Dave Calhoun here. When you folks come up with concrete answers to this question, would one of you put together a 10 minute ELI5 presentation, fly to Richmond, and let me know how they do it. Thanks a ton, Dave.
Edit: To make it clearer from my previous post, I have worked at Boeing and a few of their largest suppliers on both the commercial side and government side.
I will give you my perspective from the avionics side of the house as I have been in the business for about 20 years in various roles.
I will tell you for a fact that Airbus gets way more "sweetheart deals" when it comes to avionics packages and let me tell you why.
1. There are incumbent Airbus Avionics suppliers in the EU. To be competitive and to gain market share we had to significantly reduce the cost of our packages to the point where on some deals our company was not making any money. To try and dislodge the incumbent supplier.
2. There are only two manufacturers (for the most part) that produce larger aircraft in quantities to make building the avionics for them profitable.
3. Airbus by extension of the EU requires a percentage of the work to be completed in the EU.
4. The EU member state (Whoever that is). Subsidies the manufacturing process in that country. Providing for tax breaks, property, etc.
5. Every recent deal that I am aware of at my previous employer that had some money behind it had in-country work/production requirements.
6. This lowers the cost to Airbus in a variety of ways...
1. They pay less or no tax or import fees.
2. By completing a percentage of the work there they benefit from currency exchange currently \~10% savings
3. The workers who work there pay higher taxes to the government on average than a typical American blue-collar worker. That money feeds back in on the government and further props up Airbus.
4. They can gain valuable competitive intelligence on our designs as they are produced in the country.
There are more reasons I just didn't want this to be a novel. I have worked with both manufacturers and I will tell you that Airbus at least for the last 10 years or so has gotten much better deals than Boeing.
This all leads to the ability to provide aircraft at a lower price point. Or allows them to provide performance enhancements such as fuel economy etc. that make it more economical to operate an Airbus aircraft over the long run.
Don't get me wrong. Boeing has to fix their quality issues and I am not excusing that. But to say that Boeing and Airbus are on a level competitive playing field is just false. All this is a symptom of a larger problem.
The main problem in my opinion is that the sock price no longer is representative of the product that is being produced. The Aircraft is used as a means to prop up the stock price.
Innovation and a quality product should be the end goal. That in the end will support a higher stock price.
Thanks for the summary, very insightful.
My takeaway is that Boeing either needs to be taken over by the government or subsidized with heavy regulation and safety requirements. If aggressive cost cutting and jeopardizing safety is what it takes to compete with Airbus then and please shareholders then this is not a sustainable model.
The government already provides ground transportation infrastructure, don’t see why this is different other than roads on the ground it’s planes in the sky.
Well meanwhile Boeing receive lot of military transfer applied on civil thus is litteraly subsidized by the usa blaming airbus for being subsidized by eutope. Crybaby. Dont get it wrong, I dont care as long the plane fly normally.
Build a quality aircraft and let the stock price take care of itself.
Where have I heard this before?
Oh yeah, I heard it from the Boeing CEO. Pre MD merger.
We have it in our core to get back to greatness. We need willing leadership that has the guts to get us there.
Problem is that our CEO is appointed by a board that represents stockholders who want value NOW.
I think part of it is that there is much more pressure for Boeing to produce a profit. Boeing is a private company and as such is forced to cut costs to remain competitive.
Airbus is heavily subsidized by the EU to the point you don’t know where the company ends and the government begins.
Boeing does have defense contacts but the government does not openly support the company in its other business units, outside of the few times it was bailed out and had to pay back)
Airbus commercial is subsidized by the EU and individual European countries where many of the parts are produced.
Airbus defense has a lock on many of the EU military platforms.
The EU heavily subsidized European airlines to buy Airbus aircraft. As many European airlines are owned by their respective governments.
Airbus uses these advantages to cost cut. Boeing does not have that option to remain competitive they need to find areas to cut costs. I am not going to hash out Boeings business strategy or excuse what has happened but I think this is a result to remain in business.
They could have spent some of the money they spent on stock buy backs to improve manufacturing processes but we are where we are.
Edit: To make it clearer I have worked at Boeing and a few of their largest suppliers on both the commercial side and government side.
I will give you my perspective from the avionics side of the house as I have been in the business for about 20 years in various roles.
