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Boeing Commercial
Aircraft : Comeback ?
Presented by- Amit Barman
Debasish Patra
Devkumar Mukherjee
Kaushik Samanta
Sougata Mitra


ORDER PLACED BY BOIENG VS AIRBUS
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BOEING AIRBUS
ORDER PLACEDBY BOEING & AIRBUS
• Found in the year 1916 in the Puget Sound region of Washington
state.

• Market leader in the industry of military and commercial aircraft
manufacturing.

• Customer base and support in 150 countries.

• Employee strength of 165000 around the globe

• More than 12000 commercial jetliner engaged in aviations services.

• The commercial jetliner (SBU) total revenue earned during the
period in 2011 stands at 36.5 bn USD.
COMPANY PROFILE
TIMELINE
1916
• William Boeing establish Boeing Company.
1950
• 1950- Strategic move to enter commercial airlines as passenger plane –
known as the Dash 80
• Boeing decided to spend $16 million's to develop Dash 80 which accounted
for 2/3 of the Company entire profit.
1954
• Model 367-80 introduce
YEAR EVENTS
1957 Boeing 707 was the worlds first commercially successful passenger Jet
aircraft.
1959 model 720 successfully introduce.
1963 Model 727 introduce.
1967 Model 737 introduce.
1969 Model 747 introduce.
1970 Boeing Computer Service is formed.
1971 Boeing SUPERSONIC project is scrapped.
1972 Boeing become involved in Space Shuttle program & puts its mark on
satellites.
1983 Airbus starts giving competition to Boeing.
1994 Boeing 777, largest twinjet, takes off.
1995 Boeing gets involved in space station project.
TIMELINE
year EVENTS
1996 Boeing merges with Rockwell Aerospace and Defense unit, Renamed as
Boeing North American.
1997 McDonnell Corp & Boeing merge.
Boeing 777 sets a record for flying around the world in 41 hrs and 59
Min.

Rocket Dyne division of Boeing North American wins the first NASA
award for excellence

2000 -Boeing announced acquisition of Jeppesen Sanderson Inc. the world
leading provider of Flight Information Services for $1.5 bn cash.

-Receive and order of $ 10.4 Million contract to begin low rate initial
production for the US Navy.

2001 Headquarters is moved to Chicago.
TIMELINE
Contd….
year EVENTS
2002 Boeing deliver 1000th 757
China airlines orders 10 Boeing 747

2002 Boeing named 13
th
largest corporate air polluter.
2003 Airbus bites more market share.
Commercial aircraft product line
Boeing 737
Produced1968–present
Number built7,251 as of July
2012
Unit cost737-100: US$-32
million
Boeing 747
Produced1968–present
Number built1,435 as of April
2012
Unit cost747-100:
US$24 million (1967)
Boeing 767
Produced1981–present
Number built1,030 as of July
2012
Unit cost767-200ER:
US$160.2 million
Boeing 777
Produced1993–present
Number built1,030 as of July
2012
Unit cost777-200ER:
US$258.8 million
Boeing 787
Number built31
Program cost US$32 billion
(Boeing's expenditure)
Unit cost787:
US$206.8 million (2012
BBJ
Produced1998–present
Number built159 - As of July
28, 2010 (Including
Unit cost US$ -47–310 million
as of 2009
Boeing and Airbus compete in a near-duopoly in the global market for
large commercial jets comprising narrow-body aircrafts, wide-body
aircrafts and jumbo jets.
• Began as a consortium of
aerospace manufacturers.
• Subsidiary of European
Aeronautic Defense and Space
Company (EADS)

• Acquired former arch-rival,
Mcdonnell Douglas, in 1997
• The largest global aircraft
manufacturer by revenue, orders
and deliveries.
Duopoly













• Both companies compete against each other at every product level

Airbus A320
Airbus A330
Airbus A350
Airbus A380
Boeing 737
Boeing 767 & 777
Boeing 787 Dreamliner & 777
Boeing 747
Products Outline
Product Development Cost of Airbus & Boeing.
Category Airbus Development
Cost
Boeing Development
cost
Single Aisle
Family Model
A-319 757
A-320 $2.5 bn 737- 200
A-321 767 $1.5 bn.
A-318 757-300
Wide Bodied
Aircraft Model
A-350 767,747
A-330 $3.5 bn 777
A-340 $ 3.5 bn
Super Jet A-380 $15 Bn 787 $ 8 Bn
PORTER’S FIVE FORCES FOR
AIRLINE INDUSTRY
Threat of New Entrants- Low

Existing loyalty to major brands

Incentives for using a particular buyer (such as frequent shopper
programs)

High fixed costs in R & D

Scarcity of resources (technical )

High costs of switching companies (maintenance cost)

Government restrictions or legislation


Power of Suppliers- High

The airline supply business is mainly dominated by Boeing and Airbus.
For this reason, there isn't a lot of cutthroat competition among
suppliers.
Also, the likelihood of a supplier integrating vertically isn't very likely.

Power of Buyers- Low


There are high costs involved with switching airplanes, but also take a
look at the ability to compete on service.

Availability of Substitutes-Low


For regional airlines, the threat might be a little higher than
international carriers. When determining this you should consider
time, money, personal preference and convenience in the air travel
industry.


Competitive Rivalry. – High


Highly competitive industries generally earn low returns because the
cost of competition is high. This can spell disaster when times get
tough in the economy.

