Introduction

In the late 1970s, a test pilot returning from delivering an A300 to Eastern Airlines noted drily: “(…) Many Americans today still believe that France and Germany are those regions of the developing world where they make good wine (…) but certainly not airplanes (…).”1 The remark encapsulates one of several challenges the aircraft manufacturer faced in marketing its planes on the North American continent. Often described in hindsight as a “strategic breakthrough”, the particulars of the first successful sale to a North American carrier, Eastern Airlines (EAL), overlook the trials and tribulations the Airbus consortium faced. While these included such known difficulties as selling the plane in US dollars (a standard procedure in airliner marketing), overcoming the Boeing monopoly, and dealing with the double oil shocks of 1974 and 1979, they also involved operating in the shadow of desperate Concorde landing rights negotiations and personal as well as financial commitments that went beyond traditional marketing ploys. The opening of archives since the early 2000s make it possible to evaluate journalistic claims as well as to emphasize peculiar facets of the “sporty game” John Newhouse so ably described.2 In so doing, this article suggests that a tradition of flexibility first appearing in the context of difficult sales years influenced the development of a company culture that years later would allow Airbus to overtake Boeing on several fronts, not by imposing European values, but adopting American ones.

A complex history

The Airbus consortium’s inauspicious beginnings in the late 1960s were considered an attempt at rescuing a European industrial potential hampered by borders and governmental regulations, but also as a challenge to American dominance of the commercial aviation market.3 Though the European aircraft industry had exhibited engineering brilliance in several first-generation jet transports, a common failure at full success appeared in matters of financing, marketing, and after-sales support. For example, foreign airlines buying American products could apply for preferential loans to the EXIM bank, a Federal institution that helped ease the balance of payments while ensuring that US manufacturers received the full negotiated payment for their sale.4 There existed no such equivalent in Europe, other than through specific national airline subsidies. As for the development of a product line, too often British and French manufacturers faced restrictions through the demands of their respective national airlines or the financing imperatives of their governmental owners.5 Finally, echoing two Americans, George Ward and John Leahy, who taught Airbus the importance of aftersales service, previous servicing contracts had become a running joke in United States, notably in the case of Caravelle, an early medium-range twinjet.6 Taken together, such factors cast Airbus into an irrelevant underdog that lead American manufacturers like the Boeing company did not consider a threat. Yet in the Airbus-EAL deal lay the seeds of what would eventually become a duopoly in commercial aircraft manufacturing, as well as the source of a 17-year World Trade Organization dispute. The particulars of the Airbus-Eastern agreement are thus worth investigating.

The broad strokes of the Airbus-Eastern deal are almost legend nowadays as a proverbial “hail Mary” pass that involved the trial lease of four aircraft and three spare engines to the airline for one dollar.7 However, memoirs such as that of EAL President and former astronaut Frank Borman or the summaries of various journalists do not delve into the particulars of the deal. Borman, who became President of EAL in 1975, glosses over the deal as one of his early successes trying to rescue his airline from financial oblivion. In an almost deterministic fashion, he suggests that the quality of the aircraft and the US airline’s need to modernize its fleet coincided perfectly, though he does acknowledge the efforts of George Warde, a former president of American Airlines who had gone to work for Airbus as its North American representative.8 As told to aviation writer Robert J. Serling, Borman’s recollection is that he proposed that Airbus loan EAL four planes for six months, thus stunning Roger Béteille, who led the consortium at the time. By contrast, journalist Stephen Aris’ account suggest Warde made the offer and surprised Borman.9 Like Aris, respected aviation journalist Pierre Sparaco offers excellent insights based on private conversations, but neither they nor other chroniclers tease out the cultural elements of the Airbus success, nor the tense governmental moments that may have challenged the consortium’s development.10 In so doing, they overlook the need both sides (EAL and Airbus) had to adjust their expectations as well as transform a European plane assembled in France into an American one that politicians and consumers alike would accept. Simply put, to turn the A300 into an American aircraft, Airbus had to adopt American practices.

