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Airbus and boeing case study
Airbus and boeing case study
Airbus and boeing case study
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Airbus industry was formed as the conglomeration of western European countries which included Britain, Germany, and Spain and was led by France. During that period, Boeing was the largest manufacturer of the commercial aircrafts and held the monopoly in the market, which brought the aviation industry of the European nations into their senses. This led to the formation of France led Airbus. Now, Airbus is one of the leading manufacturers of aircrafts and has a product line of aircrafts which range from economy to luxury and from 150 to 850 carrying capacity. It also captures almost half the market. The factories of Airbus are all over Europe, headquarters being at France and have fully owned subsidiaries, spare and service parts centers spread …show more content…
The four European countries have production unit for various parts of airbus, which finally gets assembled in France. Transporting the massive sub-assemblies of the aircraft, developed at facilities located at other countries in Europe, to the integration facility at Toulouse in France itself was Technological feat in transportation. The A380’s major structural sections are built by the major shareholders of Airbus, in United Kingdom, Spain, Germany and France. These structural parts are very large in size and have proved to be inconvenient for transportation. It has been the reason for modification of many roads and fleets to accommodate the unusual large size of the components.
Engine:
Airbus A380 uses two types of turbofan engines: Rolls-Royce Trent-900 and GP7200. Trent-900 is the derivative of Trent-800 and the GP7200 is derived from GE90’s core and PW4090’s fan. The totals of four engines, two of each type, provide huge thrust force for the mammoth plane to fly even at very high altitudes. The destructive engine testing by Rolls-Royce has proved that the engine is capable of containing all the debris in itself, caused by the explosion of the engine. The Airbus A-380 has also been awarded for its low noise.
Executive Summary A key factor in determining a project's viability is its cost of capital [WACC]. The estimation of Boeing's WACC must be consistent with the overall valuation approach and the definition of cash flows to be discounted. Note that this process is a forward-looking focus and is laden with uncertainty. It is how the assumptions are modeled that many costly mistakes can be made.
Use of a single-type aircraft fleet. The A320 Airbus has an increased seating capacity of 30 seats (24 after additional seating reconfigurations), is cheaper to maintain, fuel efficient and reduces training costs, relative to other aircraft models used in the industry.
In lights of the PESTLE model, the political factors bring both opportunities and threats to Jetstar’s new proposal. Since this proposal focus on the Australia-India low price airline market, the analysis conducts involving Australia and India political environments. There are two potential opportunities in this political environment. Firstly, the Australian government has the incentive to boost the development of tourism between the two countries (Tourism Australia 2012). With the support of government, the start of the new route could be easier. For example, American government erects legislation to increase competition of the airport ‘by forcing these airports to increase the availability of scarce facilities’ (Williams 2015). Such legislations and regulations as well as financing investment or subsidies from government could directly help the airline company cut the cost. Similarly, Australian government could also have powerful intervention to influence aviation market. Thus, it is a big opportunity for Jetstar to the new route expansion if it acquires the
The Boeing Company originally started out as the Pacific Aero Products Co., which was founded on July 15, 1916. The name was changed about a year later to The Boeing Airplane Company. The Boeing Company stayed relatively small until World War I when they were selected by Navy officials to produce an order for 50 model C's planes for the war efforts. The company continued to prosper and by the late 1950s, Boeing President William Allen knew that the company had the scientists, the experience and the facilities to lead the company into uncharted territories. He was right, Boeing has emerged as the leading aerospace company in the world today.
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.
(Masters, 2007). Boeing's management team works hard to plan what projects will be best for customers, lead to the largest returns to shareholders, and maintain 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. "
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
Travelling at a speed twice that of sound might seem to be something futuristic; however, this feat has already been achieved almost 40 years ago by the world’s only supersonic passenger aircraft-The Concorde. Concorde brought a revolution in the aviation industry by operating transatlantic flights in less than four hours. The slick and elegant aircraft with one of the most sophisticated engineering was one of the most coveted aircrafts of its time. However, this was all destined to end when Air France Flight 4590 was involved in a tragic disaster just outside the city of Paris on July 25, 2000. The crash killed 113 people, but more disastrous was its impact. The belief and confidence people had with Concorde gradually started to fade, and finally Concorde was grounded after two and a half years of the crash. Official reports state that the main cause of the crash was a piece of metal dropped by a Continental aircraft that flew moments before Concorde, but, over the last decade, the report has met a lot of criticism, and many alternative hypotheses have thus been proposed.
Rolls-Royce is an established company that deals in manufacturing aircraft engines and other parts. It also has a branch that specializes in cars. It has been in existence for a long time, implying a vast resource reservoir and experience in the whole business. Apparently, the company ticks as one of the top world dealers in aero-civil industry (Wilson, 2007).
Airbus and Boeing have developed similar capabilities, and an intense competition to be the number one in aviation. The market is a duopoly market, resulting in a low profit margin for both companies. There is slow industry growth in the aviation industry, and no clear market leader. The barrier to exit is high, which leads to intense rivalry between Airbus and Boeing.
The Five forces in the airline industry can be easily broken down, firstly the threat of new entrants. Over the last 10 years there has been a huge influx of new low cost companies in Europe such as “Easyjet”, or “Ryan Air” as the low cost niche slowly becomes more full we are seeing less and less entrants since the market has become saturated. The better an airlines brand image, such as British Airways being a recognised name and the use of frequent flier or airmiles schemes the less likely a new entrant with lower prices will be able to break into the market. Next we have Supplier and buyer power in the industry. In terms of the suppliers of aircraft the main two are Airbus and Boeing and so it may seem that this few suppliers would have a lot of power over the airlines, but intact it tends to just increase the competition between the suppliers as they fight for major contracts with the big airlines. The bargaining power of customers in the
Boeing/Airbus Case Analysis Competition in the Commercial Aircraft Business. With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces. Figure 1: Porter’s Five Forces Applied to Aircraft Industry. Barrier to entry: - High barriers to entry, to a certain extent, help understand the risks involved in operating in the aircraft industry.
British Airways Plc (British Airways or BA) is a full service premium airline with a global route network flying to approximately 400 destinations worldwide. The company provides scheduled air services at both domestic and international level. Its services include flights for passengers and cargo. The company provides air transportation services for over 40 million customers a year and serves 35 million cups of tea, 36.5 million meals and 3.7 million bottles of wine for the passengers. The company operates extensive international scheduled airline route networks in association with its joint business agreement, code share and franchise partners.
Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope...
Standard and Poor. (2006) Research update: Deutsche Lufthansa outlook to stable on improved trading prospects. Retrieved 25 November 2006 from www.lufthansa-financials.de/servlet/PB/show/1019578/RatingStandardandPoors102006.pdf.