Airbus Power 8 - Cost reduction program

Das Kostenreduktionsprogramm von Airbus und die Bedeutung für die EU

Essay, 2007

16 Pages, Grade: 1,0



Airbus’ Power 8 – Power for Europe ?

Airbus – the company

Cost Reduction Program Power 8 And Its Necessity

The EU’s interest in Airbus

Power 8’s effect on the EU

Recommendation on policies


Image Reference

Airbus’ Power 8 – Power for Europe ?

In times of Globalization and Internationalization major national companies become “global” in terms of structure, purchase or production. Great “geopolitical” supra national bodies like the European Union ( EU ) play an important role in terms of regulating trade-traffic or improving the economic standard for its members. The multinational aircraft manufacturer, Airbus S.A.S, is a good example to emphasize how corporate goals do not always equate with EU ideals.

The purpose of this report is to identify those disputes relating to the current cost reduction program of Airbus called “Power 8”. By handling the agenda the lead question will be discussed. Recommondations in the last part mention proposals concerning political issues in regional and environmental policy. As a whole this report gives an overview concerning the disputes of a margin orientated company and the EU with the economic interest of all its members.

Airbus – the company

In 2001 Airbus S.A.S. ( Société par Actions Simplifiée – joint stock company ) became the second largest aircraft manufacturer in the world as an integrated company to the EADS ( European Aeronautic Defence and Space Company ). It is a multinational company, with its headquarters in Toulouse, which coordinates all activities and controls the progress in all corporate functions ( e.g. purchase, production, destribution etc. ). Its main actions are focused on four EU members: France, Germany, UK, Spain ( Airbus online, 2007a ):

France includes four manufacturing sites and three assembly lines. As one of the founder members France has the biggest number of employees ( 19.500 ). The company’s structure is based on “Centres of Excellence”, which means that certain areas are specialised in particular aircraft components. A new assembly line has been built especially for the A380, which replaced the Boeing 747 as the biggest passenger plane ( Airbus worldwide, 2007a ).

Germany has an important role in the development and engineering of all aircrafts. Hamburg is the Centre of Excellence for cabin and cargo customisation. They are also the site for the final Marketing and acceptance of A380s customers in Europe and the Middle East. Concerning the A380 Hamburg produces complete fuselage sections, which are shipped to France on a special ferry. Another production line in Stade became one of the world’s leading centres concerning the use of carbon fibre reinforced plastic, which is important to create advantages against Boeing. With a workforce of 19.250 Germany is the second largest employer ( Airbus worldwide, 2007b ).

The main contribution of the United Kingdom is the expertise in the design and manufacturing of wings. The assembling of wings for all Airbus aircrafts takes place in the UK. However, the wings of the A380 have a single special transport by road and then loaded onto the ferry to France. The overall workforce in the UK is about 11.500 people ( Airbus worldwide, 2007c ).

Spain contributes the expertise in weight-saving, composite materials and in innovative manufacturing technologies. The A 380 profits from new developments in technology and materials. With a workforce of 300 employees Spain is the smallest employer in terms of the traditional Airbus EU countries ( Airbus worldwide, 2007d ).

However, non EU members like China, Japan, USA or Russia have become more and more attractive in terms of working conditions and tax policy. To concentrate on EU issues only the above presented countries will be looked at closely.

These international collaborations emphasize the multinational thinking of Airbus and indicate the EU as an important partner in terms of creating attractive general conditions. The images below give an overview of Airbus and some of the corporate figures, which show Airbus as one of the biggest aircraft manufacturers in the world.

illustration not visible in this excerpt

These images show Airbus as the main competitor in terms of orders/deliveries, variety in its product portfolio and nationalities. Although the military fleet is smaller compared to Boeing, Airbus is the strongest competitor.

The step into the stock market in 2001 made it possible for Airbus to generate huge capital sums and widen the product-portfolio ( see image C ) and especially extending Research and Development ( R&D ) for the A380. By making these changes, Airbus finally overtook its main competitor, Boeing, in 2003 in its delivery of aircrafts. The graph below shows Airbus’s fluctuating number of aircraft delivered between 1985 to 2007.

Number of delivered aircrafts 1995 – 2007

illustration not visible in this excerpt

Taken from

4.( Eramet, 2007 )

Although Boeing has the advantage concerning its huge capacity for production ( commercial aviation report, 2005 ), Airbus has made its most important contract in its history in October 2007. This was when Dubai signed up to the purchase of a number of models including the A350 and the A380 for $ 20.2 billion ( Spiegel, 2007a,b ). Airbus benefits from the vast increase in aircraft demand especially in the arabian area ( Airbus, 2007b ). However, thishuge customer order is at a potential risk, due to several problems concerning the production efficiency and punctuality in terms of aircraft delivery. The keyword in this context is “Power 8”.


Excerpt out of 16 pages


Airbus Power 8 - Cost reduction program
Das Kostenreduktionsprogramm von Airbus und die Bedeutung für die EU
University of Gloucestershire
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
966 KB
Airbus, Power8, Airbus Power 8, EU industries, Airbus EU, EU aircraft, Costreduction, Kostencontrolling
Quote paper
Michael Kumke (Author), 2007, Airbus Power 8 - Cost reduction program, Munich, GRIN Verlag,


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