By James Surowiecki

Every other summer, the aerospace industry gathers in Farnborough, England, for a big trade show. At Farnborough last week, there was one thing on everyone’s mind: the plummeting fortunes of Airbus, the European aerospace giant. Airbus is struggling to find customers for the new plane on which it has staked its future, the superjumbo A380, as airlines wonder whether anyone wants to fly on a jet that seats almost six hundred people. The A380s that have already been ordered will be delivered late, thanks to production snafus that may add as much as $2.6 billion to the original development cost of thirteen billion dollars. Airbus’s other big project, the mid-size A350, is to be completely redesigned, at a cost of ten billion dollars. All the while, its sole competitor, Boeing, has been gobbling up business, thanks to its new mid-size jet, the 787 Dreamliner. In the first half of the year, Boeing took almost five hundred new orders for planes, while Airbus took just a hundred and seventeen.

There are reasons to think that politics and business shouldn’t mix, but Airbus’s predicament isn’t one of them. What much of the talk about the inherent weakness of Airbus ignores is that, just a few years ago, it was Boeing that looked fundamentally flawed, while Airbus was seen as the future of the industry. Beginning in the late nineties, Boeing’s commercial-aircraft business went into a long and nearly profitless slump. In 2001, Airbus surpassed Boeing in new orders, a lead it maintained until this year. During that period, Airbus’s unusual structure was praised; its insulation from the stock market supposedly allowed it to invest in long-term research and development. Boeing, by contrast, was thought to be trapped in a short-term, cost-cutting mentality, because, as one analyst put it, “the money guys don’t reward long-term thinking and investment.” In 2003, Business Week declared that Boeing was “choking on Airbus’ fumes,” and warned that Boeing’s “slip to No. 2 could become permanent.”

People are generally bad at accepting the importance of context and chance. We fall prey to what the social psychologist Lee Ross called “the fundamental attribution error”—the tendency to ascribe success or failure to innate characteristics, even when context is overwhelmingly important. In one classic demonstration, people shown a person shooting a basketball in a gym with poor lighting and another person shooting a basketball in a gym with excellent lighting assume that the second person hit more shots because he was a better player. This problem is compounded by the tendency to extrapolate big conclusions from small samples, something that behavioral economists call “the law of small numbers.” In the decade or so that Airbus has been a serious competitor to Boeing, this is its first really bad patch, and its difficulties are due mainly to making one bad bet while Boeing made one good one. That’s a minuscule sample size on which to base any kind of conclusion. But this is exactly what we like to do: sports fans assume that a few excellent performances are proof of a player’s underlying ability, while investors assume that a mutual fund’s record over one year is a reliable indicator of the manager’s skill.