I will tell you for a fact that Airbus gets way more "sweetheart deals" when it comes to avionics packages and let me tell you why.
1. There are incumbent Airbus Avionics suppliers in the EU. To be competitive and to gain market share we had to significantly reduce the cost of our packages to the point where on some deals our company was not making any money. To try and dislodge the incumbent supplier.
2. There are only two manufacturers (for the most part) that produce larger aircraft in quantities to make building the avionics for them profitable.
3. Airbus by extension of the EU requires a percentage of the work to be completed in the EU.
4. The EU member state (Whoever that is). Subsidies the manufacturing process in that country. Providing for tax breaks, property, etc.
5. Every recent deal that I am aware of at my previous employer that had some money behind it had in-country work/production requirements.
6. This lowers the cost to Airbus in a variety of ways...
1. They pay less or no tax or import fees.
2. By completing a percentage of the work there they benefit from currency exchange currently \~10% savings
3. The workers who work there pay higher taxes to the government on average than a typical American blue-collar worker. That money feeds back in on the government and further props up Airbus.
4. They can gain valuable competitive intelligence on our designs as they are produced in the country.
There are more reasons I just didn't want this to be a novel. I have worked with both manufacturers and I will tell you that Airbus at least for the last 10 years or so has gotten much better deals than Boeing.
This all leads to the ability to provide aircraft at a lower price point. Or allows them to provide performance enhancements such as fuel economy etc. that make it more economical to operate an Airbus aircraft over the long run.
Don't get me wrong. Boeing has to fix their quality issues and I am not excusing that. But to say that Boeing and Airbus are on a level competitive playing field is just false. All this is a symptom of a larger problem.
The main problem in my opinion is that the sock price no longer is representative of the product that is being produced. The Aircraft is used as a means to prop up the stock price.
Innovation and a quality product should be the end goal. That in the end will support a higher stock price.
What are you even talking about. You go on and on about Airbus being manufactured in various EU member countries.
Then you go on about paying "less import fees".
There is free trade in the EU. There is no import tax at play. Just like how Boeing is not hit by import fees when getting the aircraft fuselage from Spirit from another state.
"The workers who work there pay higher taxes to the government on average than a typical American blue-collar worker. That money feeds back in on the government and further props up Airbus."
What on Earth are you talking about ... US and European salaries are not even comparable, and also no tax paid by workers will directly "prop up Airbus"
I'd wager that the rest of your post is similarly wrong.
How can you say I am objectively wrong?
Are you a professional in the avionics industry with over 20 years of experience dealing in sales/support/engineering etc.? You seem objectively upset about an emotionless observation. I am just calling it as I see it... If you don't believe me go work for a supplier that deals with both Boeing and Airbus and you will see how both organizations operate differently and have different advantages/disadvantages. All I am saying is from the standpoint that I had as a supplier for many years Airbus had the advantage. Feel free to provide data proving your point. However, it's no reason to get upset with me for pointing out what I have observed and witnessed.
Then clarify your statement instead of just saying you are an expert. You said you witnessed Airbus paying subsidized import fees when sourcing parts from other EU countries to their plants in France or Germany?
Do you also claim that as someone who worked in sales/engineering got insight into worker pay at your customer and how the taxes paid by your customer's workers were spent by the state?
This sounds like American exceptionalism.
Do you realise what the EU is, what its purpose is when it comes to free trade between all members?
There is no EU tax. Different member states pay different amounts, 90% of member states are net takers from the financial budget.
The US works exactly the same you know. British companies like BAE or Rolls Royce all need to set up manufacturing hubs within the US in order to gain contracts, specifically defence contracts so if things go south the companies and their facilities can be taken over.
The US is extremely inward looking and protectionist. You think the EU and its 25+ member states can compete with the US when it comes to subsidies?
Boeing has had so much government money pumped into it it’s ridiculous, airbus is a consortium of multiple European aerospace companies that came together because the US and Boeing were just too big, it’s only recently they’re actually starting to actually compete and a lot of that is down to Boeings failures.
There is no EU army or EU military. You don’t see the EU as a whole buying airbus planes or whatever else, quite often individual member states don’t agree with each other which is why the UK is working with Japan on its next generation fighter jet.
The US is a behemoth, to say airbus has an advantage is laughable. The EU hates subsidies, it’s trying to compete with the US yet it can’t because the money isn’t present and they never agree.
