Word: airbuses
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McDonnell Douglas has a particular grievance against Airbus: using "predatory" practices in trying to persuade customers who had already ordered the MD-11 to switch to the A340 instead. Scandinavian SAS airlines had signed a letter of intent to buy a dozen MD-11s and had put down a deposit on the order. Then Airbus jumped in with attractive concessions to SAS on a deal (the details are undisclosed) to buy A340s. The airline has delayed its final decision...
...Airbus has been soaring especially high as a result of its new A320. This technologically advanced short- to medium-range (up to 3,500 miles) jet, unveiled in February, will carry as many as 150 passengers. The world's airlines, including two American carriers, have made commitments to buy about 440 of the A320s, making it the fastest-selling new plane in aviation history. Moreover, Airbus is already taking orders for the A330 and the A340, two larger intercontinental planes that are only on the drawing board. To the astonishment of Boeing and McDonnell Douglas, Minneapolis-based Northwest Airlines placed...
...Airbus' current success is all the more surprising because it was slow to get off the ground. Created in 1970, the consortium is funded by publicly and privately owned aircraft builders in France, Britain, West Germany and Spain. But it did not sell a single jet to a U.S. airline for seven years. Says Robert Kugel, an aerospace analyst at the Morgan Stanley investment firm: "U.S. carriers wouldn't touch European airliners with a ten-foot pole. They had a reputation for poor quality and maintenance." That perception gradually changed. By 1987 some 360 of the medium-range A300...
Confronted by such cutthroat competition, McDonnell Douglas has discussed making a truce with Airbus several times during the past few years. The American company suggested that the competitors form a joint venture to build long-range jets together and thus combine forces against Boeing. Says McDonnell Douglas' Worsham: "Instead of being lean dogs fighting for the same piece of meat, we could strengthen ourselves with cooperation." So far, though, Airbus has declined the offer...
...naturally alarmed that the American aerospace industry, which generated a surplus of $12 billion in its overseas trade last year, could be damaged by unfair subsidies to a foreign competitor. The Administration is negotiating with the Europeans in an effort to persuade them to them to curb the Airbus subsidies. Said U.S. Trade Ambassador Michael Smith last week: "We want to defuse the tension...