Preview

Airbus A3Xx

Powerful Essays
Open Document
Open Document
8265 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Airbus A3Xx
Contents

1. Introduction 1. Purpose And Objective Of Report 2. Background Case 1. Analyzing Airbus’ Objectives 2. Analyzing Boeing

2. Capital Structure 1. Assumption Of No Interest Payments

3. Demand Forecast 1. Key Competitive Characteristics Of the Commercial Jet Aircraft Industry 2. Boeing’s Response 3. Forecasting Demand In The Very Large Aircraft (VLA) Market

4. Net Present Value Analysis 1. Data Given and Assumptions Made 1. Financial Data Given 2. Assumptions On The NPV Calculation 3. Assumptions On The Rates Of Return 2. Base Case Calculation 3. Conclusions Of NPV Analysis

5. Breakeven Analysis 1. Breakeven Quantity 2. Conclusions Of Breakeven Analysis

6. Sensitivity Analysis 1. Analysis Of Changes In Operating Margin Against Changes In Discount Rates 2. Analysis Of Changes In Operating Margin Against Changes In Steady State Number of Planes 3. Analysis Of Changes In Operating Margin Against Changes In Inflation Rate 4. Conclusion of Sensitivity Analysis

7. Decision Tree Analysis 1. Rationale Behind Assigning Probabilities 2. Decision Tree Analysis 3. Conclusions Of Decision Tree Analysis

8. Conclusion 1. Current Developments

9. References
10. Tables
11. Exhibits

1. Introduction

1. Purpose And Objective Of Report

On June 23rd, 2000, the Airbus Industrie’s Supervisory Board has a critical situation at hand. They would have to decide if they were to commit to an industrial launch of the new superjumbo, the A3XX. This is the point where they have already sunk in $700million and a decision to abandon this project would result in the loss for the expense of these preliminary studies and efforts. However, with a decision to commit in launching the superjumbo in an attempt to seize market demand in the Very Large Aircraft (VLA) market, it also indicates the stage where much significant expenditures would


References: • Airbus vs. Boeing in Superjumbos: Credibility and Preemption Report by Benjamin C. Esty (HBS) and Pankaj Ghemawat (HBS), Current Draft: August 3, 2001 • Strategic Management: Competitiveness and Globalization, Fifth Edition, Michael A |  |  |5 |10 |15 |20 |25 | |Discount|9 |(3292.17) |366.47 |4025.11 |7683.75 |11342.39 | |Rate (%)| | | | | | | | |10 |(3445.40) |(181.45) |3082.50 |6346.45 |9610.40 | | |11 |(3562.65) |(644.15) |2274.35 |5192.85 |8111.35 | | |12 |(3649.82) |(1034.41) |1581.00 |4196.41 |6811.83 | | |13 |(3711.82) |(1362.97) |985.88 |3334.73 |5683.58 | | | | | | | | | |Steady |28 |(4778.70) |(3076.24) |(1373.78) |328.68 |2031.14 | |State # | | | | | | | | |38 |(4170.68) |(1860.20) |450.29 |2760.77 |5071.25 | | |48 |(3562.65) |(644.15) |2274.35 |5192.85 |8111.35 | | |58 |(2954.63) |571.89 |4098.41 |7624.93 |11151.46 | | |68 |(2346.61) |1787.93 |5922.48 |10057.02 |14191.56 | |  |  |5 |10 |15 |20 |25 | |Inflatio|0 |(3566.53) |(651.91) |2262.72 |5177.34 |8091.97 | | |0.01 |(3564.59) |(648.03) |2268.53 |5185.10 |8101.66 | | |0.02 |(3562.65) |(644.15) |2274.35 |5192.85 |8111.35 | | |0.03 |(3560.72) |(640.28) |2280.16 |5200.60 |8121.04 | | |0.04 |(3558.78) |(636.40) |2285.98 |5208.36 |8130.73 | |  |  |5 |10 |15 |20 |25 | |Tax Rate|30 |(4250.13) |(1488.76) |1272.60 |4033.96 |6795.33 | |(%) | | | | | | | | |34 |(3906.39) |(1066.46) |1773.47 |4613.41 |7453.34 | | |38 |(3562.65) |(644.15) |2274.35 |5192.85 |8111.35 | | |42 |(3218.92) |(221.85) |2775.22 |5772.29 |8769.36 | | |46 |(2875.18) |200.46 |3276.10 |6351.74 |9427.38 | 12 Source: Dresdner Kleinwort Benson, Aerospace and Defense Report, May 8, 2000 -----------------------
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    boeing guideline
    • 305 Words
    • 2 Pages

    boeing guideline

    competition from Airbus and losing its advantage. Boeing executives wish to come up with a…

    • 305 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Fin/419 - Week 2 - Financial Outcomes Lt Paper
    • 1823 Words
    • 8 Pages

