Introduction
Airbus SE benefits from a supportive financial and administrative environment in Europe that promotes sustainability and collaboration. The company’s services and goods can move freely across member countries thanks to the EU single market. Also, the organization’s development and research activities receive funding from the EU. Additionally, Airbus aims to minimize carbon emissions and use sustainable fuel to attain its sustainability objectives.
However, Airbus SE faces challenges under the EU framework and must adhere to merger control and public procurement policies to ensure fair competition and trade. America’s Boeing poses a trade conflict with Airbus SE, impacting its revenue and sales. Nonetheless, Airbus can expand into new markets and attract new clients by leveraging the EU’s alliances and trade agreements.
Analyzing Airbus SE’s Strategic Adaptation in the European Single Market
Airbus SE, a global aerospace corporation, is the leading manufacturer of launch vehicles, military and commercial aircraft, and satellites. There are ecological, social, financial, and political facets that affect the dynamic, complex environment in which it operates. The challenges and opportunities facing the corporation and its stakeholders are also influenced by the European Union (EU) framework and the European context. The regulations and policies that govern the EU’s functioning constitute the EU framework. On the other hand, the European Context refers to the institutional, cultural, and historical features that define the EU as a political entity.
Airbus SE is directed by and indirectly affected by the EU framework and the European Context in various ways, including competitiveness, market access, and innovation. This paper will address how Airbus SE’s projections, performance, and position in the international aerospace industry are affected by the EU framework and context. In addition, it will address how they create challenges and opportunities for the company to mitigate its threats, capitalize on its strengths, and leverage its opportunities.
The Impact of Repayable Launch Investment Scheme on Airbus SE
The Repayable Launch Investment (RLI) scheme is an EU policy affecting the aerospace industry. The role of RLI is to offer funding for the creation of new aircraft models. The World Trade Organization (WTO) rules do not consider it illegal. However, according to the US, it’s an unfair subsidy that harms Boeing’s competition (Schuhmacher and Gauvrit, 2023). For instance, America insinuates that RLI favors Airbus SE over Boeing regarding gaining market share and lowering its prices.
The WTO has insinuated that Germany and France granted inconsistent programs to Airbus SE for the A380 and A350 programs (Ahrens, 2020; Timmis, 2020). Thus, retaliatory tariffs on EU trade were imposed by the US under WTO authority. Aircraft parts and wine were some of the products they imposed tariffs on. Airbus member nations and the EU have agreed to change the A350’s RLI terms to ensure compliance with WTO rulings and clarify market conditions.
Based on the A350 program’s success, the company will reimburse the French and German governments more. For instance, Airbus SE will repay most of the loan if the A350 generates higher income or sells more units (Ezejiofor and Aigienohuwa, 2023; Rebière and Mavoori, 2020). The desired outcome is balanced, fair results for the aerospace industry. In addition, the EU hopes that this move will encourage the US to eradicate the tariffs.
Economic and Monetary Union and the Single European Market’s Impact on Airbus SE
The Single European Market (SEM) has positively impacted Airbus’s novelty, development, and performance in the EU market. It is responsible for shaping the EU’s integration and that of its member states. SEM involves creating a common market in which individuals, goods, and services can move freely (Baumann, Becker, and Horrmann, 2020; Knoll-Csete and Kárász, 2021).
Airbus SE benefits from SEM by avoiding currency fluctuations and trade barriers within the EU. This has generated the company over 35% of its income (Abate and Christidis, 2020; Hartley, 2023). It augments Airbus SE’s competitiveness in the aerospace industry. Additionally, it reduces the risks of exchange rates and transaction costs.
SEM facilitates cross-border innovation and collaboration among clients, stakeholders, and suppliers. The firm is international because it has branches in several European countries and production facilities located in the UK, Spain, and Germany (Zuhdizul, Hidayat, and Bainus, 2022). To obtain expertise, skilled labor, and economies of scale inside the European network, Airbus SE leverages SEM. Additionally, SEM backs the company’s efforts to minimize carbon emissions in the aerospace industry (Saxunova, Le Roux, and Oster, 2022). It achieves this by establishing comparable regulatory frameworks and providing funding for the study and development of low-emission, sustainable technologies.
