Airbus A3XX Case Study Analysis
Introduction of Boeing and Airbus
In the United States, Boeing was the primary civil aviation manufacturer for over half a century. Using manufacturing and defense techniques, it soon became the world’s top producer of commercial aircraft. Of their fleet consisting of fourteen models (five families), their forerunner was the 747-400. When they first produced the 747 in 1965, their decision was criticized and called a gamble. Nonetheless, Boeing announced an initial order of 25 planes which, as a result, caused their stock prices to increase 5.1%. In spite of an initial potential failure, Boeing’s demand for the 747 aircraft continued to stay strong with 47 planes delivered in 1999 and 74 more in their backlog.
In competition with American aircraft companies, such as Boeing and McDonnell Douglas, Airbus was formed in 1970 as an association with “principal aerospace companies of Germany (Deutsche Aerospace …), France (Aerospatiale Matra), England (Britain’s Hawker Siddeley, later BAE Systems), and Spain (Construcciones Aeronauticas, CASA)” (pg 3). The company primarily focused on creating a highly competitive line of commercial aircrafts. Though, overtime, the partnership between the four countries became unmanageable and three of them formed a new company known as European Aeronautic Defense and Space Company (EADS). Airbus, one of the leading divisions in this new company, had a fleet of nine models by 1999 and “employed ‘fly-by-wire’ technology that substituted computerized control for mechanical linkages between the pilot and the aircraft’s control surfaces” (pg 3).
The A3XX
Boeing held the monopoly in the very large aircraft (VLA) market with their 747 airplanes. Airbus made a de...
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...gy to make it more powerful and attractive than the Airbus A3XX. With the potential for this project to take some time, Boeing may have to work quickly to catch up to Airbus.
Airbus’ Commitment
The decision for Airbus to commit to the project is a tough one to make. On one hand, it is possible that all of the early investors may receive discounts thus causing Airbus to lose money. However, on the other hand, it’s possible that Airbus would make even more money than they ever imagined by designing an aircraft that attracts passengers worldwide due to the greater amount of space, details, and comfort provided in each model. Furthermore, because the VLA market is expanding quickly, Airbus is able to enter that market at an early period. If the company continues creating new aircraft and strategizing well against others in the market, they may soon become a leader.
In the 1970s, TACA Airlines entered its jet age when it acquired its first jet, A BAC One Eleven. The One Eleven was used between the 1970s and the early 1980s, then later replaced by the Boeing 737-200. Until 1980, TACA Airlines was owned by a Unites States company and was headquartered in New Orleans, Louisiana under administration of the Kriete Family of El Salvador. During the 1980s, TACA Airlines made several upgrades to its fleet by substituting older turboprops and the One Eleven airliner for more fuel efficient airliners such as the 737-300 and the 737-400. In the 1990s, TACA Airlines became the principal user and launching customer of the Airbus A320 model in Latin America. The Airbus A320 were substitutes for the aging Boeing 737-200/-300/-400 seri...
Despite the uncertainty and inherent risks, however, even if WACC exceeds IRR, the board may be well advised to accept the project. It's expected that in the first few years, Boeing will incur more expenses that income. The revenues will come at a later date when the 7E7 planes are delivered. The project will have to be evaluated periodically and management will have to make changes to ensure that the company is profitable based on current and future conditions. The board's prerogative is not to give Airbus a profit sanctuary' by not accepting the project but rather to maintain or increase its market in the industry even if it's not profitable in the shot-run. Boeing has deep pockets' and should be willing to challenge its competitors.
The SWOT process will start by examining the internal strengths of the Boeing Company of today. One of the most dominant strengths possessed by Boeing is its ability to follow the changes in a market that is continually changing. The type of products produced by The Boeing Company demands the use of state of the art technology while maintaining all the proper safe guards for sa...
