Airbus 3xx Essay

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Airbus 3XX Case Study Airbus is interested in building the A3XX because there are an enormous amount of benefits and potential for it. To begin with, the financial returns are very alluring in a good case scenario. They project 50 planes per year (750 planes/15 years from 2006-2020) and $216 million per plane. This is a total of $11 billion in sales! Not only that, but their operating margin is 20%, equaling $2.2 billion in operating profit. Another reason for building the A3XX is that it will add another segment into Airbus’s service. They currently do not operate in the VLA segment and although cause competition with powerhouse Boeing, they will get rid of Boeing’s current monopoly position. Airbus seems to have the assistance of both governments and potential customers. The French government has ordered 10 planes and the British government is willing to provide $835 million into helping launch the A3XX. Airbus also currently has 22 firm orders and another 115 potential orders. Another side reason for wanting to build the A3XX is that would create a huge number of jobs. Airbus’s objective for the creation of A3XX comes down to about 3 reasons. 1) The economics are attractive ($2 billion in sales for high sales scenario) 2) If projections are correct, the VLA segment is growing and too large to ignore. They want to be a dominant competitor in the commercial aviation industry and the VLA segment is a must involvement. 3) Create a far more superior plane then Boeing’s 747. Will offer more space for passengers, better amenities, much newer/safer, better economics for airlines, and better pilot utilization. This is a chance to surpass Boeing if they are able to be the first movers into the market. Obviously, Airbus and Boeing differ greatly on the aircraft’s sales potential for very large aircrafts. Airbus believes that there is going to be a need
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