COMMENT : Airbus begins a painful and necessary process
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.There are not many examples of successful pan-European co-operation these days, but Airbus is one of them. Scarcely noticed, this consortium of British, French, German and Spanish aerospace companies has grown to be getting on for the largest single enterprise in Europe. Most of its aircraft are superior to those of its chief rival, Boeing, and from a standing start it has managed to carve itself out a formidable position in world markets. But there is one important gap in its armoury: it doesn't have anything to compare with Boeing's jumbo. Boeing's monopoly position in this market enables it to cross-subsidise into the rest of its range, giving it a very considerable competitive advantage over its European counterpart.
Airbus wants to change that. These plans don't come cheap, however. Development of the A3XX, Europe's answer to the jumbo, is going to cost $10bn or more. Only part of that will be met by government aid. The rest is going to have to come from the capital markets and or, bringing in other partners - including, heresy of heresies, perhaps those from outside Europe.
Which is why Airbus must soon begin the slow and painful process of incorporation. What makes this doubly tortuous is that the British Aerospace part of Airbus is a good sight more profitable than the French and German parts. On Anglo-Saxon measures, therefore, it should be worth a good deal more. Unfortunately the profitability of the various parts doesn't tally with the present structure of ownership. The French and Germans have nearly 38 per cent apiece, with BAe at only 20 per cent.
It can readily be seen that this is not going to be an easy negotiation. The French, even more than the Germans, do not believe short-term profitability is any guide to value or worth. The fact that Aerospatiale makes big losses on its Airbus interests is not regarded by the French as relevant. Plainly, there is a big conceptual gulf here. With the potential opportunities and rewards so great, however, it is one that deserves to be overcome.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments