Airbus Case Study

Airbus was first established as a consortium In 1 967 when the French, German, and British government created a consortium to build European aircrafts. The originating goal was to challenge the American domination in the aerospace industry.

They are headquartered in Toulouse, France and employ about 54,000 employees.

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Airbus has presently grown to become a leading aircraft manufacturer capturing over half of the commercial airline orders. The Airbus consortium was owned 28% by France, 28% by Germany, 28% by he English, 10% by the Dutch, and 5% by the Spanish. Their plan was that Germany would build the two sections, the English would build the wings, the Spanish would build the tail, and the Dutch would build the mobile services. Their plan was that all parts would be shipped to France to be assembled.

Their first official order came in November 1971 by Air France who ordered six of the Abyss’s.

As this created a huge shipping problem for them, they gutted a 8377 Couturiers referred to as the Super Guppy whose nose swung away to allow wings and fuselage sections to be added and then shipped to France more easily (George Warded, personal communication, November 6. 201 1 SUPER GUPPY This Super Guppy, a much modified Boeing Couturiers, is used for oversized air cargo and is viewed at Buckley Air National Guard Base in April of 1967.

Commercial Industry Analysis Airbus Is an airplane manufacturer that specializes In making both standard and tailored aircrafts for commercial, industrial, and military contractors. Wealth the commercial Lorene Industry, the looming threat of airborne terrorist attacks amidst the unfailing economic recession has forced the immemorial airlines to rethink many of their strategies. “The ability of the network airlines to generate adequate revenues to cover their operating costs was severely impacted by major shifts in passenger choice behavior” (Massachusetts Institute of Technology, Para.

2). Many airlines are finding It Increasingly difficult to fill each seat, and In turn are transferring those profit losses to higher ticket prices. Situational factors such as airline industry trends, economic shifts, and changing consumer needs affect how Airbus must consistently keep track of their consumers ND continually reinvent their aircrafts to maintain a competitive advantage. Case in point, Airbus recently unveiled their Concept Plane of the future for 2050.

The exterior of the plane will feature Inspirations from nature and the Interior will be tailored to the requests of each traveler.

“The Concept Cabin doesn’t conform to the Economy class are replaced by zones that target more individual needs like relaxing, playing games, interacting with other passengers or holding business meetings” (Airbus, 2011). With increasing amenities in line with customer requests this in turn can help increase ticket sales. Additionally, on August 18, 2011 it was reported that Delta will launch a base in Atlanta for Airbus crew members (Flirtatiously, 2011).

Airbus has excelled consistently in concentrating on future demand and modifying equipment while also remaining aware that superior service is increasingly important to their continual success. Airbus 2050: “See Through” Airplane Complete with “Hollowed” Industrial Industry Analysis With airline ticket sales down, fuel costs are more prevalent in the price of plane tickets. “The economic importance of the airline industry and, in turn, its repercussions for aircraft manufacturers, makes he volatility of airline profits and their dependence on good economic conditions a serious concern for both industries.

This concern has grown dramatically since… The industry plunge into record operating losses and a financial crisis between 2000 and 2005, with cumulative net losses of $40 billion” (Massachusetts Institute of Technology, Para. 5).

Therefore, the airlines are focusing their future plane purchase strategies toward planes that have alternate options to disburse fuel costs. One of Airbus’ crowning attributes is that it equips its planes with two engines opposed to he standard three. This makes the planes more economic by decreasing the amount of fuel needed per trip and can intrinsically lower costs disbursed out to the consumer.

However, much of the cost savings responsibility also is on the airlines themselves and how they chose to modify their daily operations of the planes. For instance, the Massachusetts institute of Technology found that airlines that chose to run “Shorter ground times translate directly into higher aircraft utilization rates. In 2004, Getable operated its Airbus 320 aircraft on average for 13.

6 block hours per day, n aircraft utilization rate 46% higher than Northwest for the same aircraft type, and highest of all US Major airlines” (Massachusetts Institute of Technology, Para. 4). Average fuel cost per gallon | 2005 12006 12007 12008 12009 1 Southwest Airlines | $1. 13 | $1. 64 | $1.

80 | $2. 44 | $2. 12 | Getable Airways I $1. 70 | $2. 08 | $2.

18 | $3. 08 | $2. 08 | American Airlines | $2. 8 | | $2. 12 | $3. 03 | $2.

07 | Delta Air Lines | $1. 89 | $2. 12 | $2. 23 | $3. 16 | $2. 15 | United Airlines I | $2.

11 | $2. 18 | $3. 54 | $1. 75 | Military Industry Analysis Although not officially established until April 2009, Airbus has run a successful military division for more than 35 years based in Madrid, Spain. Having sold more than 1,000 of these aircraft to 130 customers, Airbus Military is well established on the world market with products operated by Air maritime surveillance and humanitarian aid” (Airbus Military, 2011).