    Fin/419 - Week 2 - Financial Outcomes Lt Paper

    In this paper Team C has selected to report financial outcomes for the Boeing Company. We will compare and contrast three potential financial outcomes that we envision for the initiative in using the most recent annual report and other financial statements. We will evaluate our discoveries to determine the most likely outcome. We will also include calculations that support our analysis of various financial outcomes and discuss the financial effect on Boeing. Boeing is the largest global aircraft producer that started in the mid-1916 and continues to grow by producing the biggest aircrafts and improving them with today’s technologies.…

    • 1823 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Airbus Case Analysis
    • 1553 Words
    • 7 Pages

    Airbus Case Analysis

    1. Reasons that Airbus interested in A3XX  A Revolution Adventure -- The first objective of this project is to fill the market gap by introducing a new type of aircraft. Airbus, with A3XX under the plan, is stepping into an area that Boeing has rarely touched, the very large aircraft (VLA) market. If Airbus well forecasts the future market, A3XX will be the flagship in a new airline revolution. Capturing more than half the VLA market with A3XX, Airbus would constitute an enormous financial success and achieve the ultimate objective-- the leader of commercial aviation industry.  Abundant Financial Resources and Developed Technologies -- Airbus possesses abundant funding resources and cutting-edge technologies which could substantially reduce the training cost. Airbus was prepared to receive around $4 billion development loans from the British, French, German and Spanish governments, repayable from sales revenue. Together with contributions from risk-sharing partners and its own shareholders, Airbus has no need to worry about its financial resources and thus can concentrate on the production and sale of A3XX. In addition, the well-developed aircraft technologies such as fly-by-wire technology, fight deck design, and performance characteristics that are common across the Airbus family pave the way for the A3XX’s development and potential market.  Favorable factors from Context Analysis -- Needs for travelling and cargo transportation are essential parameters which airlines have to take into consideration; hence, they are also vital determinants of demand for commercial aircrafts. According to Airbus’s Global Market Forecast (GMF), air transportation industry is expected to grow at 4.9% annually. This continuous growth demand of the flight market can offer Airbus Company a sound support to launch new types of planes. In…

    • 1553 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Better Essays

    Boeing Management Leadership
    • 1864 Words
    • 8 Pages

    Boeing Management Leadership

    Beck, K., Downey, T., & Kim, J., Proctor, P. (2002, June). How Boeing is Changing the Way it Works Around the World. Boeing Frontier, 1(2).…

    • 1864 Words
    • 8 Pages
    Better Essays
    Read More
  • Powerful Essays

    Boeing Aircraft Company vs. Airbus
    • 2365 Words
    • 10 Pages

    Boeing Aircraft Company vs. Airbus

    future competitive environment in the global jetliner industry. This paper will also demonstrate how Boeing and Airbus approach the aircraft marketplace, how they are alike and different (particularly their production processes), where the rivalry is likely to head, and the most probable outcome of their ongoing competition.…

    • 2365 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Boeing Paper
    • 37585 Words
    • 151 Pages

    Boeing Paper

    This paper will first attempt to explain the legal structure of Boeing and then describe any historical, present, or future litigation Boeing is engaged in. Then the paper will detail the business and analyze its strategic situation. This section will focus on Boeing’s core competency and use the five forces framework to analyze its strategic position. The third second of this paper will discuss Boeing’s marketing strategy as well as detail their competition and how they differentiate themselves in the marketplace. The fourth section will analyze Boeing’s principal accounting statements and prepare a valuation for Boeing. It will also attempt to assess Boeing’s financial performance and standing relative to its past performance and that of its competitors. The next section will cover a research…

    • 37585 Words
    • 151 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    TN16 The Boeing 7E7
    • 6331 Words
    • 20 Pages

    TN16 The Boeing 7E7

    In 2003, the Boeing Company announced plans to build a new “super-efficient” commercial jet called the “7E7” or “Dreamliner.” This was a “bet the farm” gamble by Boeing, similar in magnitude to its earlier introductions of the 747 and 777 airliners. The technological superiority of the new airframe, as well as the fact that it would penetrate a rapidly growing market segment, were arguments for approval of the project. On the other hand, the current market for commercial airplanes was depressed because of terrorism risks, war, and SARS, a contagious illness that resulted in global travel warnings. Boeing’s board of directors would need to weigh those considerations before granting final approval to proceed with the project.…

    • 6331 Words
    • 20 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Airbus
    • 2537 Words
    • 19 Pages

    Airbus

    Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $7.75 million, and its tax rate was 35%. What was its interest expense? Round your answer to the nearest dollar. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.…

    • 2537 Words
    • 19 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Estimating Boeing's Wacc
    • 1615 Words
    • 7 Pages