Future Trends Of Aviation Industry
Future trends and forces of Aviation industry depends upon

1. Hub and spoke vs. point to point model
2. Fuel cost
3. Strength of euro vs. dollar
4. Eco friendly operation.

Core Competency
• Proactive in meeting customer demand and needs.

• Customizing of aircraft and designing.

• Large-scale implementation system.

• Uniqueness in contract and agreement with both NASA
and United States Air Force.

• The power of vertical integration.
Boeing Entering Turbulent Times
 Uncertainty to words target market.

 Concern about Boeing corporate leadership.

 Lack of proper and ethical Management during the rein of Philip M
Condit.

 Labour discord(Frequent in sourcing, Transfer of labour to another
company at lower remuneration and benefit)

 Boeing sluggish response to competition to airbus

 Quality being a concern as most of the manufacturing unit are
outsource.

Comeback Strategy of Boeing
• Unique leadership style of Jim McNerney by
making innovation as a culture.

• Manufacturing of fuel efficient Airplanes in
contrast to the enhancement of fuel prices.

• Competitive advantage gained from the
ongoing management strife and other
problem in airbus.



Corporate Level Strategy
Strategic Decision Value addition and Business outcome
1. Investments in narrow bodied 757 and
wide bodied 767.
1. Investments made from the positive
cash flows attained through breakeven of
their earlier models.
2. Subcontracting in case of Boeing 777(
60% of the work)
2. Resulted in reduction of developmental
costs.
3. Merger between Boeing and
McDonnell Douglas
3. Resulting in increase of their presence
in the defense and space side of
aerospace
4. Movement of corporate head quarter
from Seattle to Chicago.
4. signal to the investment community
that Boeing was farmore than commercial
business
Corporate Level Strategy
Strategic Decision Value addition and Business outcome
5. Decision to produce new low cost, right
sized aircrafts
5. Resulting in increase in profit due to
demand for nonstop point to point flight.
6. launch of 787 aircraft 6. stiff competition to Airbus A350 and
A380 aircrafts.
Business Level Strategy
Strategic Decision Value addition and Business outcome
1.Adoption of Lean Production and Six
Sigma quality improvement process.
1. Better Management of warehouses in
terms of inventory, space and time as well
as capital, ultimately improving the value
chain.
2. Introduction of moving assembly lines. 2. Reaching of timeliness concepts by
tools being delivered directly on the shop
floor instead of fetching it.
3. Government subsidies 3. Boeing got subsidies from NASA to
develop technology which had helped
them in developing their commercial jet
aircraft.
Quality and Productivity Improvement
Through lean Progress
737 Lean Progress

 50% factory cycle time reduction.
 132% inventory turns increase.
 55% cost of quality reduction
 36% customer introduction hours reduction.
 41% covered floor space reduction.

777 Lean Progress

 14% Factory flow time reduction
 32% Inventory turns increase
 27% Engineering quality improvement
 7% Cost of quality reduction
 43% Factory footprint reduction


SWOT Analysis of Boeing

1. Management of supply process through
vertical integration.
2.Degital technology used for assembling.
3. Strong focus on R&D.
4. Enhancement of operational performance.





1.Constrains to reach break even point without
reaching the projected demand.
2. Complex assembly of aircraft.
3. Higher R&D cost.
4. High volatility of customer
5. Delay in Commercial aircraft Development
Program.

1. Good financial health of aviation industry
and economy
2.Competative advantage of spoke and hub
model increases demand
3.Growth of transcontinental traffic.
4.Demand for more frequent nonstop flights.


1.Increase of jet fuel prices.
2.Terrorist attack effecting the number of
travelers travelling.
3. Suppliers falling behind schedule designing
for projects.
4.Changing Govt. politics and business
partners based on those countries.

SWOT
PORTER’S FIVE FORCES FOR BOEING
Factor High Moderate Low
New Entrant
- Airbus

Threat from Substitute 
Bargaining power of Supplier
-Vertical Integration

Bargaining power of buyer
-Duopoly market

Rivalry
-First mover advantage

Boeing Orders vs. Airbus
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ORDER
BOEING AIRBUS
Source: www.boeing.com
: www.airbus.com
Boeing delivers vs. Airbus



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DELIVERY
BOEING AIRBUS
Source: www.boeing.com
www.airbus.com


Boeing Orders and delivers
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ORDER & DELIVERY
ORDER DELIVERS
Market Classification
Commercial
Airplanes
49%
Boeing
Defense, &
Security
50%
Boeing Capital
Corporation
1%
US
59%
Asia
16%
Canada
1%
Europe
12%
Middle
East
6%
Oceania
3%
Africa
2%
Others
1%
Ratio Analysis Of Boeing
2006 2005 2004 2003 2002
Dividend Payout Ratio 15.70% 14.47% 13.64% 14.29% 15.31%
DE Ratio 58.53% 42.71% 48.90% 62.47% 63.12%
ROE 15.89% 11.52% 8.41% 3.37% 2.48%
Quick Ratio 0.5 0.5 0.52 0.76 0.54
Current Ratio 0.77 0.78 0.72 1.05 0.85
0
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Source: www.boeing.com

Study on the revenue on Boeing
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
51.1
58
53.8
50.3
52.5
53.6
61.5
66.4
60.9
68.3
64.3
68.7
revenue ( $ in billion)
Source: www.boeing.com

After the case Financial Status
Source: Zonebourse.com

After The Case Financial Status
Source: Zonebourse.com

THANK YOU

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