Flashcards in Airbus Case Deck (10):
What are the differences between Airbus' and Boeing's Market Forecasts from the year 2000?
Airbus: demand for new aircrafts seating >500 people is increasing: Strategy to extend capacity of planes instead of number of flights
Boeing: Demand for smaller regional planes instead of larger (international) planes (Demand for “very large” airplanes is small)
Name opportunities and risk regarding the uncertainty in long-term demand?
Opportunities: Gain market strength, high return in case of expected market growth
Risks: Market shifts (no usage, new technologies), costs will exceed project budgets → you cannot predict the future
Name the three key features in PF and connect them to the A380 project.
Cash Flows: Airlines had to make upfront payments, repayments of debt are based on the projects’ success (CF-related lending)
Off-Balance: Airbus didn’t use a SPV to take the project off balance
Risk Sharing: Shifted their risks to the main vendors, used governmental launch aid
Name governmental benefits when supporting this project.
- Intelligent, sustainable and integrative growth of the EU
- Increasing employment rate
- Investments in R&D
- More efficient energy usage
What are typical large project economics?
- Land and site development
- Plant and machinery
- Up-front investments
Strength: Competitiveness (product to compete with the Boeing 747), revolution for the entire airlines industry which in ling run generate higher demand
Opportunities: expanding to new countries, engaging technically sound and advanced systems to enhance effective operation
Threats: uncertainty of demand, danger of competitive plane build by Boeing
Weaknesses: Extremely high costs including up-front payment, complexity of the entire project is extremely high, airports need adjustments (size of A380)