It seems that everyone wishes to be like Airbus. Luca de Meo, the chief executive officer of Renault, has advocated for an Airbus-style automobile to counter the Chinese electric vehicle threat to European automakers in recent months. The head of the German utility E.ON was answering questions in March regarding the potential benefits of a pan-European mega-utility that would be the "Airbus" in the energy sector. Infuriated by Europe's highly disjointed defense sector, military experts have even begun to consider creating an "Airbus of defense." This poses two questions: first, what does this spate of sloganizing actually imply; and second, are any of the new Airbus fanatics aware of the whole tortuous history of it?
Undoubtedly, the Airbus of 2024 is performing exceptionally well. Orders and profitability for the 140-billion-dollar pan-European aircraft manufacturer are rising amid turbulent times at US rival Boeing. Since 2019, commercial aircraft deliveries for the company under its CEO Guillaume Faury have surpassed those of their American competitor every year. In 2023, the combined net gain for the company was 3.8 billion euros, while Boeing's net loss was almost $2 billion. At the conclusion of the year, Airbus had 8,598 commercial orders, over 2,000 more than its rival. The European group had a lead of about 500 ten years ago.
It's also true that Airbus provides an attractive pattern; during its more than 50-year history, it has served both private and public owners in key European countries like France, Germany, and the UK. Chinese automakers, such as BYD, are putting their European rivals at risk by saturating the market with lower-priced EVs. Should companies like Renault, Volkswagen, and Stellantis combine their operations in some sort of Airbus clone, they would share crucial expertise and assume less individual risk. Additionally, they may achieve economies of scale in production, perhaps leading to the creation of an electric automobile that is competitively priced in Europe. Ultimately, Airbus emerged from a similar worry about foreign competition: during the 1960s, European aircraft industries were afraid that American competitors such as Boeing and Lockheed would force them out of business. An example of bureaucrats contributing to the establishment of a worldwide successful corporation is clearly appealing during a time when authorities are aggressively interfering in the market.
However, more research into Airbus's past might be beneficial for these followers. Only ten years ago did the corporation take on its current structure, with the board mostly free from government influence and minority holdings held only by state and state-aligned investors. German and French groups founded "Airbus Industrie" in 1970, with British and Spanish investors joining later. However, it wasn't until the 1990s that it started to make an operating profit because of significant investments and the success of the A320 aircraft. Three companies, DaimlerChrysler Aerospace of Germany, Aerospatiale Matra of France, and CASA of Spain, combined to establish the European Aeronautic Defence and Space Company in the early 2000s. EADS was to hold 80% of the Airbus aircraft manufacturing company, with the UK's BAE Systems retaining the other 20%. Nonetheless, the ensuing ten years illustrated how challenging it is to get an intricate pan-European project.
Following their 2000 merger, the formerly independent national corporations' cultures and procedures remained virtually unaltered. The compromise reached its lowest point when building the A380 superjumbo. It was eighteen months late and many billion dollars over budget. The underlying issue was national rivals withholding full disclosure of issues to the management until it was too late.
After restructuring the business and purchasing the 20% BAE stake in 2006, EADS chose to rebrand the airline as Airbus seven years later. Ultimately, Airbus was able to work itself out. However, a number of peculiar characteristics are reflected in its current state of health. Planemaking trends toward oligopoly because of the enormous upfront expenditures associated with creating new aircraft that are superior to the previous model, with no assurance that airlines will purchase them. Moreover, it is a worldwide market, with airlines from all over the world selecting from a limited number of models.
Another powerful support for the ruse health of Airbus is the sickness of its major rival. Boeing's reputation had been hurt by two fatal crashes that claimed 346 lives in 2018 and 2019, but it is now dealing with the fallout from a door plug blowout that occurred in mid-air in early January. Carriers like United Airlines are getting closer to acquiring more Airbus aircraft as Boeing goes through a significant management reorganization. Yet despite its superior performance, Airbus's stock return has only surpassed that of its American competitor over the past three years.
Put another way, the current health of Airbus today is a result of more than 50 years of history as well as a few extremely unique circumstances. It may still be wise for European automakers to work together to combat the threat posed by Chinese competitors. For instance, the Automotive Cells Company, established in 2020, combines the efforts of Stellantis, Mercedes-Benz, and a division of TotalEnergies in the research, development, and manufacturing of batteries for electric vehicles. Yes, that might be the kind of collaboration that de Meo is thinking of. If that's the case, he and other followers of Airbus ought to devise a better analogy.