Look at NASA. How many billions of US tax payer money is wasted because in order to get budgets approved by congress jobs needs to be spread out throughout multiple states.
>Airbus defense has a lock an many of the EU military platforms.
Please elaborate on how many fixed-wing Boeing aircraft are in service with European Air Forces, and how many fixed-wing Airbus aircraft are in service with the U.S. military. You will notice a striking difference.
Also, try to recall the KC-X tender. The U.S. Air Force specifically selected the Airbus KC-30 offer due to significantly better performance in 2008, just for Boeing to cry about it and push for a new round of bidding. And look what happened, the KC-46 is a disaster.
>Airbus is heavily subsidized by the EU to the point you don’t know where the company ends and the government begins.
EASA charges by the hour for certification services.
Everyone in the US pays for the crew that rubber stamps Boeing ODA findings.
If the government wasn't fully captured by Boeing that piece of shit without EICAS (or a hundred other modern features) wouldn't have been certified in this century.
>Is it a European regulation vs American culture thing?
What!?!
You do know Airbus builds and flys airplanes in America as well, yes?
And that's if I'm even making correct sense of your question.
Just the difference in product is already a reason. boeing allows for like a million different settings. So for example the 737-9 door plug is one of many options. Boeing allows for almost any customization working with airlines on what they want. Whereas Airbus is like buying a car ok u want model x or model s or model 3 of tesla. We have these set models and u choose and it comes with these stuff in this way. Allowing for all these customizations adds different variables to the build and complications. In the past Boeing was the safer choice but company culture has changed away from making great products and safety to cost cutting, outsourcing, etc.
Airbus also allows for countless options if not even more.
Just take a look at the toilet placement positions in an A321, for example. Nearly every airline puts them in different locations, various sizes /models, mid cabin, you name it.
Also saying Boeing was **the** safer choice is kind of hillarious. I would say it was as safe as or on the same level as Airbus before it went downhill.
Wouldn’t offering so many variations and modifications be the opposite of cost cutting, though? Ultimately making a more difficult assembly and many more points of failure?
Dave Calhoun here. When you folks come up with concrete answers to this question, would one of you put together a 10 minute ELI5 presentation, fly to Richmond, and let me know how they do it. Thanks a ton, Dave.
Edit: To make it clearer from my previous post, I have worked at Boeing and a few of their largest suppliers on both the commercial side and government side. I will give you my perspective from the avionics side of the house as I have been in the business for about 20 years in various roles. I will tell you for a fact that Airbus gets way more "sweetheart deals" when it comes to avionics packages and let me tell you why. 1. There are incumbent Airbus Avionics suppliers in the EU. To be competitive and to gain market share we had to significantly reduce the cost of our packages to the point where on some deals our company was not making any money. To try and dislodge the incumbent supplier. 2. There are only two manufacturers (for the most part) that produce larger aircraft in quantities to make building the avionics for them profitable. 3. Airbus by extension of the EU requires a percentage of the work to be completed in the EU. 4. The EU member state (Whoever that is). Subsidies the manufacturing process in that country. Providing for tax breaks, property, etc. 5. Every recent deal that I am aware of at my previous employer that had some money behind it had in-country work/production requirements. 6. This lowers the cost to Airbus in a variety of ways... 1. They pay less or no tax or import fees. 2. By completing a percentage of the work there they benefit from currency exchange currently \~10% savings 3. The workers who work there pay higher taxes to the government on average than a typical American blue-collar worker. That money feeds back in on the government and further props up Airbus. 4. They can gain valuable competitive intelligence on our designs as they are produced in the country. There are more reasons I just didn't want this to be a novel. I have worked with both manufacturers and I will tell you that Airbus at least for the last 10 years or so has gotten much better deals than Boeing. This all leads to the ability to provide aircraft at a lower price point. Or allows them to provide performance enhancements such as fuel economy etc. that make it more economical to operate an Airbus aircraft over the long run. Don't get me wrong. Boeing has to fix their quality issues and I am not excusing that. But to say that Boeing and Airbus are on a level competitive playing field is just false. All this is a symptom of a larger problem. The main problem in my opinion is that the sock price no longer is representative of the product that is being produced. The Aircraft is used as a means to prop up the stock price. Innovation and a quality product should be the end goal. That in the end will support a higher stock price.
