MEMO

Airbus A3XX.
To: Airbus management
From: Yuxiang Fan, Da Luo, Di Jia,
Tiantao Zheng

Business Overview
Airbus Group SE is a European multinational aerospace and defense corporation. The
company operates through Airbus, Airbus Helicopters, and Airbus Defense and Space
segments.

Objectives for building A3XX

Despite the gains in market share, Airbus did not have a product to compete with Boeing's
747 in the VLA market. Therefore, Airbus wanted to enter this new segment to get more
market share. Management of Airbus believed that they can capture more than half the very
large aircraft market with A3xx, which would represent a huge financial success and would
position Airbus as the commercial aviation industry leader. Moreover, Airbus believed that air
transportation demand would grow significantly in future and growing economies in Asia such
as China would contribute greatly to the demand for VLA, because Airbus predicted that by
2019, Asia-Pacific airlines would hold almost half the VLA passenger fleet, and that six of the
top ten airports served by VLA aircraft would be in Asia.

Boeings response
From Boeings perspective, they could have several options to respond Airbus strategy of
developing A3xx. Boeing could start to develop their own VLA to compete against A3xx.
However, this approach would not be recommended as Boeing believes that the investment
was too high. Cutting existing 747s price to compete would not be recommended either since
profit margin would be lower. Alternatively, Boeing could compete by developing new point-topoint routes. If Airbus decided not to develop A3xx, Boeing should still its development of
point-to-point route if there were no other available projects available.

4. jiadi

Appendix
Table 1 Discount Cash Flow and Depreciation analysis