Airbus 380 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION:

Justice Investment Value European Fund (JIVE) is the substantial stakeholder of the European Aeronautics Defense and the EADS, which is contributing almost 80 percent of the operating profit of the European Aeronautics Defense and Space Company, owns European Aeronautics Defense and Space Company (EADS) and the majority of Airbus shares. Melissa Hayes has taken over the management of the Justice Investment Value European Fund recently, the main concern of Melissa Hayes is about the delay in delivery of the new A380 Airbus commercial aircraft that was manufactured by Airbus, and it was the world’s largest commercial aircraft manufacturer.

Airbus formed in the mid 1960’s, by the state officials of Germany, France, and the United Kingdom. The purpose of establishing the Airbus was to beat the United States domination of the world’s largest aircraft industry and this was due to the reason of the small European aircraft industry that was is not capable to compete with the United States aircraft industry.

European Aeronautics Defense and Space Company was trying to increase the efficiency and advancement of the manufacturing plant to overcome these problems through collaborating with different aeronautical industries. Different momentum was initiated by Airbus to make new design and manufacturing place for the company, which has more manufacturing facilities and low risk in the economy. Rolls-Royce was manufacturing the engines of the Airbus A300, but when the government stopped funding, then the new design of the Airbus A300 introduces, which was smaller than the previous one and the new model was very attractive as compared to the previous model and this new model was a helping hand to Airbus in terms of reducing cost. It became very successful after initiating this new design.

Airbus was fully integrated and efficient, which permits the shareholders and stakeholders to earn the incentive to increase the transfer cost to maximize their individual profits. Different Airbus partners joined with the European Aeronautic Defense and Space Company to form the joint stock company. European Aeronautic Defense and Space Company held approximately 80 percent of the stake in the company and the BAE Systems owned the remaining 20 percent control. European Aeronautic Defense and Space Company had the organizational structure that was very similar as the French and German management structure. The joint management system of the company creates inefficiencies and restrains the independence of the company.

European Aeronautic Defense and Space Company have a variety of the business division, in which Airbus is the largest division. Airbus is contributing almost 62 percent of the total sales of the European Aeronautic Defense and Space Company and approximately 87 percent of the total earnings before interest and tax (EBIT) of the company.

PROBLEM STATEMENT:

After the joining, Hayes was more concerned about the selloff price of Airbus A380 as how much it would cost due to the delay in delivery in terms of selling its new A380. What affects it would bring to the stakeholders.

Analysis:

The analysis has been done on the fact that, Airbus newly manufactured product A380 was delivered late to its customers and what were the causes of this late delivery.

To analyze the causes of this delay in delivering the A380 the industry analysis have been made below:

Industry Analysis:

After the 1940’s, the mobilization and innovation were injected in the aircraft industry that included new designs of the aircrafts, advance technologies, and advance manufacturing processes. Aircraft manufacturing had faced the declining trend in the past.

The industry was booming because of the reasons that, aircraft manufacturer were manufacturing larger aircraft that helped them to attract more customers to travel. The aircraft industry had the potential to grow, but the industry had the only two major competitors such as Airbus and the Boeing.

market of the aircraft was continuously growing and it was reported that in the year 2005, the industry growth has been recorded around 2 billion passengers with the freight carried around 37 million tons. The projections were made for the upcoming year that, in the year 2006 the passenger traffic would grow around 6 percent, 5.8 percent in the year 2007, in the year 2008 it grows around 5.6 percent and for the upcoming decade, it would grow about 5 percent...................

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