Airbus A3XX: Developing the World’s Largest Commercial Jet 1. What are the main factors determining the profitability of the A3XX project? Number of planes sold per year – The first and most important factor determining the profitability of the A3XX project is long term demand. This is measured by the number of planes sold/year. In 2000, both manufacturers believed that Asia would register the world’s highest growth rate over the next 20 years.
Boeing has customers in more than 90 countries world-wide and is one of the largest U.S. exporters in terms of sales. The company values innovation and is continually expanding their product line and services to meet emerging customer needs (About Us). Boeing generates $66 billion in revenues from their global aerospace and defense markets and conducts business through three operating segments. Boeing Commercial Aircraft (BCA; 50% of revenues and 49% of operating profits in 2007) and EADS's 80%-owned Airbus division are the world's only makers of 130-plus seat passenger jets. Integrated Defense Systems (IDS; 48%, 48%) is the world's second largest military contractor behind Lockheed Martin Corp. Boeing Capital Corp. (2%, 3%) primarily finances commercial aircraft for airlines (Business).
Northwest Airlines (NWA) The airline industry was among those hardest hit by the September 11, 2001 terrorist attacks in the United States. In this case you will examine the financial statements of one airline, Northwest Airlines. Extracts from the 10Q (quarterly report) for the third quarter of 2001 and the second quarter of 2006 are attached. Use this information to answer the following questions. 1.
Case Analysis: Boeing's e-Enabled Advantage This Case Analysis describes how Boeing was in a continuous need to adapt to a changing climate. The Boeing Company is a major aerospace and defense corporation, founded by William E. Boeing in Seattle, Washington. Its international headquarters has been in Chicago, Illinois since 2001. Boeing is the largest global aircraft manufacturer by revenue, orders and deliveries and the second largest aerospace and defense contractor in the world. Boeing is the largest exporter by value in the United States.
Analyse the attractiveness of the airline industry pre-9/11. There had been several structural changes in the global airline industry for the last decades. Some of the main factors are: globalisation, deregulation, technology improvements, and ongoing improvement in the jet engines in order to make it longer routes Pre 9/11, the demand for air travel increased due to the rise of world GDP, rise in world trade and investment (economic influence). In addition, the demand for travelling increased due to the growth of the number of retirees (social influence). This was a major opportunity within the airline industry since the global number of passengers increased from 450 million to 700 million between1990 and 2000 mainly due to the retiree that were travelling for leisure.
Case Summary and Important facts Despite the fact the airline industry had 87 new-airline failures in the US over the past 20 years. David Neeleman convinced a group of investors and quickly raised $130 million from venture-capital community. With its strong capital base, JetBlue acquired a fleet of new Airbus A320 aircraft and focused on innovation, providing the most valuable and the most excellent travel experience, low-cost, point-to-point service to large metropolitan areas with high average fares or highly traveled markets that were underserved, mainly on central and Western routes in the US. During 2001 and 2006, the airline industry was facing a number of external stress, such as the 911 terrorist attacks, Iraq War, SARS, high price of petroleum, ect. The airline industry in US has been challenged and many of firms were bankrupt.
Industry Analysis Two large airlines take the initiative to expand their horizons and decide to affiliate and join together. The alliance between US airways and British Airlines was widely publicized and criticized because it was the largest such venture ever attempted in an industry. British Airways, in 1939, British Overseas Airways Corporation was formed. The company became heavily loaded with debt through the 1950s and 1960s as it acquired new aircraft, experienced severe swings in capacity as passenger traffic ebbed and flowed, and began to compete internationally with the large U.S. airliners. For many years the British government continually subsidized the losses.
Such technological advancement placed a lot of financial burden on the operations of Jet Blue. The airline industry continues to feel the effect from the U.S economic slowdown and rise of crude oil/jet fuel prices, which have risen to record numbers with no predictable end in sight. The slow economic growth has compelled both business and individual travelers to cut back on travel expenditure thereby compelling airlines such as Jet Blue to initiate energy conservation measures, targeting specific markets and exploring the possibility of partnership with other airlines. Linked to the volatility of jet fuel prices is the increased in competition posed by new entrants to the airline industry. New entrants such as Virgin America are bracing the competition by offering lower fares to customers.
This case involves two major tycoons of the aviation industry, Boeing and European Aeronautics and Space Company (EADS). Boeing is an American company and EADS is based in Europe. Boeing had a monopoly in the aviation industry but its position is not so strong due some internal problems and acquisitions. The company has focused on aerospace and defense which has considerably weakened its position in commercial airline. The competition has taken advantage of the situation and has managed to grab the market share of Boeing over in few years.
Boeing's Strong Flight Will Be Continued. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis of Boeing Strengths Strong standing in aerospace industry Core competence in Research and Development (R&D) According to the Boeing company 2011 annual report(2012), “Boeing is the world’s largest aerospace company and leading manufacturer of commercial airplanes and defense, space and security systems” (Boeing, 2012, p. ii) and the company’s annual revenues in 2011 were 68,735 million U.S. dollars. In addition, Boeing’s strong R&D activities “develop solutions which are designed to meet customers’ needs in the US and international growth areas” (Datamonitor, 2011, p. 6) in commercial and military segments. New production lines of the Boeing 787 Dreamliner and F-22 Stealth fighter are evidence for Boeing’s advanced R&D abilities. Weaknesses Slow process of developing new products Too many regulations to meet One of Boeing’s major weaknesses is that the slow process of devolving new products, especially commercial airliners.