Foraging for clients

Eastern Airlines appeared early on as a potential Airbus customer. A 1970 marketing study identified the advantages the US airline could derive from using a twin-engined widebody as opposed to the Lockheed Tristar, a three-engined aircraft Eastern had ordered. The propulsion would rely on Rolls Royce engines similar to the Tristar to ensure commonality, but the proposal itself was based on a paper airplane, as the A300 prototype did not fly for another two years.11

Between 1974, when the traces of the initial EAL Airbus campaign disappear from archives and 1977, when the lease of four aircraft was announced, Airbus sales representatives examined various ways of entering the US market, concluding that only a heavily discounted approach might gain an order. Previous sales in United States had either flopped for obvious economic reasons (Concorde), or due to a failure to respond to client solicitations (Caravelle). Mending such fences could only happen with a discounted machine, regardless of its technical qualities. As Airbus analysts discovered, US airlines following the first oil shock of 1973 were either in financial difficulty or uninterested in upgrading, let alone renewing their fleet. The financial package thus appeared the only reasonable route. Such actions would fall under anti-dumping legislation and result in sanctions in case of outright sale, which may explain why much of the leasing negotiations that led to EAL’s first contract were conducted confidentially.12 Other factors, however, opened the possibility that Airbus might be taken seriously.

A European aircraft of American quality?

Two factors external to the Airbus-EAL negotiations may have influenced the deal positively, if only by diluting the European dimensions of the deal. In early 1977, Western Airlines, a mid-level American carrier completed a study of the A300. Although it did not buy the aircraft, it acknowledged its qualities, and its chairman even noted that US manufacturers had not offered something equivalent. The only saving grace in his view was that the plane was too big for Western’s routes.13 However, the fact that a smaller domestic US airline had examined the Airbus option meant that the European tag was not an automatic disqualifier. Adding to the technical qualities of the A300, the US Airline Pilots Association (ALPA) issued a positive report on the aircraft, noting its cockpit ergonomics and flying qualities. While neither event may in itself be considered an essential factor, both share in common the fact that they deemphasize the European origins of the A300, focusing instead on its potential as a machine for the US market. The consortium was learning fast the need for adopting American methods in terms of financing, but also aftersales services. In parallel, gaining tentative approval from US pilots was an equally important step, as it represents the beginnings of the Americanization of Airbus machines.

Operating in the shadow of Concorde: talking to governments and EAL at the same time

Throughout the negotiating process, Airbus representatives navigated between the scylla of public attention to their new machine, and the Charybdis of secrecy necessary to clench a deal. The public focus was not all positive, as it stemmed in part from the fracas of early Concorde operations, notably the lawsuit winding its way through the courts to allow the supersonic to land in New York. Thus, to avoid appearing as part of the same group (since Airbus and Concorde were both built in Toulouse), Airbus tended to keep its marketing and negotiations separate from any government-driven efforts. On a regular basis, the announcement of an Airbus demonstration in United States took diplomats by surprise, at a time when some were heavily involved in solving the SST problem. For example, the French embassy in Washington, DC noted laconically that neither its services nor their German counterparts were aware of the ongoing Airbus process.14 The self-imposed secrecy between Airbus’ US representatives and EAL is understandable, however. The acrimony that pervaded public discourse regarding Concorde might have tainted the complex formula Airbus was endeavoring to apply to its sale. This included the matter of discounts, to be guaranteed through a Franco-German governmental agreement.

Airbus administrator Bernard Lathière, eager to clench the EAL deal, initiated several confidential conversations at the governmental level in spring 1977, insisting that the unconventional nature of the proposed Airbus loan to EAL was necessary in light of the client’s importance. In a note to a friend at the French Finance and Economics Ministry, he described EAL as the world’s fourth airline, adding that “it is our first chance to penetrate the US market that, as you know, represents half of the airline world market.”15 At an emergency meeting of the board of Aérospatiale, co-manufacturer of Airbus, the urgency of the situation prompted its chair, General Jacques Mitterrand to argue that only a special agreement between the French government and Aérospatiale could allow the latter to conduct effective negotiations that might break the US monopoly by issuing a funding guarantee backing the loan of the four aircraft to EAL.16

