Presented by

-Jatin(6)
-Alka(12)
-Kuldeep(18)
-Vinayak(24)
-Ankita Narain(31)
Introduction
The Boeing Company and Airbus Industries,
dominate the manufacture of large commercial
aircraft
 Combined, they delivered 889 aircraft in 1999,
ranging from single aisle
jets seating 100-200 passenger to the twin aisle
Boeing 747-400 seating more than 400 passenger
Airbus New Launch- A3XX
Financial Design of A3XX

Super Jumbo Jet

Seating Capacity 550-990
Proposed in June23,2000
Estimated launching cost- $13bn
$11bn -R&D, $1bn –Cap Exp, $1bn -WC
Price -$216mn
Before started, expecting orders at least 50
Continues…
BEP- 250 Planes
Depreciation- SLM
Expecting Delivery from 2006
Time Horizon-20 yrs
Expecting sale- 750, Revenue- >$350bn
History of Boeing
From the 2nd world war(B17s, B29s)
Based in USA
Manufacture various kind of aircrafts, eg-air force
one, fighter aircraft, space shuttle
Consisted 14 models, each with different technology
World’s leading producer of commercial aircraft(2/3 rd
of the revenue &1/3rd from missiles, military aircraft)
Continues…
Flagship- 747-400(1965) held 420 passengers
In 1999, there was strong for 747, delivered 47 planes
at avg price $150mn &many more orders
Connectivity across the world
History of Airbus
Founded in 1970 as a consortium of principal
airospace companies of Germany(Deutsch now
daimler- chrysler), France(aerospatiale matra),
England(hawker siddeley) & Spain(construcciones
aeronauticals)
Headquarter- Toulouse(France)
Commercial aircrafts, Military aircraft, Space systems
Continues…
Financial statement- exhibit 4A
Companies merged and make EADS in 2000 and
launched an IPO(exhibit 4B)
A-300, A-310, A-320,A-330, A-340 –Aircrafts of Airbus(
detailed information of sitting capacity and
deliveries , order booking for the future yrs is in
Exhibit3)
Proposed A3XX Project
Against boeing 747
List price $216mn, operating cost 12% more than 747’s
but 35% more efficient
Break even per flight 323 passengers
Forecast demand for 727 VLA by 2019
Financing the A3XX
Launch cost-$13bn(exhibit 10)
R&D- 11bn
Property, Plant, Equipment-1bn( SLM depreciation
over 10yrs)
WC-1bn
Financing sources- 3.5bn from vendors,3.6bn launch
aid, 5.9bn from partners
Project Economics of A3XX
1st delivery- 2006
Cost can go upto $15bn
In 2008, price would go up $225mn/plane
Operating margin- 15-20%(earning before payment of
launch aid and risk sharing capital)
Tax rate- 38%
Target pre-tax IRR- 15%( could be 20%)
Risk free interest rate-6%
Inflation rate-2%
Asset beta-0.84
Analysis of the Project A3XX
After using the given information in the exhibits,
-calculate NPV
-Sensitivity analysis on BEP
-Sensitivity analysis of NPV
Conclusion
As NPV is +ve i.e. $ 112 mn so it is feasible for Airbus to
go ahead with project.

Using sensitivity Analysis on Break- Even Number of

Planes Sold, 39 per year are the number of planes to
be produced to achieve break even analysis.