Airbus: From Challenger to Leader

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Case Details:

Case Code : BSTR046
Case Length : 14 Pages
Period : 1997 - 2003
Organization : Airbus
Pub Date : 2003
Teaching Note : Available
Countries : USA
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS Contd...

The Gamble

In order to increase its market share, Airbus decided to enter the super jet category (400 seater). In 1998 it announced that it would be developing a super jumbo jet with a planned initial investment of $10 billion.

If it took off, Airbus's A-3XX (later called A-380) would end the monopoly of Boeing's 747 in the over-400 seats category. According to company sources, the A-380 would be a double-decker plane with a seating capacity of 555 passengers (137 more than the Boeing 747). The super jumbo would be priced at $213 million and was expected to fly by 2004 (later the launch date was postponed to 2006). The main challenge for Airbus was to raise the funds required to manufacture A-380. Finally, Airbus was able to split the total costs of development of the project as follows: around 40% would be funded by its suppliers such as Saab (Sweden), 30% would be in the form of government loans bought in by partners, and the remaining 30% would be the consortium's own funds...

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Exhibits

Exhibit I: Profile of Boeing
Exhibit II: Product Range of Airbus & Boeing

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