1. In light of the foregoing payoffs, why did Airbus go ahead with the A380 Superjumbo even though its $10.7 billion development cost required as many as 250 planes to break even by 2010?
2. In 2004, Boeing produced fewer planes than Airbus (see Figure). If Boeing finds itself less profitable at 60 percent market share than at 45 percent, what is the likely impact on the Airbus-Boeing tactical competition?
3. The EU claims that Boeing was given $3.2 billion in tax exemptions by the State of Washington to support the Boeing Dreamliner 787 project. The United States claims that Airbus received $6 billion in loans that do not need to be repaid to support the research, development, and launch aid for the Airbus 380 Superjumbo. These charges and countercharges at the World Trade Organization pertain to whether either firm is €œdumping€ when it brings the first 787s and 380s to market. What category of cost must be covered by the early penetration prices in order to avoid such charges of predatory pricing?

Boeing and Airbus complete wide-bodied commercial aircraft in several sizes at the rate of about one per day. Customers first pay a deposit of one-third of $84 to $127 million for a 767, one-third of $134 to $185 million for a 777, and one-third of $165 to $200 million for a 747, depending on how the planes are equipped. The second third is due after final assembly when the aircraft is painted, and the final third is due at delivery. Final assembly requires 15€“25 days, the entire production schedule is 11 months long, and of course, design modifications add months to the front end of each project. The largest of the Boeing planes (the 747-400) carries 432 passengers; by comparison, the largest Airbus plane (the A380) carries 550passengers.

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Wide-Bodied Aircraft Deliveries by Year 600 400- Boeing 200 Airbus 0 1974 1980 1990 2000 2010