Essay on Boeing 747 and Airbus

630 Words Oct 16th, 2014 3 Pages
1. Why is Airbus interested in building the A3XX? What are its objectives?
Airbus predicts that there would be demand for more than 1500 super jumbos over the next 20 years that would generate sales in excess of $350 billion. And they could sell as many as 750 over jumbos over the next 20 years with a break even on undiscounted cash flow basis with the sales of only 250 planes. There is a huge profit in this business if Airbus succeeds in the industrial launch of A3XX jumbo jets.
In addition, Airbus has received over half of the total large aircraft orders for the first time in 1999 thanks to the “cross crew qualification” feature. Capturing more than half of the very large aircraft (VLA) market with the A3XX would constitute an
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The annual demand from 2009 to 2019 would be 62.
So the breakeven point is much less than the total demands. 3. As Boeing, how would you respond to this situation? How does your answer depend on what you think Airbus is likely to do? Please provide some calculations to support your answers.
In its published Current Market Outlook (CMO), Boeing forecast a much smaller VLA market despite general agreement on overall growth with GMF. Boeing predicts the total market demand for VLA aircraft is 330 over the next 20 years. In addition, the most of the demand for the lager planes would not materialize for at least ten years. If the predicted market demand is true, there is no way for Airbus to reach the breakeven point. It is most likely Airbus will run out of the business if it commits build A3XX. In this case, Boeing could ignore the A3XX and concentrate on its existing product line. That is to say, Boeing had an opportunity to enhance profitability on its existing products while Airbus was tied up developing the A3XX.
4. Should Airbus commit to build the A3XX? How many orders should Airbus have before committing to develop the plane? Again, provide some numerical support for your answers. Because the analysis above gives a positive NPV, it is in airbus best interest to build the A3XX. But since Airbus needs to sell at least 39 annually aircrafts

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