The tension between business secrecy and the use of public funds would continue into the following year, whether it concerned the French embassy that knew little of the contract,17 or the Germans, who sometimes felt blindsided as well. In late spring 1978, the entourage of German Economics Minister Otto Lambsdorff, who visited United States at that time, noted the state of confusion and misinformation that surrounded the Airbus-EAL deal and recommended more precise handling of communications. In effect, though Airbus had handled matters with EAL as a private consortium would, the financial guarantees the French and German governments had provided meant that more transparency, at least with Paris and Bonn, was necessary.18 Airbus, through Bernard Lathière, warned that any open governmental involvement would feed the claim of unfair competition and that Airbus’ approach, while out of the ordinary, was ensuring a muted US reaction.19

While he was busy handling governmental questions about his operation, Bernard Lathière also needed to keep Frank Borman interested in the A300. The back-and-forth negotiations carried on after delivery of the first aircraft, while these were being prepared for operations in fall 1977. That October, Frank Borman summarized recent conversations he had with Airbus manager Bernard Lathière in the form of a carrot-and-stick approach. Borman warned that he would not commit to any purchase were any of his guarantees not met; at the same time, he dangled the prospect that EAL’s commitment would net other airlines eager to renew their fleets.20

In the hopes of getting a full order for 20 to 30 aircraft, Airbus also commissioned a study to evaluate the second-hand market for commercial widebodies.21 A new realm of business, it had already become active when several US airlines found the Boeing 747 too big for many of their routes. The possibility of buying back L-1011s from Eastern in exchange for a full order might have potential, but the study identified only seven airlines that might interested in buying used L-1011s, some of which were potential A300 customers, and it warned that the manufacturer would potentially damage further sales of the A300. The retaining of the L-1011 in the Eastern fleet was not resolved until later. It even involved Airbus evaluating whether the Royal Air Force, which had begun a search for a new tanker, might be interested in buying Eastern’s Tristars through Airbus.22 Eventually, the Tristar deal did not occur as planned, but it showed the steps the manufacturer was willing to take to succeed as an underdog.

The problem of communicating effectively and providing aftersales service

While being the proverbial underdog, throughout 1977 Airbus also faced internal difficulties in determining how best to operate in the American market. The company culture, though officially European, very much reflected French practices that had affected sales of Caravelle, and of course the ongoing slow death of the Concorde project. For example, a variety of meetings held by Airbus did not include EAL officials who would have benefited from the information shared. The same happened in reverse. Thus, Lufthansa shared in 1977 its experience, detailing the ups and downs of its early fielding of the A300, notably in the realm of updated operating manuals. It turns out Airbus was already carrying this out in cooperation with Lufthansa, but had not informed EAL of the ongoing process: only happenstance made it possible for EAL staff to attend Lufthansa briefings in spring 1977.23 Along similar lines, George Warde, president of Airbus for North America and a former US airline executive chaffed under the need to fly back and forth to Toulouse to ensure that he would not be overruled in his decisions. This frustration was all the greater because he had agreed to leave the French city to head Airbus’ operations in North America. This did not account for the fact that the consortium was a complex conglomerate of European voices that did not reflect American corporate practices of delegating negotiating power to trusted representatives.24 The matter would remain an issue for several years, though Warde did succeed in presenting Airbus products to several airlines without factory interference.25

The Airbus EAL deal was dependent on how much support the airline could expect as it operated the first four aircraft. It was up to Airbus to shed its association with a somewhat negative French legacy of sales support, and to transform itself into a company that followed American practices.26 This meant that not only would Airbus have to do more than to pay lip service to the airline, but that it had to convince equipment manufacturers to follow suit. Most did so, setting up a representation in United States. Some who sub-contracted there for parts simply added a special inventory to increase speed of service and avoid customs surcharges. Perhaps the best example of acknowledging that the airline, not the manufacturer, was king is reflected in the fact that the first four aircraft incorporated some 200 changes before acceptance, including the installation of a flight movie system; such modifications were commonly applied by US aircraft manufacturers, but had not been the norm in European practices.27 Furthermore, by fall 1977, it was clear that this part of the operation was a success as representatives came to visit EAL headquarters to discuss their products and remain on standby to assist, instead of waiting in France to be contacted. Though Airbus wondered about setting up an aftersales service American style, EAL was skeptical that it would succeed. Thus, new connections had to be established with US manufacturers who might be able to take over on behalf of French counterparts.28 The full-scale support Airbus gave Eastern did contribute to the deal, but it also made clear to the consortium the need to accept that it would have to behave like its US competitors if it was to make its planes no different from American ones.

