billion in launch aid, of which only $500 million had been repaid, and an additional $2.3 billion had been pledged for the future A330-A340 models. A further pledge of $3 billion was made by the Germany government as part of the merger between Daimler and MBB, the German member of the Airbus consortium. These total almost 75% of the development funds used in Airbus models to date.
In principle, the launch aid provided by the European governments is repayable, but only if the products developed with such aid are profitable. The companies that receive the aid are not required to pay back the funds from their other non-Airbus business activities. As a result of this arrangement, government money, not company money, has borne the significant risks of product launch discussed above. Companies have not been bet-- public funds have. Public insurance against company risk has encouraged the Airbus consortium to be aggressive in the launch of new models, to exploit new markets and new technological opportunities. Indeed, as noted below, during the 1980s Airbus was more aggressive in introducing a number of new technologies than either MD and Boeing.
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