Case 2: Developing the World’s Largest Passenger Aircraft-Airbus A3XX

Airbus is an established leader in the global aerospace sector whose cutting edge products and services span the commercial aircraft, helicopter, defense, security and space segments. Airbus is the largest aeronautics and space company in Europe and is a worldwide leader with presence in 180 locations and have relationship with 12,000 direct suppliers. The Airbus A380 is the world’s largest passenger aircraft build by Airbus. With respect to the demand for very large aircraft market, Boeing and Airbus had estimated different views on the size of the very large aircraft market. A3XX had superior safety features since it was a four engine plane compared to two engine plane like Boeing 777. A3XX had the same fly by wire technology, flight deck design and performance characteristics similar to other planes in the Airbus family. Airbus believed that synergy in terms of increased capacity and reduced costs would compensate for the higher price in terms of economics of the project. Major structural sections of the A380 are built in France, Germany, Spain, and the United Kingdom. The major suppliers of A380 components are Rolls Royce, Safran, United Technologies and General Electric. The cost of development included approximately 13 billion. The sources of financing were 3.5 billion from risk sharing partners (RSPs) or vendors; 3.6 billion of launch aid from the partner governments of UK and France; 5.9 billion from Airbus partners in proportion to their partnership interests.