Airbus-vs.-Boeing-A.docx

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1、如有侵权，请联系网站删除，仅供学习与交流Airbus-vs.-Boeing-A【精品文档】第 22 页9 - 707 - 447 R E V : N O V E M B E R 1 5 , 2 0 13 R A M O N C A S A D E S U S - M A S A N E L L E R I C H A L E X A N D E R V O I G TJ O R D A N M I T C H E L LAirbus vs. Boeing (A)In the summer of 1992, the same question lingered throughout the ex

2、ecutive ranks of Boeing and Airbus: Would it make sense for both companies to join forces to investigate the possibility of a very large commercial transport (VLCT), otherwise known as a super jumbo? While its configuration was not yet fully determined, it was estimated that a VLCT would hold betwee

3、n 550 and 800 passengers and would sell for between $150 million and $250 million. If developed, the VLCT would dwarf the largest plane currently availableBoeings famous 747.Recently, in July 1992, Airbus had shocked the industry by winning a lucrative 100-plane leasing deal with longtime Boeing cus

4、tomer United Airlines. Also, Boeing and Airbus were battling head-to- head in an attempt to secure orders for their newly designed longer-range, medium-sized planes Boeings 777 and Airbuss A340. Amid the grueling competition, U.S. and European governments had finally ended a six-year trade dispute r

5、esulting in a cap on government subsidies in aircraft manufacturing.Now, both companies were eyeing the super-jumbo market. Boeing and Airbus had both been shoring up interest from potential Japanese partners to contribute resources for the development of a super jumbo. At the same time, the third m

6、arket player, McDonnell Douglas, was bandying around the possibility of developing its own super jumbo.Should Airbus go ahead and develop its own version of a super jumbo (the A3XX)? Should Boeing develop a larger version of the 747? What would Boeing and Airbus gain by teaming up? What could they l

7、ose? The answers to these questions would determine the future of both companies for many years to come.The Commercial Airline IndustryThe global aviation industry was sized at approximately $100 billion as of 1992. The single largest segment was the manufacture and sale of large commercial aircraft

8、, which totaled $38.5 billion in1991.1 The sale of large commercial aircraft was expected to grow to $40 billion by the end of 1992. The worldwide commercial aircraft fleet was made up of nearly 8,000 passenger and 1,200 cargo planes spread out over 450 airlines and operators. Large commercial aircr

9、aft were defined as airplanes with 100 or more seats. Large aircraft made up 90% of the fleet, while smaller airplanesProfessor Ramon Casadesus-Masanell, Erich Alexander Voigt (Tiggeman Associates), and Research Associate Jordan Mitchell prepared this case. This revised version was prepared by Senio

10、r Lecturer Ian Mackenzie and Professor Ramon Casadesus-Masanell. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective ma

11、nagement.Copyright 2006, 2007, 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1- 800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http:/www.hbsp.harvard.edu. No part of this publication may be reprod

12、uced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording, or otherwisewithout the permission of Harvard Business School.707-447Airbus vs. Boeing (A)accounted for the remaining 10%.2 The VLCT was defined as a

13、plane over 400 seats or with the capacity to haul more than 80 tons of freight, and as of 1992 there only existed one model: the Boeing 747 “Jumbo Jet.”There were three main manufacturers of large commercial aircraft: Boeing, Airbus, and McDonnell Douglas. Boeing had 57% of the existing fleet, McDon

14、nell Douglas had 20%, and Airbus had 16%. The remaining 7% of the installed base was spread out over smaller or defunct aircraft manufacturers.3 For example, Lockheed from the U.S. had exited its commercial aviation division in the 1980s after it failed to become profitable in the sector (it focused

15、 its efforts on defense aircraft thereafter).Commercial aircraft manufacturers purchased parts from thousands of suppliers. For major components of the airplane such as engines, wings, frames, and flight instruments, aircraft manufacturers sought to establish long-term relationships with suppliers.

