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Airbus A3XX Developing the World’s Largest Commercial Jet

by Suleman
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  1. As A Senior Member of Airbus Management, Would You Commit to the Launch Immediately in July 2000? Options: Yes/ No/ Wait. What Are the Potential Risks and Rewards for Each Choice?

As a senior management member, various things have to be kept in mind while deciding on launching a large aircraft. The vast projects come with a considerable cost, and the company has to think whether this investment would be profitable. Airbus does not have massive aircraft like its competitor Boeing. It means if the company does not move forward, it will lose its competitive edge over its competitor. Airbus should wait before launching the new product because it has a benefit for the organization. The demand for the product cannot be established in a short amount of time. If the company wait until the demand increases than the organization can fulfill the orders efficiently.

  1. Comment on the Customer Demand for A3XXX to Justify Spending. Use Discounted Cash Flow and Break-Even Analysis?
Usage Net Present Value Internal rate of Return Break-Even
80 percent -567 8.2 percent
85 percent 0 8.8 percent 829
90 percent 492 9.3 percent 779-824
100 percent 1552 10 percent 715-765

 

Airbus A3XX Developing the World's Largest Commercial Jet

In the above table, the sales of the aircraft and the breakeven point can be seen. where the line intersects with x and y-axes is the breakeven point. 

  1. Can Airbus Achieve Sales at or More Than Break Even Quantity?

It depends on the demand of the aircraft if the order of the craft increases then the organization can perform sales more than the break-even quantity otherwise things become difficult for the corporation.

  1. Why Do Boeing and Airbus Disagree on the Size of the VLA Market Segment? What is Your Advice to Boeing?

It is evident that when Airbus is going to launch its new large aircraft, it will become a significant threat for Boeing because Boeing then loses its competitive edge over Airbus. Boeing has to develop even bigger airplanes and have to reduce the price of its plans to compete with Airbus.

  1. Because Boeing is a for-Profit Company and Airbus is the Government-Backed Company, Analyze Airbus’s Options?

Airbus still has limited options because if it wants to serve the increasing demand for plans, large projects like Boeing have; otherwise, the company can lose its market share.

  1. Please Research What happened and How it Has Led to the Current Global Airline Industry Travel Picture?

In recent years, air travel has increased to many extents due to the increase in tourism and globalization. Many people now prefer air travel as a mode of transport due to convenience and long-distance. When the demand increases, the airline companies acquire large airplanes to meet this demand, and that’s how the large planes become the need of today’s airline industry.

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