Airbus Case
I. Introduction/Company Background:
Airbus Industrie (Airbus) was founded as a consortium of several aerospace companies spread across several countries that combined their resources and technologies to produce a competitive line of commercial aircraft. Over the years the company developed a reputation for being innovative in design and technology. In 1990, Airbus in conjunction with Boeing began a feasibility study to create a jumbo jet, but Boeing withdrew due to cost and uncertainty in demand. Airbus was interested in building the A3XX to have a product to compete in the very large aircraft (VLA) market. Boeing had been very successful in their production of the 747 after a very rocky start that threatened their survival. Airbus found in the feasibility study that the demand for a jumbo jet would grow significantly because passenger air traffic was expected to triple in volume by 2019. Based on an Airbus study, an average annual growth of 4.9% across the world would lead to a demand “for 14,661 new passenger aircraft and 703 new air freighters over the 20 year period through 2019”. Of the new passenger aircraft projected demand 727 would be for aircraft seating 400-500 passengers and 1,550 (1235 passenger planes, 315 cargo planes) aircraft seating 500 or more passengers. However, Boeing projected a demand for 600 VLA’s with 270 being cargo planes and 330 being passenger aircraft. Boeing’s study also predicted that the majority of the demand would not materialize for at least 10 years. An independent third party projected demand would fall in between the numbers Airbus and Boeing presented. Airbus believed there would be a sustained demand for VLA’s because new routes and increased frequencies would provide just a short-term solution to the growing demand in the airline industry. The chance to build an aircraft that could meet both customer, airline and regulation needs would allow them to become the commercial aviation
Airbus Industrie (Airbus) was founded as a consortium of several aerospace companies spread across several countries that combined their resources and technologies to produce a competitive line of commercial aircraft. Over the years the company developed a reputation for being innovative in design and technology. In 1990, Airbus in conjunction with Boeing began a feasibility study to create a jumbo jet, but Boeing withdrew due to cost and uncertainty in demand. Airbus was interested in building the A3XX to have a product to compete in the very large aircraft (VLA) market. Boeing had been very successful in their production of the 747 after a very rocky start that threatened their survival. Airbus found in the feasibility study that the demand for a jumbo jet would grow significantly because passenger air traffic was expected to triple in volume by 2019. Based on an Airbus study, an average annual growth of 4.9% across the world would lead to a demand “for 14,661 new passenger aircraft and 703 new air freighters over the 20 year period through 2019”. Of the new passenger aircraft projected demand 727 would be for aircraft seating 400-500 passengers and 1,550 (1235 passenger planes, 315 cargo planes) aircraft seating 500 or more passengers. However, Boeing projected a demand for 600 VLA’s with 270 being cargo planes and 330 being passenger aircraft. Boeing’s study also predicted that the majority of the demand would not materialize for at least 10 years. An independent third party projected demand would fall in between the numbers Airbus and Boeing presented. Airbus believed there would be a sustained demand for VLA’s because new routes and increased frequencies would provide just a short-term solution to the growing demand in the airline industry. The chance to build an aircraft that could meet both customer, airline and regulation needs would allow them to become the commercial aviation