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Summative Assessment
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Market Analysis ofBy Rosita Mickeviciute
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, Introduction
Leading airline manufacturer Airbus, entered aviation world in July, 1967, with two politicians;
French transport minister and German economics minister both agreeing that Europe is missing
strong governance in aviation technology and operations sectors (Airbus, n.d. [online]), at a
convention the launching of the first model A300B in 1972 entered the programme (Airbus, n.d.
[online]). Main competitor Boeing, in 1970’s were already a reputable company and its focus at the
time was establishing other non-aircraft sectors (Amir and Weiss, n.d. [online]) this prompted Airbus
easier access to the aerospace industry.
Following the emerging consumer behaviour to fly more frequently it is explicit that the demand for
flights, therefore airlines is growing rapidly. Ergo, in 2010 total number of aircraft orders were 644
increasing to 949 in comparison to Boeing’s 848 in 2016 (Statista, 2016 [online]). Airbus entered
highly profitable and competitive market estimating €67 million in turnover and a revenue of €49.237
million (Airbus, 2017 [online]) also employing 133,782 staff (Statista, 2016 [online]).
In addition, Airbus adopted duopolistic competition which is a part of oligopoly structure explained
by Andriopoulos and Bountis (2008 [online]) of Boeing and Airbus being key players in aerospace
industry which distribute aircrafts of the same type. Barton (1968 [online]) explains that an oligopoly
stands for a market structure with a small number of firms which hold the majority of the market
share.
Airbus target market is increasing and growing a wider range of global airline operators such as
Emirates, Qantas Airways and many more. Furthermore, other market areas such as European
Defence Agency and private individuals as stated by (Lea, 2014 [online]).
The main aim of this report is to undertake macro-analysis of Airbus by compiling PEST analysis
and macro-environmental factors affecting its market as well as conducting comprehensive
competitor analysis and analysing two emerging trends facing Airbus.
Macro Environmental Factors:
Political
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, In retrospect of Brexit, West (2017 [online]) predicts UK to become less competitive in terms of high
costs over manufacturing processes. Airbus UK Limited (Companies House, 2017 [online])
produces A380 superjumbo plane wings at Broughton UK; therefore probability to result in a loss of
production and sales is high. According to Katz (2017 [online]) reduction of A380 outputs impact on
company’s revenue as well as suppliers and engineers dismissal from jobs. Airbus profits fell nearly
halved in the third quarter in 2014 as a result of falling euro currency which outweighed company’s
net earnings (Deutsche Welle, 2014 [online]). Consequently, Airbus adopted hedging strategies in
order to minimise the consequences on company’s Earnings Before Interest and Tax (EBIT) with
the US dollar fluctuating (Airbus, 2017 [online]). Nevertheless, Airbus secured distribution of A320
and A350 for another 20 years (Airbus, 2016 [online]) and in 2014 cooperated with UK government
relations team and designated leaders for new lobbying sector Airbus Helicopters, a subtotal of:
$111,000 (See Figure 1); keen to stay competitive player in the future markets.
Figure 1
Source: (Open Secrets, 2017 [online])
- Lobbying increase annually by a large amount of investment.
Economic
Annually increase in wages affect 256 Airbus UK employees’ salaries, according to Glassdoor (2017
[online]) a trainee earns £14,548 per year, whereas design engineer up to £35,000; well above the
minimum wage. However, according to Stacey and Parker (2017 [online]), Airbus warns out its
employees working at UK wing factory on the implications post Brexit as well as the impact on the
boarder changes between EU and UK and how it would affect shipping fuselage to France.
Consequently, such disallowance could impact on competitiveness with Boeing that operates with
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