Airbus SE’s Opportunities and Threats based on the EU’s Enlargements
The EU was created in 1957 and has been undergoing some enlargements ever since. The accession of the United Kingdom (UK), Ireland, and Denmark to the EU in 1973 marked the first enlargement (Woo et al., 2021). Several enlargements have occurred since, including the accession of Portugal and Spain in 1986 and the inauguration of Sweden and Finland in 1995 (Rizzi and Rizzi, 2022).
The aviation sector and Airbus SE have been affected both positively and negatively by the EU’s enlargement. They have been positively affected by gaining a larger market for their services and products. Regulatory standards and trade discussions with other states are also likely to be advantageous to Airbus SE since the enlargements have increased the EU’s economic and political clout.
The enlargements have negatively affected Airbus SE by making EU decision-making procedures diverse and complex. Disputes and competition from emerging aviation players have increased. In addition, problems concerning the distribution of profits and costs among EU member states have arisen from enlargement (de Casanove et al., 2023; Schilde, 2023).
EU’s future enlargements rely on specific social, financial, and governmental facets and are unpredictable (Pons, Rodriguez, and Reuzeau, 2022; Vaydik, 2020). Future expansion scenarios include gradual, tightly controlled expansion; expansion chosen based on strategic objectives; distinctive, varied-geometry integration; and none at all. Regarding regulation, innovation, market size, and competitiveness, each scenario would have a diverse impact on Airbus SE and the aviation sector.
Airbus SE’s European Strategy
The PESTEL (political, social, economic, technological, legal, and Environmental) framework best assesses the business’s European strategy. Several external features affect Airbus SE’s European strategy. First, the company faces political issues, including geopolitical tensions and Brexit uncertainties. However, the business also benefits from EU member states political collaboration by getting funding.
Second, Airbus SE benefits from free trade and economic incorporation in the EU market. Nonetheless, the COVID-19 pandemic and currency fluctuation are increasing its economic risks (Vasigh and Azadian, 2022). Third, the company’s leadership in safety, value, and novelty has provided a positive social image in the EU. However, social conflicts and changing customer tastes in some states are some social challenges affecting the business.
Fourth, Airbus SE has developed a robust technological ecosystem by collaborating with EU shareholders, including research institutions and universities. Nonetheless, innovation threats such as intellectual property theft and cyberattacks also affect the company. Fifth, the business aims to reduce noise, waste levels, and carbon emissions to increase sustainability performance. Nonetheless, the organization is under more environmental pressure now that activism, fines, and fees are all increasing. Sixth, Airbus SE must strictly adhere to EU regulations and laws, or face legal consequences, as seen in the 2020 corruption case (Kárász and Knoll-Csete, 2021). The European digital tax proposal is another example of the changing legal climate that businesses must adjust to.
A European Policy from the EU Commission Affecting Airbus SE
The General Data Protection Regulation (GDPR) was enacted in 2018 to protect the privacy and personal data of EU individuals. It asks that businesses such as banks and e-commerce sites adhere to various policies (Kárász and Knoll-Csete, 2021). One policy requires obtaining consent from data owners before using their data. They should be transparent about why and how they will use the data. Also, they must respect that the owner can prevent, erase, and rectify their data (García Martín, Duran-Heras, and Reina Sánchez, 2023). The objective of the GDPR is to minimize administrative costs and legal ambiguity for companies operating within the EU by creating a harmonized legal framework.
Airbus SE has been significantly affected by the GDPR and has taken specific measures to comply with it. First, it conducts a conclusive mapping exercise and data catalog. The company regularly updates its privacy policies, offers awareness promotions, and trains its staff (Frey et al., 2020; Kleczka, Buts, and Jegers, 2021). However, the company encounters various perils and issues related to the directive. For instance, managing the variety and complexity of data processing undertakings across its numerous sites is difficult. Additionally, it must comply with GDPR and other data protection requirements and address conflicting jurisdictions.
