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Press release: Game theory as a strategic success factor - production of A380 continues

Munich, 26/01/2018 – Marcus Schreiber, Founding Partner & Chief Executive Officer of TWS Partners, accredits the continuation of production and the order of new aircrafts to the application of game theory

The aerospace and defence company Airbus has announced that it will stop production of the A380. This leads to seemingly surprising reactions in the market. It has now become known that Emirates, one of the world's most successful airlines, has ordered 36 new A380s. This order by the airline has led to a continuation of production of the world’s largest passenger jet. British Airways is also close to finalising its purchase of additional A380s, according to recent announcements.

The consulting firm TWS Partners, which specialises in building its negotiating strategies on multi-award winning game theory, believes that game-theoretical considerations are behind Airbus' decision to communicate production stoppages in the media. From a game theory perspective, it is understandable to communicate the negative decision openly, provided it is credible. This informs all market participants about a significant market change and creates a swift shift in bargaining power between buyers and sellers.

The anticipation of an imminent quasi-monopoly situation in the market for large-capacity aircraft leads to the buyers having to rethink planned procurement strategies. The relative attractiveness of Airbus to the competition is increasing. It is to be expected that several airlines will behave strategically in response, as evidenced by the ongoing negotiations of British Airways with Airbus. The purchase decision by Emirates is, in this context, very understandable. It can therefore not be assumed that the currently reported Airbus sales were solely a result of increased discounts, but were instead due to anticipated market changes.

According to Patrick Meine, Partner at TWS Partners, this once again proves how efficient and effective game theory approaches are.