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
"It was the jet Boeing didn't build that averted what could have become one of the worst crash landings in the company's 91-year history--and cleared Boeing to conquer the skies again."(Masters, 2007). Boeing's Management team's work hard to plan what project's will be best for customers, lead to the largest returns to shareholders, and keep a reputation of being a world leader in the aviation industry. "In October 2002, executives of the aircraft manufacturer met with a group of global airline representatives at a conference center on the Seattle waterfront. The executives were trying desperately to figure out what to build next to hold off a soaring Airbus."(Masters, 2007) Boeing had made plans to build a high speed jetliner prior to this meeting. Through careful planning and expert decision making Boeing officials found that the world was more interested in comfort and efficiency. Boeing's high speed aircraft would have been a huge economic let down because of the huge price tag and expensive operating costs. After that meeting Boeing changed plans to make the Dreamliner which is a more cost effective and comfortable aircraft that has enough orders to keep Boeing busy building the aircraft for customers until the year 2015. While Boeing has spent many resources planning what to build, Boeing is now faced with the problems of how to meet customer demands of the new aircraft.
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
The engineering section of aircraft manufacturing is quite old. It is characterized by a few firms that keep Rolls-Royce on its toes in terms of competition, like General Electric. The small number of firms can be justified by the high cost of starting of...
The Boeing 737 is one of the most popular aircraft ever produced. Over 7700 in all variants have been produced, with an additional 11,275 aircraft on order. This makes the 737 the most popular jetliner to date. The 737 has a wide variety of uses, and still remains extremely popular and under high demand. Because it is such a widely mass produced aircraft, it is also a target for constant aerodynamic improvements. Boeing has looked at everything from the design of the anti-collision lights, to the reduction of small gaps in the airfoil. This has created an aircraft that is extremely aerodynamic and efficient at any task it performs.
Technology Innovation: - Boeing should carefully analyze the market to evaluate the trends in the airline industry and aggressively invest in a new product line (top dog strategy) that could counter Airbus’s A380.
Technology for any aerospace company is important, and this very much holds true for Boeing. Since its inception Boeing has been at the forefront of aviation technology. They introduced the first modern airliner with the Boeing 247 model (http://www.boeing.com/history/boeing/m247.html). During World War II Boeing manufactured the premier bomber planes based on the model 247 the bomber Boeing designed was so good that even their rivals Lockheed Martin, and Douglas aircraft agreed to manufacture them also. Following the end of the war Boeing suffered significant financial losses from their defense division this experience forced the company to reinvent themselves, and that they did. In the 1950s during the Korean War Boeing started to develop guided missiles. This technolog...
Although Boeing’s top management considered this company as a top global brand, critics believed this company did not make adequate changes in regard to its growth, in other words, did not adapt itself to 21st century. Public was thinking of Boeing as a traditional company which does not promote its public image as other similar corporation does. Business Week’s survey suggested that Boeing received no rank among top best 100 companies by public in year 2000. In order to catch up with global growth, Boeing started its branding campaign a bit too expansive and no body predicted such a disaster on septer11, 2001, which caused lots of problems for this company.
The Airbus A380 features many new technologies that help the plane in many different ways. First of all, the Airbus A380 is greener, cleaner, quieter, and smarter than other planes. The plane has to technology built into it so that it can essentially fly itself, making itself much smarter than other leading planes in the industry, but very efficient engines allow for the plane to use less fuel, yet fly farther distances which makes the plane much greener, and cleaner than leading industry competitors such as the Boeing 747. Furthermore, the Airbus A380 has reduced noise levels, diminishing another major concern of airports, when they think about such a large plan...
Michael, D. (2010, June 9).Emirate Airline Orders More Airbus Planes, Challenging Germany’s Lufthansa. The Wall Street Journal, p.B1.
... Airbus pretend to accomplished their missions and goals by using strong strategies such as competing with the highest standards of quality and safety.
The 777 would be manufactured differently than previous Boeing aircraft. Various efforts would be undertaken to increase demand and reduce manufacturing costs of the 777 in an attempt to create positive cash flows sooner. To increase demand, the 777 would be the first fly-by-wire Boeing aircraft, a feature Boeing’s competitors already added to their aircraft. Boeing also made an effort to get their large customers involved in the design process from the beginning in an effort to increase its competitive advantage and long-term demand for the 777. As a cost saving measure, the design and manufacturing teams would work together to create a detailed simulation of the manufacturing process that would reduce the cost of “improvements” that were often made during manufacturing thereby reducing the overall manufacturing cost. Furthermore, Boeing would invest in more training for its engineers on the new CAD system. This new manufacturing process would lead to large capital outflows in the short-run. The challenge for Mr. Shrontz is determining whether these capital investments will lead to an increased return on equity for Boeing.