Raising the protectionist shield

As soon as the terms of the aircraft “lease” became public in 1977, Airbus and EAL faced multiple protectionist challenges. A close scare followed the May announcement, when the Anderson law introduced in Congress to help airlines modernize their fleets to make them comply with new pollution regulations was modified to include a “buy American” clause that was eventually withdrawn.29 As a Washington Post columnist summarized,

Despite their obvious pride in the European accomplishment, Airbus officials are sensitive to the “foreign-made” charges heard in some American circles, and are quick to point out that a greater proportion of the value of the A300 originated in the US than in any other country. With the investment of the engines [$5 million a set] and components and parts made by some 300 US companies, the US share of the $25 million plane is one-third.30

To act against Airbus would have thus meant taking on a valuable source of income at the time the US economy was going through a difficult period of inflation and high interest rates. This did not stop some members of Congress from demanding action.

In Washington, DC, the US International Trade Commission (ITC) held hearings based on newspaper reports, thus threatening to scuttle the deal on the basis of a specific anti-trust paragraph.31 Paradoxically, the ITC was acting without a complaint from US aircraft manufacturers, thus rattling the sword rather than striking. This reaction reflected a defensive pattern intended to shield US industry by using a wide interpretation of articles contained in the Tariff Act. Though French observers worried the meeting might boil over into a formal inquiry, the non-communication of the terms of the lease helped limit the ITC’s power, as did the fact that its chair, while committed to defending US industrial interests, was equally concerned about foreign reaction: no ITC action ensued.32 Had it received a specific complaint, however, the ITC would have investigated Airbus. It did so later, notably in the context of the Airbus-Boeing trade dispute before the WTO.33

Spring 1978 saw the crystallization of the battlegrounds. On March 15, as part of a testimony before the Civil Aeronautics Board, Frank Borman mentioned that EAL would commit to purchase 23 A300s. On April 5, Washington Post editorial columnists Evans and Novak dropped a bomb of sorts by recasting the Airbus deal as a “French, Inc.” one that smacked of government interference and had little to do with competition.34 Since Concorde, finally flying to New York, had indeed involved governmental sponsorship, the editorial suggested that more of the same was coming. It remained for Frank Borman, a conservative Republican, to respond to such charges on behalf of both his airline and Airbus.

Within a week of the announced sale, however, hearings in Congress revealed the particular shield intended to scuttle the sale, as Jack Pierce, a financial director from Boeing argued that the contract could only stem from illegal subsidies.35 Airbus lawyers and representatives also identified quickly an intense lobbying effort, notably by Lockheed, and were able to put a stop to it by threatening to expose their knowledge of US manufacturers’ illicit practices.36 However, The House Ways and Means Committee followed through by requesting copies of any Airbus-EAL agreements, only to be told that such materials were only filed with economic reports, not as specific items. However, the Civil Aeronautics Board noted that it had examined the initial lease “essentially for free” of the first four A300s and authorized it “without comment or specific approval”, adding that “this agreement, to the best of our knowledge is unique.”37 The EAL legal team eventually shared the contracts with congressional investigators as a way of staving off additional inquiries, and by late July, it became clear that Congress would not investigate the Airbus deal, though various congressmen were upset about the situation.