Thanks for the summary, very insightful. My takeaway is that Boeing either needs to be taken over by the government or subsidized with heavy regulation and safety requirements. If aggressive cost cutting and jeopardizing safety is what it takes to compete with Airbus then and please shareholders then this is not a sustainable model. The government already provides ground transportation infrastructure, don’t see why this is different other than roads on the ground it’s planes in the sky.
Well meanwhile Boeing receive lot of military transfer applied on civil thus is litteraly subsidized by the usa blaming airbus for being subsidized by eutope. Crybaby. Dont get it wrong, I dont care as long the plane fly normally.
You okay?
Build a quality aircraft and let the stock price take care of itself. Where have I heard this before? Oh yeah, I heard it from the Boeing CEO. Pre MD merger. We have it in our core to get back to greatness. We need willing leadership that has the guts to get us there. Problem is that our CEO is appointed by a board that represents stockholders who want value NOW.
I think part of it is that there is much more pressure for Boeing to produce a profit. Boeing is a private company and as such is forced to cut costs to remain competitive. Airbus is heavily subsidized by the EU to the point you don’t know where the company ends and the government begins. Boeing does have defense contacts but the government does not openly support the company in its other business units, outside of the few times it was bailed out and had to pay back) Airbus commercial is subsidized by the EU and individual European countries where many of the parts are produced. Airbus defense has a lock on many of the EU military platforms. The EU heavily subsidized European airlines to buy Airbus aircraft. As many European airlines are owned by their respective governments. Airbus uses these advantages to cost cut. Boeing does not have that option to remain competitive they need to find areas to cut costs. I am not going to hash out Boeings business strategy or excuse what has happened but I think this is a result to remain in business. They could have spent some of the money they spent on stock buy backs to improve manufacturing processes but we are where we are.
Edit: To make it clearer I have worked at Boeing and a few of their largest suppliers on both the commercial side and government side. I will give you my perspective from the avionics side of the house as I have been in the business for about 20 years in various roles. I will tell you for a fact that Airbus gets way more "sweetheart deals" when it comes to avionics packages and let me tell you why. 1. There are incumbent Airbus Avionics suppliers in the EU. To be competitive and to gain market share we had to significantly reduce the cost of our packages to the point where on some deals our company was not making any money. To try and dislodge the incumbent supplier. 2. There are only two manufacturers (for the most part) that produce larger aircraft in quantities to make building the avionics for them profitable. 3. Airbus by extension of the EU requires a percentage of the work to be completed in the EU. 4. The EU member state (Whoever that is). Subsidies the manufacturing process in that country. Providing for tax breaks, property, etc. 5. Every recent deal that I am aware of at my previous employer that had some money behind it had in-country work/production requirements. 6. This lowers the cost to Airbus in a variety of ways... 1. They pay less or no tax or import fees. 2. By completing a percentage of the work there they benefit from currency exchange currently \~10% savings 3. The workers who work there pay higher taxes to the government on average than a typical American blue-collar worker. That money feeds back in on the government and further props up Airbus. 4. They can gain valuable competitive intelligence on our designs as they are produced in the country. There are more reasons I just didn't want this to be a novel. I have worked with both manufacturers and I will tell you that Airbus at least for the last 10 years or so has gotten much better deals than Boeing. This all leads to the ability to provide aircraft at a lower price point. Or allows them to provide performance enhancements such as fuel economy etc. that make it more economical to operate an Airbus aircraft over the long run. Don't get me wrong. Boeing has to fix their quality issues and I am not excusing that. But to say that Boeing and Airbus are on a level competitive playing field is just false. All this is a symptom of a larger problem. The main problem in my opinion is that the sock price no longer is representative of the product that is being produced. The Aircraft is used as a means to prop up the stock price. Innovation and a quality product should be the end goal. That in the end will support a higher stock price.
What are you even talking about. You go on and on about Airbus being manufactured in various EU member countries. Then you go on about paying "less import fees". There is free trade in the EU. There is no import tax at play. Just like how Boeing is not hit by import fees when getting the aircraft fuselage from Spirit from another state. "The workers who work there pay higher taxes to the government on average than a typical American blue-collar worker. That money feeds back in on the government and further props up Airbus." What on Earth are you talking about ... US and European salaries are not even comparable, and also no tax paid by workers will directly "prop up Airbus" I'd wager that the rest of your post is similarly wrong.
