However, Lockheed testified that the number of units they were contracted to sell (including option-to-buy) would well recover the production costs and the Airbus would be an economically viable project for commercial jet production. Problem Definition The main doubt here is the sales volume needed to achieve a break-even sale figure. While the Airbus production line had solid numbers in that their revenue per unit exceeded the cost per unit, the cash inflows from the sales were spaced out over the production time period. Considering the time value of money and the generous discount rate of 10%, the cash inflows in terms of net present value may be lower than expected; thus, the overall benefit of the project may not be commercially viable. Also, with the unrealistic estimation of future growth in global demand for commercial jets, the guarantee of selling such a high number of Airbus’ units is doubtful.
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.
The basic idea was that unit costs, such as direct labor, declined as a function of cumulative output. As a result, the faster Airbus could sell planes, the more profitable it would become. This was especially true in the early years when cumulative output doubled relatively quickly. Discount rate and operating margins – Using a discount rate of 11.0% and operating margin of 15% the factors in Table 1 imply a NPV of negative $296 million and NPV of free cash flows (FCF) of negative $5,139 million. Assuming 2% growth, the terminal value has a NPV of $4,843 million for 2009 and beyond.
An expensive item is more likely to last than one that was madepoorly. In Thorr Motorcycles case, their name is synonymous with quality and reliability. Thorr Motorcycles customers know they are spending their money on an item unlike any other and that will not be able to find from another motorcycle company. While the competition offers similar products at reasonable prices, customers will not be purchasing an item back with years of testing and quality control. Thorr Motorcycles are made to last and are a recognized brand among motorcycle aficionados.
Running Head: Classic Airlines Classic Airlines Marketing 571 Classic Airlines Introduction Classic Airlines is a 25 year old airline company whose recent decline of 19% in their Classic Rewards members due to lack of consumer confidence has senior leadership uneasy. Classic Airlines is proud to be the fifth largest airline in the world with 32,000 employees. Due to rising costs in fuel and labor it has limited the airlines competitiveness in its rewards program. Classic Airlines leadership needs to make a 15% across the board cut while enhancing revenue from its rewards program (University of Phoenix, 2012). Marketing Strategy Relationship marketing is the current marketing strategy Classic Airlines is using.
The airline industry in US has been challenged and many of firms were bankrupt. However, JetBlue Airways started to expand aggressively and remained profitable by insisting on its low-fare strategy. JetBlue has been published through initial public offering in April 2002, barely two years since established. The initial price range for JetBlue shares was $22 to $24, but facing sizable excess demand, the management increased the range as $25 to $26. After the whole process of IPO including SEC reviewing, road showing, book-building, pricing, tombstone advertisements, JetBlue finally launched in NASDAQ at $27/share as initial pricing, closed at $45 per share on the first day of trading.
II. Environmental Analysis: The event that lead to the need for a new airport in Denver was simply – Denver had outgrown SIA (Stapleton International Airport). SIA was established in 1929; although periodic expansion over the years seemed to satisfy air traffic demands, by the 1970s SIA was one on the ten largest airports in the world and was not capable of handling its current or future projected air traffic. An option to expand SIA onto U.S. Army arsenal property was pursued – the property was highly contaminated, and clean-up costs were estimated at $6 billion in 1982 – proving this to be an unfeasible option for the city of Denver. The other option, and eventual result, was to construct a new airport.
The Microeconomics of the Boeing 787 Boeing launched the 787 Dreamliner in 2004 with the idea that airlines would seek more efficient but smaller aircraft instead of larger aircraft capable of carrying more passengers. Apparently, this gamble paid off as the Dreamliner became the fastest selling wide body aircraft ever (Johnston, 2012). This record may lead some to speculate that the 787 monopolizes the wide body aircraft market. But is it truly a monopoly? Does it have competition from any other manufacturer of wide body twin aisle aircraft?
First of all, GM has shed nearly $40 billion in obligations to become debt-free. This gives GM a huge advantage competing with companies which did not bailout and is still paying off it borrowed to survive such as Ford. Second of all, GM is achieving a healthy margin. GM cut incentives and slim down. This movement causes a decline on sale but help company keep margin.
For whatever reason, the gas-powered engine has been kept in circulation for generations ever since Henry Ford rolled out the first car that sold for $200 back in the late 1800s. But now here we are in the year 2010 where the gas powered engine is becoming the old model and professionals/manufacturers/consumers are deciding: what will be the new engine? There are two models being tested at the moment. They are the electric engine and the hydrogen engine. The real question that needs to be asked is: Which engine is better in the long run and how fast can the engines be put to use?