Presented by-Jatin(6)

-Alka(12)-Kuldeep(18)-Vinayak(24)

-Ankita Narain(31)

IntroductionThe 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 JetSeating Capacity 550-990Proposed in June23,2000Estimated launching cost- $13bn$11bn -R&D, $1bn –Cap Exp, $1bn -WCPrice -$216mn Before started, expecting orders at least 50

Continues…BEP- 250 PlanesDepreciation- SLMExpecting Delivery from 2006Time Horizon-20 yrsExpecting sale- 750, Revenue- >$350bn

History of BoeingFrom the 2nd world war(B17s, B29s)Based in USAManufacture various kind of aircrafts, eg-air

force one, fighter aircraft, space shuttleConsisted 14 models, each with different

technologyWorld’s leading producer of commercial

aircraft(2/3rd of the revenue &1/3rd from missiles, military aircraft)

Continues…Flagship- 747-400(1965) held 420 passengersIn 1999, there was strong for 747, delivered

47 planes at avg price $150mn &many more orders

Connectivity across the world

History of AirbusFounded 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 ProjectAgainst boeing 747List price $216mn, operating cost 12% more

than 747’s but 35% more efficientBreak even per flight 323 passengersForecast demand for 727 VLA by 2019

Financing the A3XXLaunch cost-$13bn(exhibit 10)R&D- 11bnProperty, Plant, Equipment-1bn( SLM

depreciation over 10yrs)WC-1bnFinancing sources- 3.5bn from vendors,3.6bn

launch aid, 5.9bn from partners

Project Economics of A3XX1st delivery- 2006Cost can go upto $15bnIn 2008, price would go up $225mn/planeOperating 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 A3XXAfter using the given information in the

exhibits, -calculate NPV-Sensitivity analysis on BEP-Sensitivity analysis of NPV

ConclusionAs 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.