“A driver of Change in Aerospace and Defense”
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Introduction
“A driver of Change in Aerospace and Defense”
Airbus Industrie, was founded in 1970 as a consortium of the principal aerospace companies of Germany (Deutsche Aerospace, now a Daimler-Chrysler subsidiary known as DASA), France (Aerospatiale Matra), England (Britain’s Hawker Siddeley, later BAE Systems), and Spain (Construcciones Aeronauticas, CASA).
Airbus has a fleet of nine basic models, a customer base of 171 operators, and an order backlog for 1,445 planes. All of its planes employ “fly-by-wire” technology that substitutes computerized control for mechanical linkages between the pilot and the aircraft’s control surfaces. This technology combined with a common cockpit design help explain why Airbus received over half the orders for large aircraft for the first time in 1999, even though its share of deliveries was only 33% by number and 30% by value that year.
Despite the gains in market share, Airbus still does not have a jumbo jet to compete with Boeing’s 747 in the VLA market. A senior executive at Aerospatiale complained: “The problem is the monopoly of the 747, which is a fantastic advantage. They have a product. We have none.”
Problematic
In July 2000, Airbus Industries Supervisory Board was on the verge of approving a $13 billion investment to develop the A3XX, a new super jumbo jet that would seat from 550 to 1000 passengers and have a list price of $216 million. Having secured firm orders for 22 jets, the Board must decide if there is sufficient long-term demand to justify the investment.
At the time, Airbus was predicting that the market for very large aircraft (VLA) would exceed 1500 aircraft over the next 20 years and would generate sales in excess of $350 billion. According to Airbus, it needed to sell 250 aircraft to break even on an un-discounted cash flow basis, and could sell as many as 750 aircraft over the next 20 years. Boeing, however, was predicting that the VLA market would be less than 400 aircraft over the next
Introduction
“A driver of Change in Aerospace and Defense”
Airbus Industrie, was founded in 1970 as a consortium of the principal aerospace companies of Germany (Deutsche Aerospace, now a Daimler-Chrysler subsidiary known as DASA), France (Aerospatiale Matra), England (Britain’s Hawker Siddeley, later BAE Systems), and Spain (Construcciones Aeronauticas, CASA).
Airbus has a fleet of nine basic models, a customer base of 171 operators, and an order backlog for 1,445 planes. All of its planes employ “fly-by-wire” technology that substitutes computerized control for mechanical linkages between the pilot and the aircraft’s control surfaces. This technology combined with a common cockpit design help explain why Airbus received over half the orders for large aircraft for the first time in 1999, even though its share of deliveries was only 33% by number and 30% by value that year.
Despite the gains in market share, Airbus still does not have a jumbo jet to compete with Boeing’s 747 in the VLA market. A senior executive at Aerospatiale complained: “The problem is the monopoly of the 747, which is a fantastic advantage. They have a product. We have none.”
Problematic
In July 2000, Airbus Industries Supervisory Board was on the verge of approving a $13 billion investment to develop the A3XX, a new super jumbo jet that would seat from 550 to 1000 passengers and have a list price of $216 million. Having secured firm orders for 22 jets, the Board must decide if there is sufficient long-term demand to justify the investment.
At the time, Airbus was predicting that the market for very large aircraft (VLA) would exceed 1500 aircraft over the next 20 years and would generate sales in excess of $350 billion. According to Airbus, it needed to sell 250 aircraft to break even on an un-discounted cash flow basis, and could sell as many as 750 aircraft over the next 20 years. Boeing, however, was predicting that the VLA market would be less than 400 aircraft over the next