The Merits of Airbus

Single isle very popular

Smaller aircraft fewer risks

Cheaper to correct problems

Fuel efficient aircraft - Oil price in 2000 was up c.60%

Size, range, pricing – 737 lost out on to the A320

Military requirements; cannot as a unified Europe rely on American built planes for cross border and especially for trans-Atlantic or long-range conflicts

Asia-Pacific carriers, demanding narrow body

US company issues, policy; more difficult for individual nations’ policy to influence an EU group

“Every action in a duopoly sees an instant reaction”, signalling for higher prices, boeing’s interest to say its low quality, low prices; price inelastic demand means both suffer with price cuts,

Enough demand to absorb both firm’s offerings

Super jumbo jet – 550-990 passengers

Price of 216million 13bn to develop: need to sell 60 to break even. Assuming cost is all in is break even at 250 planes (mgt estimate undiscounted) so 54bn all in.

Hopes for orders of 50 jets from 5 major airlines

In progress from 1990 (10yrs work).

Delivery starts in 2006 (6yrs time)

Air france –10, emirates-7 , international lease finance- 5 = 22 already + 30 lined up

Is there LT demand?

Mgt believe 250 sales break even undiscounted, could sell 750 over 20yrs

Market demand could be 1500 over 20yrs, giving 350bn

Single isle very popular

Smaller aircraft fewer risks

Cheaper to correct problems

Fuel efficient aircraft - Oil price in 2000 was up c.60%

Size, range, pricing – 737 lost out on to the A320

Military requirements; cannot as a unified Europe rely on American built planes for cross border and especially for trans-Atlantic or long-range conflicts

Asia-Pacific carriers, demanding narrow body

US company issues, policy; more difficult for individual nations’ policy to influence an EU group

“Every action in a duopoly sees an instant reaction”, signalling for higher prices, boeing’s interest to say its low quality, low prices; price inelastic demand means both suffer with price cuts,