The passenger plane market has been transitioning to smaller, more fuel efficient craft with longer ranges. The reason is pretty straightforward--the demand for direct flights. Business travelers want to be able to fly from Memphis, TN to Lyon, France without having to change planes in Atlanta and Charles De Gaulle. The Boeing 787 Dreamliner was built to this specification and Boeing is selling a whack of them. Since April 2004, Boeing has booked 468 orders and commitments for many, many more.

So where is Airbus in this market? Nowhere. The A350 has also been plagued with delays, design changes and is now in a state of suspension as the company focuses on the A380.

Airbus is healthy in precisely one market--short range aircraft where it competes with the likes of Brazil's Embaer and Canadair.

So with market trends against you, and serious manufacturing problems, how do you squeak through to a better future?

This is where the decision makes some kind of sense.

The A380 really only has solid orders from Quantas, and contingent orders from Virgin airlines, which is 50% owned by Singapore Airlines. If they can make these two customer's happy, they will have established a presence in the Pacific market--the only sensible one for a plane the size of the A380.

That's terribly important for one main reason: China. Assuming China's economic growth continues relatively unabated, it will need to order 3,000 new planes by 2025. That's a lot of planes, and whoever dominates that market will be the market leader for the foreseeable future.

The freighter market has no real strategic value, so they were right to throw it under the wheels, but they absolutely have to deliver the Virgin and Quantas orders if they are going to have any chance at all at the Chinese market.

A chance is likely all they are getting. Boeing currently dominates the market at 65% share, which is as much to do with diplomatic relations between it and the U.S. as anything inherent advantages of the Boeing product line. Ironically, Airbus's future is likely to be determined by U.S. foreign and economic policy, and frankly it doesn't look good for Europe at this point.

The U.S.-China relationship is far, far more important that the EU-China relationship, both economically and strategically. The U.S. and its allies are important regional players at all levels. Basically, the EU has to hope for a serious estrangement since it can offer no comparable access to their markets, nor exercise regional leverage with Taiwan, Japan and South Korea.

Airbus is still in the game, but all they may have really done is postponed the inevitable.