Paradoxically, the consortium’s representatives were beginning to learn the ways of a sporty game that was very much American. By summer, the point of “unfair” competition was effectively muted when United Airlines announced it would purchase the Boeing 767 rather than the A300, and none of the US manufacturers chose to show up for a scheduled congressional hearing.38 Their muted reaction suggests they viewed the Airbus “incursion” as a one-off with little to follow. Boeing, for example, was in the process of bringing EAL to the table as a launch customer for its 757 model. In so doing, Frank Borman had shown that, beyond his appreciation for Airbus’ A300, the precise (and shifting) needs of his airline came first: EAL never ordered the A310, a smaller version that lined up with some of EAL’s wish list.

Transforming the A300 into the “Whisperliner”

Throughout his dealings with Airbus, Frank Borman described the A300 in glowing terms, emphasizing its quieter engines (American-built), its handling (he had been invited to pilot it while visiting Toulouse), and its lower fuel consumption. In one of the first public declarations he gave regarding negotiations in May 1977, he praised the A300 as “a machine, not an airplane” that alone could fill the segment his airline was seeking to fill.39 The moment of the sale confirmation on April 6, 1978 also marked the spot when the A300 transformation into an American plane began in earnest. In a phone interview with the New York Times, Frank Borman casually stated that the aircraft “were largely American products with engines and other initial components amounting to one-third of the basic price.”40 This emphasis on the technical prowess of the new plane as well as its American components became essential to the successful incorporation of the A300 into the EAL fleet and to defanging the opposition.

For example, within a day of Jack Pierce’s testimony before Congress, EAL took out a three-page ad in the Washington Post noting that the plane of the future would be landing at Washington-National on April 12. The massive font and the airplane schematic included subtitles emphasizing fuel economy as well as the fact that “although it’s assembled in Europe, the largest share is American-made.” Emphasizing the latter point, a US map showed the main spots where some 300 US companies made equipment incorporated into the A300. Another ad, this tie coming from Airbus, simply showed a section of the plane in EAL colors at the level of the engines with the muted caption “Designed for profit”.

Competition also played a role in christening the A300 with a new name. Delta Airlines had just introduced its “Aero Bus” fares on the New York-Miami route, with an obvious flare for the name similarity.41 The Civil Aeronautics Board, busy working on the process that would bring deregulation to American skies, had approved the proposal which EAL immediately matched. Mindful of how volatile public opinion could be regarding the aircraft, EAL branding specialists recommended a swift incorporation of the plane into advertising campaigns, and went on to rename the A300 “Whisperliner”, a name previously used on the Tristar. From 1978 onward, the ad campaign retained the aircraft’s designation but not the manufacturer’s name, thus deemphasizing the machine’s European background.

The La Guardia Challenge

Another factor that demonstrates the transformation of the A300 into an American machine revolves around the technical challenges arising from the peculiarities of La Guardia airport. As one of New York City’s three main airports, but the closest to downtown, La Guardia had expanded over the years by extending runways over water. The last such extension prior to the introduction of widebodied aircraft came with the Boeing 727 in the 1960s. The jump in operating weight, however, became a concern as some parts of the runways might not resist repeated stress. As Frank Borman reminded Bernard Lathière in his November 1977 summary letter, a key component of the Airbus-EAL agreement was to have the A300 operate from La Guardia airport, was essential to ensure efficient operation of Eastern’s Miami route as well as the shuttle service to Boston and Washington, DC.

However, as early as 1967, La Guardia officials who had become aware of the Airbus project contacted the consortium to warn about potential weaknesses in the design of the runways and taxiways. The airport had been conceived and consolidated with an eye to have aircraft the size of a Convair 880 (a first-generation jet) or a Boeing 727 land there. Wide-bodied jets were not even a matter of speculation then. However, when the L-1011 (in service with Eastern) and its competitor, the DC-10 underwent design, the placement of the main landing gears was 35 and 36 feet apart respectively, thus resolving the issue for aircraft bigger than the A300. The letter advising Aerospatiale went to Chief engineer Pierre Satre, but yielded no answer.42 Since early Airbus studies did not conceive of building an aircraft around a specific airport requirement, the A300 ended up with landing gear bogies 31 feet apart from each other. As one French diplomat who rediscovered the 1967 correspondence ten years later observed drily, not only could Airbus not say it “had not been told in a timely manner”, but such a reaction was “typical at the time” in as far as it ignored the fact that most mid-range jets were likely to land at La Guardia.43 It was time to follow American standards, if only because Frank Borman himself had warned that EAL would cancel the deal should La Guardia negotiations fail.

