Airbus A3XX Developing the World's Largest Commercial Jet

Airbus A3XX Developing the World's Largest Commercial Jet

1.      As a senior member of Airbus management, would you commit to the launch immediately in July 2000? Options: Yes/no/ wait. What are the potential risks and rewards for each choice?

As a member of senior management, various things have to be kept in mind while taking the decision regarding launching a large aircraft. The huge projects come with a huge cost and the company has to think whether this investment would be profitable or not. Airbus does not have very large aircraft like its competitor Boeing. It means if the company does not move forward it will lose its competitive edge over its competitor. Airbus should wait before launching the new product because it has benefit for the organization. The demand for the product cannot be established in a short amount of time. If the company wait until the demand increases than the organization can fulfill the orders efficiently.

2.      Comment on the customer demand for A3XXX to justify spending.  Use discounted cash flow and break-even analysis.

In the above table, the sales of the aircraft and the breakeven point can be seen. where the line intersects with x and y-axes is the breakeven point. 

3.      Can Airbus achieve sales at or more than break even quantity?

It depends on the demand of the aircraft if the demand of the craft increases than the organization can perform sales more than the break-even quantity otherwise things become difficult for the corporation.

4.      Why are Boeing and Airbus disagreeing on the size of the VLA market segment?  What is your advice to Boeing?

It is obvious that when Airbus is going to launch its new large aircraft it will become a major threat for Boeing because Boeing than lose its competitive edge over Airbus. Boeing has to come up with even bigger aircraft and have to reduce the price of its plans to compete with Airbus.

5.      Considering the fact that Boeing is a for-profit company and Airbus is the government-backed company, analyze the options for Airbus available.

Airbus still have limited options because if it wants to serve the increasing demand for plans it has to come up with large plans like Boeing have otherwise the company can lose its market share.

6.      Please research what happened and how it has led to current global airline industry travel picture

In recent years the air travel has increased up to a lot of extents due to increase in tourism and globalization. Many people now prefer air travel as a mode of transport due to convenience and long distance. When the demand increases the airline, companies acquire large airplane to meet this demand and that's how the large airplanes become the need of today’s airline industry.