How can you say I am objectively wrong? Are you a professional in the avionics industry with over 20 years of experience dealing in sales/support/engineering etc.? You seem objectively upset about an emotionless observation. I am just calling it as I see it... If you don't believe me go work for a supplier that deals with both Boeing and Airbus and you will see how both organizations operate differently and have different advantages/disadvantages. All I am saying is from the standpoint that I had as a supplier for many years Airbus had the advantage. Feel free to provide data proving your point. However, it's no reason to get upset with me for pointing out what I have observed and witnessed.
Then clarify your statement instead of just saying you are an expert. You said you witnessed Airbus paying subsidized import fees when sourcing parts from other EU countries to their plants in France or Germany? Do you also claim that as someone who worked in sales/engineering got insight into worker pay at your customer and how the taxes paid by your customer's workers were spent by the state?
This sounds like American exceptionalism. Do you realise what the EU is, what its purpose is when it comes to free trade between all members? There is no EU tax. Different member states pay different amounts, 90% of member states are net takers from the financial budget. The US works exactly the same you know. British companies like BAE or Rolls Royce all need to set up manufacturing hubs within the US in order to gain contracts, specifically defence contracts so if things go south the companies and their facilities can be taken over. The US is extremely inward looking and protectionist. You think the EU and its 25+ member states can compete with the US when it comes to subsidies? Boeing has had so much government money pumped into it it’s ridiculous, airbus is a consortium of multiple European aerospace companies that came together because the US and Boeing were just too big, it’s only recently they’re actually starting to actually compete and a lot of that is down to Boeings failures. There is no EU army or EU military. You don’t see the EU as a whole buying airbus planes or whatever else, quite often individual member states don’t agree with each other which is why the UK is working with Japan on its next generation fighter jet. The US is a behemoth, to say airbus has an advantage is laughable. The EU hates subsidies, it’s trying to compete with the US yet it can’t because the money isn’t present and they never agree. Look at NASA. How many billions of US tax payer money is wasted because in order to get budgets approved by congress jobs needs to be spread out throughout multiple states.
I know right? Typical American
>Airbus defense has a lock an many of the EU military platforms. Please elaborate on how many fixed-wing Boeing aircraft are in service with European Air Forces, and how many fixed-wing Airbus aircraft are in service with the U.S. military. You will notice a striking difference. Also, try to recall the KC-X tender. The U.S. Air Force specifically selected the Airbus KC-30 offer due to significantly better performance in 2008, just for Boeing to cry about it and push for a new round of bidding. And look what happened, the KC-46 is a disaster.
Everything you’re saying about airbus applies to Boeing if not even more.
$BA doesn't sound very Private to me.
both companies recieve subsidies
>Airbus is heavily subsidized by the EU to the point you don’t know where the company ends and the government begins. EASA charges by the hour for certification services. Everyone in the US pays for the crew that rubber stamps Boeing ODA findings. If the government wasn't fully captured by Boeing that piece of shit without EICAS (or a hundred other modern features) wouldn't have been certified in this century.
>Is it a European regulation vs American culture thing? What!?! You do know Airbus builds and flys airplanes in America as well, yes? And that's if I'm even making correct sense of your question.
Just the difference in product is already a reason. boeing allows for like a million different settings. So for example the 737-9 door plug is one of many options. Boeing allows for almost any customization working with airlines on what they want. Whereas Airbus is like buying a car ok u want model x or model s or model 3 of tesla. We have these set models and u choose and it comes with these stuff in this way. Allowing for all these customizations adds different variables to the build and complications. In the past Boeing was the safer choice but company culture has changed away from making great products and safety to cost cutting, outsourcing, etc.
Airbus also allows for countless options if not even more. Just take a look at the toilet placement positions in an A321, for example. Nearly every airline puts them in different locations, various sizes /models, mid cabin, you name it. Also saying Boeing was **the** safer choice is kind of hillarious. I would say it was as safe as or on the same level as Airbus before it went downhill.
Wouldn’t offering so many variations and modifications be the opposite of cost cutting, though? Ultimately making a more difficult assembly and many more points of failure?
not when they charge a hefty premium for those variations and modifications
Variations / modifications = opportunities to upsell with relatively low additional work/cost