Studies of the La Guardia runways revealed weaknesses that could be handled with the Lockheed Tristar, EAL’s other wide-body workhorse, but not the A300. The solution was to reinforce specific taxiways and runways while modifying the A300 bogie to ensure better weight distribution.44 Frank Bormann had already begun discussions by the time he testified before congress in March 1978, but it was up to Airbus to assist with the financial costs that would result.45 Discreet inquiries to Aéroports de Paris, the entity managing Parisian airfields, yielded considerable information on the estimated costs the shoring up of runways and bridges had required to accommodate the Boeing 747.46 This helped negotiate proper terms and agree on common calculations to determine what needed to be reinforced.

By April 1978, a deal had been reached that would allow for limited operations under specific weight conditions for eighteen months, pending consolidation of specific parts of the runway and a redesign of the A300 bogies. In the latter case, a widening of the bogies into a “La Guardia” variant became a standard technical reference in Airbus jargon. It shifted the center of gravity of the plane on the ground thus allowing for the increased take-off weight.47 George Warde summarized the particulars in a letter to Roger Béteille six months later, stating that the bill for the runway reinforcement was some US$850,000. Airbus discreetly paid for the first round of modifications.48 Consequently, A300 operations from La Guardia became common, even as the use of the aircraft shifted from the proposed Miami and Houston routes to providing efficient shuttle service.

By working with the Port Authority, which controlled La Guardia airport, Airbus had played the ultimate “sporty game” and learned how best to compete with its American counterparts.

Postscript and conclusion

Though EAL did not order anymore A300s, Airbus continued to follow closely its dealings, as it had guaranteed loans for the airline to cover its purchases. A concern affected the Airbus-Eastern relationship in 1980. As world air transport began to suffer the impact of the second oil shock, several airlines considered consolidation to build market share and survive the downturn. Eastern thus turned its attention to acquiring National Airlines, which was ailing from lowered revenue. This caused great concern in Airbus circles, as the consortium was one of the loan guarantors for the airline with the help of the French and German governments. Unlike the previous negotiations, this time diplomats focused closely on the matter. On the one hand, the airline’s successful acquisition would make it the second largest carrier in the world, and an Airbus operator. Yet the amount of debt it would take on gave serious concern to Europeans. Eventually, Eastern Airlines’ substantial share buying offer was topped by Pan Am, putting the matter to rest.49

By emphasizing its willingness to support EAL in its bid to buy A300 planes, the Airbus consortium succeeded in piercing the American market, but it would be several more years before further American deals came through. What the operation revealed, however, was the need to accept American approaches to marketing aircraft, not only in the US, but elsewhere. Airbus’ loan guarantees to EAL mirrored the practices of the EXIM bank in United States, though they lacked a formal governmental process, having been pieced together among private American banks and the French and German governments. Mending the poor after-sales service reputation of European manufacturers notably by responding swiftly to any client concern represented perhaps the biggest learning curve, something George Ward had warned Airbus about when he first joined the consortium.50

As for EAL, a series of missteps and union tensions precipitated the decline of the company, with Frank Borman being ousted in 1986. Five years later, EAL closed shop. By then, other airlines had taken on and enjoyed the A300’s efficiency, notably Pan Am. Though anecdotal, a passenger observation made in 1980 suggested that Airbus and EAL had succeeded in identifying both the strength and the weakness of the A300 formula, and solved it for the time being. In a report aired on France’s FR3 channel regarding the “Sporty Game”, said US passenger was filmed deplaning an EAL A300 and being informed of the machine’s European manufacturing. He sternly replied to the interviewer: “No sir, it’s an American aircraft.” Paradoxically, the motto “buying American” meant “selling American” for Airbus.