Their military division uses Integrated Logistic Support (ILLS) that helps the manufacturer to monitor quality control from aircraft formation to aircraft retirement (Airbus Military, 2011). However, despite the aircraft manufacturers experience within the military field, Airbus remains a foreign manufacturer and has been subject to harsh domestic American competition.

Boeing has fought hard to capture all the United States Military contracts sighting the need to keep labor and profit within the United States borders. However, in late February on 2008 “Boeing lost a lucrative aircraft contract…

With the U. S. Military. The $40 billion deal was instead awarded to a consortium of businesses that includes Boeing’s chief rival, European-owned Airbus” (Beardsley, 2008, 11). Since then Airbus has been gradually more assertive in increasing the amount of U.

S. Military contracts by offering products domestic competitors, such as Boeing cannot deliver (Gates, 2008).

Airbus Military is a business unit of Airbus, which is part of the DADS conglomerate. The current company was formally created in April 2009 by the integration of the former Military Transport Aircraft Division (MAD) and Airbus Military Associated Limited (MASS) into Airbus. Industry I Defense I Founded 12009 1 Headquarters I Madrid, I Key people I Domingo Arena-Rasa, (CEO) I Products I Military aircraft I parent I Airbus S. A.

S. , DADDIES Website I www. Arbitrarily. Com I As a consortium, Airbus manufactured airplanes to custom orders.

In the early days of Airbus, parts were manufactured on a form, fit, and function basis.

When Airbus became a company they had to adjust their strategies to produce airplanes to the regulatory standards of the Federal Aviation Agency (FAA), European Aviation Agency (AAA), and the Civil Aviation Agency (CA). To date, Airbus airplanes follow the inter- changeability requirements of the FAA, AAA, and CA. “The success of Airbus is always driven by the spirit and passion of its leaders and employees” (Airbus, an DADS Company, 2011, p. ). George Warded, past Vice President of Sales and Product Support recalls, “The first Airbus to be sold in the United States was to Eastern Airlines.

Eastern Airlines decided the planes were too expensive so Airbus made a deal to loan four airplanes to Eastern Airlines for free for three months. Eastern Airlines had to have the planes certified by the FAA in order to fly them in the United States. Once these four airplanes were certified through the FAA, Airbus could sell to any other airline in the United States. In making this deal with Eastern Airlines, at the end of the three months, Airbus obtained an order for 23 more Airbus planes room Eastern Airlines as well as the ability to sell to the other United States airlines. Airbus used the strategy of producing a “family’ of airplanes for short-haul routes. The routes were set up to link cities not previously connected by air.

The family of trends in the market and the philosophy of new technology development for Airbus to meet the needs of low-cost airlines. Low-cost airlines found the economy, reliability, and quality of Airbus AWAY family aircraft perfectly suited to the new market” (Airbus, an DADS Company, 2011, p. 1). Airbus realized without customers it would not have a market. Another strategy the company decided on was to help the airlines buy their airplanes by setting up a finance company with financial schemes and terms during the downturn of the economy and crisis in the aerospace industry. The finance company was set up in Dublin, Ireland.

Another strategy the company used, as Warded recalls, “Airbus moved training (simulators) with airplanes as they were sold. This was because when Korea bought airplanes from Airbus it was realized they (Korea) did not have the intelligence to run them. ” The company decided to reorganize in July 2004 to streamline and simplify to allow improved efficiency and quality in production. By setting up a series of “centers of excellence” for the manufacturing sites and major components of the airplanes, Airbus has remained the leader in the industry. 2006 1 2007 | 2008 | 2009 | 2010 | Revenues , million EURO | 39,434 | 39,123 | 43,265 | 42,822 | 45,752 | EBITDA pre exceptional in million EURO 12,033 1 1,751 14,439 1 1,446 12,769 1 BIT million EURO | 399 152 12,830 1 (322) | 1,231 | (self-financed), in million EURO | 2,458 12,608 12,669 12,825 12,939 1 Net Income (b TN million EURO | (446) | 1,572 | (763) | 553 | Earnings per share in EURO 10.

2 1 (0. 56) | 1. 95 | (0. 94) 10. 68 1 Dividend per share EURO I 0. 12 | 0.

12 | 0. 20 | 0. 00 | 0. 22 | Free cash Flow in million EURO I 1,968 | 3,354 | 2,559 | 585 12,707 1 Free cash Flow before cuts.