    Estimating Boeing's Wacc

    In early 2003, Boeing released plans to build a new “super efficient” jet called the 7E7. The jet subsequently gained the nickname the “Dreamliner.” In the six months following the announcement news depressed the market for aircraft, which was already shrinking. This news included the United States going to war with Iraq, global terrorist attacks, and SARS putting travelers in fear. This all contributed to the worst airline profits in a generation. From Boeing’s perspective this meant for a promising market to introduce a major new product. Boeing moved forward with this concept and planned to release the 7E7 in 2008. It is Michael Bair’s job to make a recommendation to the board of directors for a final decision on the project. In order to do this he will need to complete a valuation of the 7E7 project in order to convince Boeing’s CEO and other upper management that the project would be financially profitable for Boeing’s shareholders.…

    • 1615 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Lockheed
    • 253 Words
    • 2 Pages

    Lockheed

    We examined the decision to invest in the Tri-Star project by forecasting the cash flow associated with the project for a volume of 210 planes. We also asked what a valid estimate of the NPV of the Tri-Star project at a volume of 210 planes as of 1967 would be. We found this to be -$584 M. This was clearly an unacceptable NPV for capital budgeting on the project. A break-even analysis revealed that the project reached economic break-even with the production of 275 planes at $12.5 M per unit but did not reach value break-even at that level of production.…

    • 253 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Case Study: Boeing 787: the Dreamliner
    • 511 Words
    • 3 Pages

    Case Study: Boeing 787: the Dreamliner

    Throughout the history of commercial aircraft business, Boeing had been recognized as the industry leader over decades, yet until Airbus takes over the title in 2006. In hope to regain its leading position in the industry, Boeing has initiated a new product strategy in 2004, named the Dreamliner, or the 787, to capture the forecasted increasing demand for a midsized wide-body jetliner. Market Positioning The 787 is positioned as the first midsized commercial airplane with long-range capability, which could offer non-stop service over long distance and greater flexibility for airlines to fill up the seats. Travelers’ preference to fly directly to their destination is the main believe of 787’s expected success. The launch of the 787 is likely to succeed in the market as it fills the gap between smaller airliners with limited range and large jetliners with long distance ability. It may transform the traditional hub-and-spoke network for long distance travelling by cutting down the transfer flight to the final destination. Another simple reason for the potential success of the 787 is that, if not seen as profitable, Airbus would not be interested in launching a direct competing model, the A350. Development Process The development process of the 787 is considered as revolutionary compared to all Boeing’s previous product developments. Historically, Boeing’s engineers designed and prepared hundreds of pages of details for each part and then demanded that their strategic partners build the parts to the exactly specification. However, Boeing has asked its international suppliers to fund and run their own R&D for the first time in its history. This aims to achieve costs reduction and higher efficiency, but it may pose potential integration problems as over 70% of the 787’s parts are designed and manufactured globally by different partners using different technologies and standards. Potential Pitfalls As demand for aircraft increases, especially from…

    • 511 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Collision Course in Commercial Aircraft: Boeing-Airbus-McDonnell Douglas
    • 1675 Words
    • 5 Pages

    Collision Course in Commercial Aircraft: Boeing-Airbus-McDonnell Douglas

    This is a case about three different companies dedicated to the manufacturing of aircrafts. Those three major companies are: Boeing, Airbus Industry and McDonnell Douglas; each of one was struggling to produce enough aircraft to satisfy a seemingly unquenchable need for passenger and freight transport around the world, developed in this form many kinds of aircrafts in different models and styles.…

    • 1675 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Airbus A380 Effects on the World
    • 5059 Words
    • 21 Pages

    Airbus A380 Effects on the World

    There are two major jet airplane manufacturers which are Boeing and Airbus, and both companies are trying to invent some comfortable, gorgeous, and energy saving airplanes for the airline passengers. A selective critical analysis of the effects of the Airbus’s new generation aircraft which is the Airbus A380 sets a foundation for more in-depth research. Newspapers, journals, and government documents provide an overview of the effects of Airbus A380 to aviation industry. The Airbus A380 requires most of the international airports to reconstruct its airport facilities to fit the large and heavy super-jumbo aircraft.…

    • 5059 Words
    • 21 Pages
    Powerful Essays
    Read More
  • Good Essays

    airbus
    • 1947 Words
    • 7 Pages

    airbus

    The multipurpose glassware uses a mass marketing approach. This glassware are technology related and it’s relatively inexpensive. It is a high end product with affordable price so that variety of individual can afford to buy them. This product is available in most countries and its easy to use for more demographic.…

    • 1947 Words
    • 7 Pages
    Good Essays
    Read More
  • Powerful Essays

    Airbus
    • 1067 Words
    • 5 Pages

    Airbus

    The Airbus product line started with the A300, the world's first twin-aisle, twin-engined aircraft. A shorter, re-winged, re-engined variant of the A300 is known as the A310. Building on its success, Airbus launched…

    • 1067 Words
    • 5 Pages
    Powerful Essays
    Read More

Related Topics