3.1. For the opponent Boein:
From 1969 to 2005, Boeing was the only supplier of super jumbos. However with the entry of Airbus into the wide-body aircraft market the monopoly position of Boeing broke apart as Airbus was given the opportunity of entering the super jumbo market with subsidies from the EU. The financial aids of the main investors France, Germany, Spain and Great Britain, of $4 billion for research and development for the A380 forced Boeing to share the product division with Airbus from the first flight on April 27th 2015 (Warnholtz, 2015). From then on Boeing had to share the super jumbo market and the revenue decreased by more than a half, because of rivalry price wars for a better market positioning in the accrued oligopolistic …show more content…
In these countries are main production facilities of Airbus. Therefore the governments want to ensure, through subsidies, the 19870 jobs in France, 18800 jobs in Germany, 9290 jobs in Great Britain and the 2850 jobs in Spain, status 2007 (Noack, 2007). Without the subsidies the four countries would have made no economical welfare loss. If they had not provided subsidies it would have been possible that these countries would have faced a higher unemployment rate and a lower income of taxes from Airbus. This is because Airbus would have had to shut down some factories or even have to move to low-wage countries to keep up with their rival Boeing. As a result France, Germany, Spain and Great Britain would have had a lower economic surplus, because the taxes of Airbus would shrink and the money to distribute and support their population would have been less. Furthermore, they maybe would have had another expense the unemployed workers, who could have worked for Airbus and now they have to be supported by the state. Therefore is it not easy for a country to decide whether or not to subsidize a company, because the governments never knows, if the opportunity cost, the cost of investing in something different, would have got a higher economical surplus, than the chosen investment to the general …show more content…
The financial burdens of $11.9 billion (Esty, Ghemawat, 2001) of the A380 empowered the airlines, because Airbus invested “more than 70% of Airbus total revenue- $17.2 billion- 2000” (Esty, Ghemawat, 2001, p.1) to make the production happen. To draw profit, Airbus had to sell at least 250 planes to break even (Esty, Ghemawat, 2001), where total cost are equal to total revenue. The airline with the most influence on the success or failure of the A380 was Emirates, because they ordered, 140 aircrafts of a total of 317 aircrafts status October 2015 (Airbus S.A.S., 2015). Consequently the airlines, specifically Emirates, were able to use Airbus as a puppet, because the financial welfare of the company depends on sales. Airbus needs to gather financial resources to be able to pay back the loans and parts of the financial subsidies and to compete in the future against Boeing in launching new
From 1969 to 2005, Boeing was the only supplier of super jumbos. However with the entry of Airbus into the wide-body aircraft market the monopoly position of Boeing broke apart as Airbus was given the opportunity of entering the super jumbo market with subsidies from the EU. The financial aids of the main investors France, Germany, Spain and Great Britain, of $4 billion for research and development for the A380 forced Boeing to share the product division with Airbus from the first flight on April 27th 2015 (Warnholtz, 2015). From then on Boeing had to share the super jumbo market and the revenue decreased by more than a half, because of rivalry price wars for a better market positioning in the accrued oligopolistic …show more content…
In these countries are main production facilities of Airbus. Therefore the governments want to ensure, through subsidies, the 19870 jobs in France, 18800 jobs in Germany, 9290 jobs in Great Britain and the 2850 jobs in Spain, status 2007 (Noack, 2007). Without the subsidies the four countries would have made no economical welfare loss. If they had not provided subsidies it would have been possible that these countries would have faced a higher unemployment rate and a lower income of taxes from Airbus. This is because Airbus would have had to shut down some factories or even have to move to low-wage countries to keep up with their rival Boeing. As a result France, Germany, Spain and Great Britain would have had a lower economic surplus, because the taxes of Airbus would shrink and the money to distribute and support their population would have been less. Furthermore, they maybe would have had another expense the unemployed workers, who could have worked for Airbus and now they have to be supported by the state. Therefore is it not easy for a country to decide whether or not to subsidize a company, because the governments never knows, if the opportunity cost, the cost of investing in something different, would have got a higher economical surplus, than the chosen investment to the general …show more content…
The financial burdens of $11.9 billion (Esty, Ghemawat, 2001) of the A380 empowered the airlines, because Airbus invested “more than 70% of Airbus total revenue- $17.2 billion- 2000” (Esty, Ghemawat, 2001, p.1) to make the production happen. To draw profit, Airbus had to sell at least 250 planes to break even (Esty, Ghemawat, 2001), where total cost are equal to total revenue. The airline with the most influence on the success or failure of the A380 was Emirates, because they ordered, 140 aircrafts of a total of 317 aircrafts status October 2015 (Airbus S.A.S., 2015). Consequently the airlines, specifically Emirates, were able to use Airbus as a puppet, because the financial welfare of the company depends on sales. Airbus needs to gather financial resources to be able to pay back the loans and parts of the financial subsidies and to compete in the future against Boeing in launching new