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Thursday, November 26, 1998 Published at 11:07 GMT

Business: The Company File

Boeing and Airbus 'under investigation'

While Boeing planes fly high, company profits take a dive

The US Federal Trade Commission (FTC) is reported to be looking into price fixing allegations made against the world's two largest commercial plane manufacturers, Boeing and Airbus.

Barbara Cracht, spokesperson for Airbus, denies any price fixing
According to a Financial Times report, the investigation is at an early stage and was triggered by the fact that both Boeing and Airbus recently announced planned increases in their list prices on aircraft.

Airbus denied colluding with Boeing over price rises.

A spokesman said "even to hint that would be insulting".

Both companies told the Financial Times in separate interviews earlier this year that they would no longer compete purely on price.

[ image: Manufacturers try to get the balance right between market share and profitability]
Manufacturers try to get the balance right between market share and profitability
The FTC is now reported to have asked the two plane manufacturers to submit their price lists and answer a number of preliminary questions.

The investigation seems to focus on the list prices for planes, although airlines rarely pay the full list price.

They either negotiate discounts when buying a large number of aircraft, or lease planes from companies that own large fleets and specialise in leasing them.

David Learmount from Flight International says both are like boxers on the ropes
The European Airbus consortium and the US manufacturer Boeing are normally seen as bitter rivals, fighting hard for market share and new customers.

Airbus, which started from scratch in the 1970s, now has a share of about 50% of the market.

The European company recently scored a major success when it persuaded British Airways to buy 180 Airbus planes.

Until now BA's fleet of large planes consisted almost exclusively of Boeing aircraft.

Industry experts say the bitter price war to win customers has cut margins for both manufacturers.

Boeing's $178m net loss in 1997 - its first in 50 years - was blamed on the tough competition for market share.

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