Airbus Industrie Loses $194 Million in 1999

Airbus Industrie lost $194 million in 1999 after it sold airplanes for less money than it cost to build them, said Manfred Bischoff, chief executive of DaimlerChrysler Aerospace, one of four Airbus partners. Bischoff said at a news conference in Germany that the loss was incurred through the partnership’s marketing organization. Even so, the entire Airbus business is profitable because the money made by each of its partners, which are also its main subcontractors, exceeded the loss at the marketing level. Airbus, the world’s second-biggest builder of commercial airliners, after Seattle-based Boeing Co., is a loosely structured risk-sharing partnership of four companies that build the airplanes. Most of the profit derived from the sale of planes is passed on to the partners in their roles as component suppliers. “The Airbus system as such is highly profitable,” said Bischoff, although Airbus Industrie can suffer a loss at the marketing organization level even when the partners still make money. The Airbus partners are DaimlerChrysler Aerospace, Britain’s BAE Systems, French aerospace and defense company Aerospatiale Matra and Spain’s Construcciones Aeronauticas. Aerospatiale Matra and DaimlerChrysler Aerospace have announced plans to merge later this year to form European Aeronautic, Defense & Space Co.