The Trade Policy’s Effects on EU Relations with the US
The trade policy is an external EU policy that affects its relationship with the United States. Airbus SE competes with Boeing Company, a US-based corporation. A trade war has broken out over their protracted disagreement on tariffs and corporate subsidies. The United States implies, on the one hand, that Airbus receives preferential subsidies and purchases from the European Union (Airbus, 2021; Rookes, 2021).
However, it is alleged that the US gave Boeing unlawful grants through tax exemptions and defense contracts. Goods hit with retaliatory levies worth billions of dollars and euros include wine and aviation parts. Boeing and Airbus’s customers, workers, and suppliers have been affected most by the trade war.
The transatlantic relationship has also suffered because of the trade conflict between the US and the EU. Both states want to endorse and regulate their aerospace industries and resolve disputes in their viewpoints and interests. The UE wants to endorse a reduction in tariffs and subsidies to negotiate with the US (Airbus, 2021; Goulard, 2020). Similarly, the US prefers to pursue its interests and retain independent procedures. The current US government wants to mend the relationship, but has not provided any meaningful solution so far.
Comparison of European vs. African Integration
The EU’s individual currency, laws, and institutions make it a universal body. The process of social, financial, and administrative collaboration among EU member states is known as European integration (Abderrahmane et al., 2019). The endorsement of the rule of law, human rights, and democracy is the core role of European integration.
Similarly, the African Union (AU) directs and implements specific African integration initiatives (Bhat, 2021). Africa’s people have forced the AU to imagine a united, democratic, and productive continent. Encouraging socioeconomic and political integration across the continent is its chief goal.
African and European integration share similarities and differences in their issues, accomplishments, and models. For example, they are predicated on the idea that nations that are adjacent to one another and share similar cultures and beliefs may work together more effectively than those farther apart. Both have also examined a variety of integration aspects, including social and political factors.
One distinction is that African integration is less developed than European integration in terms of the monetary union and the single market (Allal-Chérif, Guijarro-Garcia, and Ulrich, 2022). Also, economic interests drive European integration more than African integration. The EU was created to promote trade with allies during the Second World War, while the AU was established to promote unity after colonization.
Impact of Populist and Illiberal Regimes on Airbus SE
The rise of populist, illiberal regimes in significant markets such as the US and the UK has negatively affected Airbus SE’s international operations. Philosophies that have reinforced the creation of the aviation sector, such as collaboration and free trade, are the policies these regimes have pursued. Because Airbus relies on a vast network of suppliers and customers across the EU, disruption and uncertainty have resulted from the UK’s exit from the EU (Boakye et al., 2022).
The company’s success and operations have been affected as it adjusts to new client procedures and regulatory requirements. Also, the areas where the company operates are at risk of insecurity and instability due to heightened geopolitical tensions and conflicts under these administrations. Moreover, Airbus SE’s access to resources and markets is affected by the consequences of military interventions, tariffs, and sanctions.
Conclusion
The European Union framework and context heavily influence Airbus SE. Airbus obtains access to innovation and research, encouraging trade policies and an integrated market from the EU. Also, the EU guarantees a level playing field for the company to compete with other leading companies, such as Boeing.
The Repayable Launch Investment provides funding to Airbus SE to develop new technologies that address digital transformation, climate change, and competition. Airbus can deliver its services and products to over 100 countries and receive protection from unjust subsidies and trade practices. To this end, the EU considers Airbus SE a core partner because the company adds to its strategic goals of security, sustainability, and growth.
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Appendix
EU frameworks and European Context affects Airbus SE in various ways:
- When Airbus is creating its products, such as satellites and planes, it utilizes the collaboration and expertise of EU member states.
- Airbus aims to attain sustainability on carbon control by 2050.
- Airbus drives innovative progress by being involved in EU technological projects.