Airbus Case Study Solution
Statement of Problem
Airbus Industries is looking to introduce a new airplane that would compete in the “Very Large Aircraft” (VLA) segment of the market as a “super jumbo jet.” We will evaluate the viability of this project and make a recommendation to Airbus on whether or not they should pursue the project. Our recommendation will be based on NPV and IRR calculations.
Relevant Facts
Airbus was founded in 1970 as a consortium and has established a strong reputation for innovative design and technology. The main competitor to Airbus is Boeing; another large player in the commercial plane manufacturing industry. Additionally, Boeing is currently the only firm operating in the VLA segment through their “Queen of the Air” aircraft, the 747-400. With a sale price of $150M, a seating capacity of 410, and a range upwards of 8,500 miles, the 747-400 has been unopposed in the VLA segment since the original models’ debut in 1969.
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With a list price of $225M; the A3XX would seat 550 passengers, with similar range capabilities as 747’s as well as increased safety features and comfort while incorporating Airbus revolutionary fly-by-wire technology; the A3XX is set to be the new “Queen of the Air.” Industry analysts believe that Airbus’s technology, coupled with the cost and operating benefits as well as passenger appeal, the A3XX will be a differentiated
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