CLOSING CASE Government Intervention at Airbus and Boeing Historically, United States companies such as Boeing (www.boeing. Government Support for Airbus com) and McDonnell Douglas were the dominant players in the Since the 1940s, European governments have pursued public poli- global aircraft industry. Founded in 1916 in Seattle, Boeing had cies based on democratic socialism. Under this system, Europeans many years to develop the critical mass necessary to become the became accustomed to government playing a significant role in world's leading aerospace manufacturer. During World War II and guiding economic affairs. the subsequent Cold War years, Boeing received many lucrative con- Airbus has benefitted enormously from government support. tracts from the U.S. Department of Defense. The firm has received tens of billions of euros of subsidies and No single country in Europe possessed the means to launch an soft loans from the four founding country governments and the aerospace company capable of challenging Boeing. Manufacturing European Union (EU). Airbus must repay the loans only if it achieves commercial aircraft is complex and capital-intensive and requires a profitability. Government aid has financed, in whole or part, every highly skilled workforce. In the 1970s, the governments of France, major Airbus aircraft model. European governments have forgiven Germany, Spain, and the United Kingdom formed an alliance, sup- Airbus's debt, financed R&D for civil aircraft projects, and provided ported with massive government subsidies, to create Airbus S.A.S. infrastructure and huge equity infusions. (www.airbus.com). By 1981, the four-country alliance succeeded in Airbus is currently a stock-held company jointly owned by becoming the world's number-two civil aircraft manufacturer. Airbus the British, Germans, French, and Spanish. It is based in Toulouse, launched the A300, among the best-selling commercial aircraft of all France, but has R&D and production operations scattered through- time
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