16、Often for the development of new planes, suppliers of major components were required to invest millions to cover development and specialized equipment. While Boeing and McDonnell Douglas built their planes on U.S. soil and Airbus built its planes in Europe, the geographic reach of suppliers spread t

17、hroughout the world. For example, Boeing had long-standing arrangements for airframes with Japanese suppliers that would bear between 10% and 20% of the development costs of Boeings latest project, the 777. Boeing and McDonnell Douglas also worked with a number of European suppliers, such as Aerital

18、ia, for aerostructures and components. Conversely, Airbus had over 500 industrial partners from the U.S. Airbus equipped its planes with engines from General Electric (GE) and CFM (a joint venture between GE and SNECMA, a French manufacturer).4Airlines had the choice to either purchase a plane outri

19、ght or lease it from a company such as International Lease Finance Corporation. Airlines typically ordered from manufacturers four to five years in advance of the predicted delivery date: a minimum of one or two years was needed to manufacture the planes (which were all more or less custom built). A

20、irlines secured future delivery dates by placing additional airplane orders into the future due to the manufacturers limited production capacity. Airlines managed their existing fleet plus the backlog of orders to plan for their desired fleet. On average, large aircraft had a useful life between 15

21、and 20 years. Large commercial aircraft ranged in price from $30 million for a 100-seat plane to $200 million for a plane over 400 seats.For new-airplane sales, commercial aircraft manufacturers had teams of salespeople who were typically dedicated to a key airline account. As one industry expert co

22、mmented: “Building contacts, keeping track of fleet requirements and monitoring shifts of executive power within an airline take years of work, all preparation for the once or twice in a decade when the airline is ready to place a major order.”5However, high-value airplane deals usually escalated to

23、 government levels, often with the involvement of high-profile ministers and heads of state.6 Between 55% and 65% of the industrys new orders typically went to Boeing, while Airbus and McDonnell Douglas fought for the other orders. The Airline Media Group predicted that Boeing, Airbus, and McDonnell

24、 Douglas would deliver 2,974 aircraft from 1992 to 1996 with 53% (1,575) accounted for by Boeing, 31% (929) by Airbus, and 16% (470) by McDonnell Douglas.7Demand for large commercial aircraft was predicated upon passenger growth. As the number of passengers grew, more airlines entered the industry a

25、nd either offered more routes or greater frequency or both. Long-term traffic growth was buoyed by worldwide economic growth, greater access to emerging markets, and political stability. The demand for commercial aircraft was also affected by the profitability of the overall airline industry, the ex

26、tent of consolidation among airlines,2Airbus vs. Boeing (A)707-447the infrastructure of airports and air traffic control, noise regulations, and pricing strategies by other commercial aircraft manufacturers.8Market share of a particular commercial aircraft segment was determined by a number of facto

27、rs including price, the installed fleet size, direct operating costs borne by the airlines (DOCs, which made up half of the cost of operating a plane), delivery conditions, fleet variety, commonality with other models made by the same manufacturer, historical buying patterns, and political positioni

28、ng. (See Exhibit 1 for a list of the deliveries from 1967 to 1992.)Aircraft size and technology were the two key elements that determined DOCs. Economies of scale were evident: the larger the plane, the cheaper it was to operate on a per seat basis. Thus, airlines were always trying to deploy the la

29、rgest possible aircraft that they could fill with paying passengers. Technology influenced DOCs in several ways, but in 1992 the most important was fuel costs: newer airplanes had more modern engines and a lighter structure, thus burning less fuel (per passenger) than older models.While new technolo

30、gy was thus always desirable, airlines preferred to manage homogeneous fleets with a limited number of different model types: each new aircraft type demanded heavy investment in specific parts, tools, and training of skilled personnel (pilots, mechanics, engineers). Manufacturers needed to carefully

31、 consider the amount of new technology that they could afford on each new design: too little and the model would be obsolete too soon, too much and the plane would lose all commonality with it siblings. The latter was particularly true for Boeing: the companys large customer base was viewed as a maj

32、or marketing and sales asset that could be lost if the company was not able to leverage a similarity between existing and new models.Due to the worldwide recession and the Persian Gulf conflict, 1991 marked the first year that worldwide airline passenger traffic declined.9 The worsening of condition

33、s caused several airline losses and some bankruptcies. It was expected that worldwide passenger traffic would increase by 2% to 3% for the next three years. On a long-term basis, passenger traffic was expected to grow between 5% and 7%, with the highest growth in Asia. Some industry experts predicte

