Airbus Case Study

History

Airbus is a consortium of European aviation companies in an attempt to compete

with their larger American counterparts. Airbus wanted to compete with the American

companies such as Boeing, McDonnell Douglas, and Lockheed Martin. In the mid

1960's, tentative discussions started about the possibility of forming a company for the

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large European companies to control. Airbus was officially formed in 1970 after

France's Sud-Aviation agreed to combine with Germany's Deutsche Airbus (which itself

was already a consortium made up of several other Germany aviation companies). The

United Kingdom, who was originally in the mix until they backed out in support of their

own British Airline Company (BAC) but later rejoined Airbus in 1979. In 1974, CASA

of Spain joined the new-formed consortium. The name "Airbus" was chosen because it

was a term used by the airline industry in the 1960s to refer to commercial airplanes and

because this term was acceptable for the French Linguistically (Wikipedia, 2006). In

1972, Airbus made its first maiden voyage with its first production model the A300.

"Initially the success of the consortium was poor but by 1979 there were 81 aircraft in

service" (Wikipedia, 2006). In 1981, Airbus was guaranteed a spot as a major factor in

the aviation production market because of the mass orders Airbus was delivering. Airbus

incorporated itself in 2001 under French law and in 2001 again became a fully integrated

company through a merger of the companies from Spain, France, and Germany getting

80% and The United Kingdom's BAE System getting 20%. The merger formed the

European Aeronautic Defense and Space Company, or EADS (Airbus, 2006). Airbus is

currently classified as a simplified joint stock company that is for the most part private,

yet it does publish its financial statements even though it does not have to under French

law (Hopkins, 2006). Right now, Airbus is owned jointly by EADS (owns 80%) and by

BAE Systems (owns 20%). These two companies are Europe's two biggest military

defense contractors. Currently, BAE Systems is selling out and would like EADS to buy

their shares (20%) in the company. The deal will be finalized after BAE Systems shares

are valuated by an investment banker company known as Rothschild.

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Airbus is a very large employer in Europe and internationally. Airbus represents

over 85 nationalities and over 20 different languages are spoken with English being the

chosen business language. "Airbus employs over 55,000 people at sixteen sites in four

European countries: Germany, France, The United Kingdom, and Spain" (Airbus, 2006).