Executive Summary
Airbus was formed in the 1960s by a consortium of European companies from Germany, France, UK and later Spain, in response to the American manufacturers’ dominance of the aerospace industry. Airbus has progressed over the years from a ‘Question Mark’ to that of a ‘Star’ (Boston Consultant Group’s Growth-Share matrix). By adopting strategies based on the Ansoff grid, Airbus has broken through Boeing’s market domination, growing 5-10% p.a. and achieving 25% market share in 1980. As of 2010 Airbus’ market share was 52% based on net orders, in a duopolistic competition with its other major rival, Boeing.

Airbus has adopted a differentiation strategy in its competition with Boeing. Airbus designs like ‘sharklet’ wingtip design helps saves 3.5% fuel burn, whilst “GLARE” materials weigh 10% less than aluminum (savings of 794kg weight on the A380). Lower airplane maintenance costs by 6%, improved manufacturing processes (eg 62% defect reduction in Broughton facility) and engine sourcing from UK firms (Rolls Royce/Pratt Whitney engines, whilst Boeing prefer GE engines) are amongst other differentiating strategies adopted. Its flagship, the A380 was designed in line with the traditional hub-and-spoke model (as opposed to Boeing’s tendency towards the point-to-point model). Outsourcing to China has helped Airbus secure 45% delivery share there by 2011. However, Airbus needs to be mindful of supply chain risks from its vast supplier network- the A380 was delayed by 2 years resulting from production issues, causing Airbus’s share price to drop (26% in 2006) and reduced earnings by €4.8 billion in 2010.

The aerospace industry is still growing rapidly especially within Asia. PEST analysis has shown that political and economical factors, e.g. deregulation and higher living costs have resulted in increased flight routes and rising popularity of low-cost