34、d that the entire commercial aviation market would result in a cumulative value of $850 billion from 1992 to 2010.10The Very Large Commercial Transport (VLCT) AircraftAll three industry players agreed on the market readiness for a super jumbo; the continued growth in air traffic combined with the ne

35、ar saturation of key airports worldwide and the increasing importance of available cargo space demanded a higher-capacity plane.However, the risks of developing such an aircraft were daunting: all three manufacturers disagreed on the size of the market opportunity. Boeing believed that the market wo

36、uld evolve toward more point-to-point flights, which would divert air traffic from current megahubs to more secondary airports; this scenario would allow the industry to satisfy most of the demand with current planes (the 747 and the future 777), and only 200300 new super jumbos would be needed over

37、 the next 20 years. Airbus, though, believed that the demand for flights to and from major airports would continue to grow and that the only way to prevent saturation would be a new, higher-capacity plane. According to Airbus, more than 1,000 super jumbos would be needed over the coming 20 years.Est

38、imates also diverged regarding the development cost of the plane. A smaller super jumbo developed as a derivative of a current model (the 747 “Stretch” talked about by Boeing) could cost as little as $4 billion to $6 billion. A full-scale new development, significantly larger than the models3707-447

39、Airbus vs. Boeing (A)currently available, could cost anywhere from $5 billion to $20 billion depending on the size and level of technology.The Boeing CompanyEstablished in 1916 in Seattle, Washington, Boeing had grown to become the U.S.s largest exporter and the worlds largest commercial aircraft ma

40、nufacturer. Commercial aircraft sales accounted for three-quarters of Boeings revenues. The remaining quarter consisted of sales to theU.S. government for military aircraft and defense equipment. The company was traded principally on the New York Stock Exchange and had secondary listings on five oth

41、er worldwide stock exchanges. Stocks of Boeing were widely held by over 100,000 shareholders,11 with a market capitalization of $10.1 billion.12 Earnings from operations were $1.95 billion, and net earnings were$1.57 billion in 1991 (Exhibit 4).Boeings Commercial AircraftSince the 1960s, one of Boei

42、ngs key aims was to dominate in every segment of commercial aircraft. Boeing strove to offer airlines a comprehensive fleet that would cover their requirements for range and passenger capacity. As of 1992, Boeing had an existing fleet of 6,600 commercial aircraft.13 For the 1992 fiscal year, the com

43、pany would deliver 342 commercial airplanes. Its order book added 500 planes over the next five years.As of 1992, Boeing had four families of airline models: the 737, a short-range plane; the 757 and 767, medium-range planes; and its flagship product, the 747 “Jumbo Jet.” (See Exhibit 2 for a chart

44、of Boeings offerings.) In each family, several variations were available. Boeing had phased out previous models such as its first commercial jetliner (707) and the 727. In the early 1990s, Boeing scrapped the development of a short-range 150-seat plane called the 7J7, as it could not find sufficient

45、 orders to justify its development. The company shifted its development efforts to the 777, a longer- range, medium-sized plane expected for delivery in 1995.14The small plane: 737 The 737 was given the official go-ahead in 1965 even though Boeing had only one order and no official “launch” customer

46、.15 The original 737 was to cater to the 100-passenger class for short-range distances to compete head-to-head with Douglass (later McDonnell Douglas) DC-9 and -10. The 737 became known for its stubby appearance (its wingspan was almost equal to the length of the plane). During the early 1980s, the

47、737 became the best-selling plane in the world having captured a record customer base of 115 airlines. From 1980 through 1983, the 737 was credited with keeping Boeing afloat even though the companys profits eroded from $600 million in 1980, to $473 million in 1981, to $292 million in 1982.16 By the

48、 end of 1991, Boeing had delivered 3,000 737s, representing nearly half of all the companys delivered planes.17 The third version of the 737 (named the 737-300) was considered to be the plane that “turned the profit corner for the entire 737 program.”18Medium planes: 757 and 767 The 757 and 767 prog

49、rams began in the early 1970s in response to the 19731974 oil embargo crisis, which increased jet-fuel prices. Boeing wanted to pitch the two planes to airlines as “sister ships” using fuel efficiency and commonality as key selling attributes.19 In 1978, the company released the programs simultaneously. The 757 was designed for the 150-plus-seat segment to replace the older Boeing 727, and