Aviation History: Boeing and Airbus

Boeing Company the world's largest manufacturer of commercial airplanes. Boeing controls more than half of the global market for jet airliners and is the leading supplier of military jets and helicopters, missile systems, and aerospace technology. The company also is one of the leading exporters in the United States. Its headquarters is in Chicago, Illinois. In the early 1950s Boeing began developing a commercial jet to compete with the popular propeller-driven planes of the Douglas Aircraft Company. Launched into service in 1958, the B-707 became the basis for Boeing's hugely successful line of commercial airliners: the 727, the 737, and the 747. In 1961 the company changed its name from the Boeing Airplane Company to The Boeing Company, reflecting its expansion into fields beyond airplane manufacture. For example, Boeing designed and built the first stages of the Saturn rockets used to launch the Apollo spacecraft to the Moon. The 747, the first wide-body "jumbo jet," entered service in January 1970 and seated as many as 490 passengers. Although the 747 would become the premier transcontinental jet in the world, its development pushed Boeing to the edge of bankrupcy. The company laid off about 60 percent of its workforce in the early 1970s before a new surge of commercial and military orders helped it recover. The smaller 737 became the world's best-selling passenger jet. In the early 1990s, a prolonged airline industry slump and increased competition from Airbus Industry forced Boeing to eliminate about 25 percent of its workforce. A lengthy workers' strike in 1995 cost the company significant revenues. Also in 1995 the company launched into service the midsize 777 jet, the first jet designed and modelled entirely on computers. The new jet helped the company win billions of dollars worth of new orders.

In 1997 Boeing acquired rival McDonnell Douglas Corporation for more than $16 billion, the largest merger ever in the aerospace industry. The merger dramatically strengthened Boeing's military aircraft and defence businesses. However, following the merger Boeing experienced a series of setbacks. Facing a record number of orders for its commercial jets, Boeing was plagued by severe parts and labour shortages. Production delays forced the company to shut down assembly of its 737 and 747 jets for a month. The production problems, combined with the costs of phasing out production of McDonnell Douglas's MD-80 and MD-90 passenger jets, led to billions of dollars in losses in 1997 and Boeing's first annual loss since 1947. In 1998 Boeing announced that it would stop producing the MD-11 wide-body jet, leaving the 717 (formerly called the MD-95) as the only remaining model from McDonnell Douglas's line of jets.

In 2000 Boeing acquired Hughes Electronics Corporation's space and communications division, the world's largest satellite manufacturing operation, in a deal valued at $3.75 billion. In 2001 Boeing moved its company headquarters from Seattle to Chicago.

Airbus Industry was formed in 1970 to counter the dominance of the commercial aircraft market by United States companies, specifically The Boeing Company, Lockheed Corporation (now Lockheed Martin Corporation), and McDonnell Douglas Corporation (now merged with Boeing). European aircraft companies that lacked the resources to compete against the larger U.S. companies on their own decided to share development costs. Original partners in the consortium were Sud Aviation of France (later Aerospatiale Matra SA) and Deutsche Airbus of West Germany. The first Airbus aircraft, the A300, was a wide-body twin-engine jet that accommodated up to 250 passengers. In 1971 Air France ordered six A300s, becoming Airbus's first customer. Initially Airbus had difficulty marketing the airplane outside the consortium's member countries, but the 1973 world oil crisis sparked new interest in the fuel-efficient A300. The plane entered service in 1974. By 1975 airlines had ordered more than 40 A300 planes. In 1978 Airbus launched a smaller version, called the A310. By the early 1980s Airbus had surpassed McDonnell Douglas and Lockheed and ranked only behind Boeing in the production of commercial jets. In 1984 Airbus introduced the A320, the first aircraft with fully computerized cockpit controls. The A320 became the fastest-selling jet in aviation history. In 1987 Airbus launched two larger models, the A330 and A340, with capacities of up to 380 passengers. As Airbus became more successful, it came under harsh criticism from U.S. jet makers, who charged that the company's government subsidies allowed it to price planes lower. Airbus posted its first operating profit in 1991.

In 1996 Boeing and McDonnell Douglas announced that they would merge into one company, a development that prompted Airbus to consider changing its corporate structure. To increase efficiency and competitiveness, the four Airbus partners agreed to transform the consortium into a centralized company operating under a single management team. The European Aeronautic Defense and Space Company (EADS) was created in 1999 from the merger of three partners in the Airbus consortium: France's Aerospatiale Matra, Germany's DaimlerChrysler Aerospace, and Spain's CASA. The following year the fourth partner, Britain's BAE Systems, agreed to make Airbus an integrated company. In 2001 Airbus Industrie became a single company, Airbus, ending its long status as an industrial consortium. In 2000 Airbus launched production of the A380, a superjumbo jet with seating on two decks capable of carrying 555 passengers in a typical three-class configuration. The aircraft, scheduled to enter service in 2006, will eclipse Boeing's 747-400 as the largest commercial passenger aircraft.

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