Airbus – From Challenger to

Leader
Under guidance of Dr. Thomason Rajan

Case Analysis by

Amrita Singh
Jeetu Jose
Ripu Ranjan
Rohit V
Rooma Devi
 Aerospace Industry
• 3 categories:
– Defense contracts
– Space programs
– Commercial aircraft
• Prior to WW Britain was the leader and post WW, USA
• High risk – cost of A 380 development equalled Airbus’ networth
• High entry barrier of heavy capital investment
• High level of involvement of governments
• 4 main players – Boeing, McDonnell-Douglas, Airbus and Lockheed
• Boeing took over McD-Douglas and Lockheed exited from Civil
Aviation resulting in almost a duopoly between Boeing and Airbus
• Late 1990s -2000s saw recession and terrorist attacks causing
drastic drop in aviation business.
•European Aircraft Manufacturer
•Founded in 1970
•Headquarters at Toulouse, France
•Main stakeholders – Britain, France
and Germany
•Products: Civilian and Military
Aircrafts
•Europe’s answer to Boeing
• American Airline Manufacturer
• Founded in 1916
• Headquarters at Chicago, Illinois, US
• Products:
– Commercial airliners
– Military aircraft
– Munitions
– Space systems
– Computer Services
Competition
• Market share:
The Competition
Products
 Problems
• Allegations of financial support from European
governments.
• Four Partner Consortium
• Pressure to corporatize
• Slow decision making
• Job sharing rather than Profit making
• Inefficient manufacturing
• Market dominated by Boeing
• High end 400+ and 700+ seaters required
 Solutions
• 1992 – bilateral deals between US and Europe –
limited to 33% of total Development cost -17
year period
• 2001 - Integrated company
• 2002 - 45000 hired, manufacturing plants in
Europe
• Product Innovation and Product Differentiation
• A-380 against 747
 First Break
• 1970s - Demand for 250 seaters
– Market dominator Boeing not interested in this
segment
– Airbus sees niche market
• 1974 - Enter the A-300
– Low popularity, initial 18 months without orders
– Price regulation
– Simultaneous launch of Concorde and Dassault
Mercure
 Strategies
• Product Innovation and Product Differentiation
– Aircrafts are economical to use
– Several product families focused at niche left by Boeing – Low
cost segment
– Similar cockpits across models
– Wider fuselage for more seat space
– Fly by wire against yoke system
– Computer aided design against Boeing’s manual design
– State of the art production line compared to dated WWII process
of Boeing
– A-380 takes on 747
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THANKS!