Financing(4), in million EURO 3,293 12,886 1991 12,644 1 order Backlog / order book (5), million EURO | 262,810 | 339,532 | 400,248 | 389,067 1448,493 1 Net cash position , in million EURO,229 17,024 19,193 19,797 1 11,918 | Employees 1 116805 1 116,493 | 118,349 | 119,506 | 121,691 | The first aircraft built by Lockheed for the military was the C-AAA Hercules, a four- engine turboprop transport.

The C-130 was capable of using unprepared runways for takeoffs and landings; and was originally designed as a troop, medical evacuation, and cargo transport aircraft.

The versatile airframe has found uses in a variety of other roles, including as a gunship (AC-130), for airborne assault, search and rescue, scientific research support, weather reconnaissance, aerial refueling, maritime patrol, and aerial firefighting. It is the main tactical airlifted for many military forces worldwide (Military, 2011). The first major war to feature widespread bombing, World War II produced a variety of bombers of all shapes and sizes. Some nations such as the United States and Great Britain built long-range, four-engine aircraft; others chose to focus on smaller, medium bombers.

During the Cold war aircraft were built specifically for research purposes.

In 1945 the Bell X-I built for this purpose. In 1947 with Chuck Yeager at the controls the Bell X-I was the first aircraft to break the sound barrier (Military, 2011) First flying in 1952, the 8-52 Stratospheres formed the backbone of the US Strategic Air Command for much of the Cold War. Designed for of American efforts during the Vietnam War, the 1991 Gulf War, and Operation Iraqi Freedom. The US Air Force plans to keep the 8-52 Stratospheres in service until 2040 (Military, 2011).

One of a decommissioned fleet of S-B Vikings – is used by the Navy, Boeing, and NASA to fly into hazardous conditions. The Vikings’ next mission is to venture into hazardous weather to study a phenomenon that has caused more than 100 commercial aircraft engines to fail, stall, or temporarily lose power (Witty, 2008).

Workers at the Navy’s Fleet Readiness Center – Southeast and a Boeing facility in Florida enhanced the plane by adding commercial satellite communications, global positioning, navigation, and weather radar systems. They installed research equipment racks in what was once the plane’s bomb bay.

They also gave it a shiny blue-and-white NASA paint Job. With these new features, Anna’s S-B Viking is equipped to conduct science and aeronautics missions, such as environmental monitoring, satellite communications testing, and aviation safety research. It can fly up to 40,000 feet high and reach speeds faster than 500 miles per hour, which makes it perfect for studying commercial airline safety issues (Witty, 2008). This fall in Puerco Rice, pilots and researchers plan to use the S-B to study icing conditions in invective storms, ranging from isolated thunderstorms to tropical storms.

We’ll be flying in the proximity of storms that we think have the elements that cause engine power loss to measure the cloud properties,” said Icing Research Engineer Tom Rattraps (Witty, 2008). In conditions like these, ice crystals have been ingested into aircraft engines causing problems. During the flight, research equipment will collect data, such as the size of ice and liquid cloud particles, water content in the clouds, temperature, and humidity. Glenn researchers will use this data to develop an engineering standard to test engines.

This mission is part of Anna’s Aviation Safety Program, which partners with the Federal Aviation Administration, airlines, and the Department of Defense to reduce the rate of aircraft fatalities.

NASA and its partners plan to build test facilities and computer codes that propulsion engineers can use when designing engines (Witty, 2008). In January 2010, Tom Enders, Airbus CEO, said: “Today’s delivery is our 25th AWAY so far, and more important, the 6,10th Airbus produced in our 40-year history goes to Emirates.

The Emirates’ double-Decker serves Toronto, London Heathery, Paris, Seoul, Bangkok, Sydney, Auckland, and Judged from SST February. The international airline of the AJAX, which announced half year profits of ADDED 752 million (USED 205 million), has so far announced four new routes for 2010. They are Tokyo (28th March), Amsterdam (1st May) Prague (1st July) and Madrid (1st August) (E-travel, 2010). Conclusion After the September 1 1, 2001 tragedy, commercial airline traffic came to an almost complete stop.

Many airlines went bankrupt.

Airbus had to adjust their growth forecasts drastically. Knowing the tide would turn, Airbus made several changes and initiated factors to help its customers still buy Airbus aircrafts, including finance schemes, and rearranging credit terms. During the years of 2001 – 2004 Airbus had strategic insight to make adjustments to their prior forecasts and overcame the downturn to become the world’s leading aircraft manufacturer by 2003. In 2010, American Airlines became a major customer with an order for 260 aircrafts.

Today they capture about half of all commercial airliner orders. Through innovation and that air travel will continue to be one of the safest, most efficient means of travel. Airbus’s Vision 2020 strives for: a better balance between commercial aircraft and our other activities, a better balance between platform and services, a better balance between European roots and our global footprint, and aim to become truly CEO- efficient.