Managing in Troubled Times Case Study

Airbus: Flying through Turbulence

OR

Abstract:

In 2006, Airbus booked 824 new orders for aircraft, representing a 44% market share at a value of $75.1 billion. Unable to commence supply of A380, a futuristic double decked jet, it suffered 34 order cancellations. With two years behind schedule and $2 billion over budget on the project, Airbus also faced a revenue loss of $6.6 billion, which could make the company financially extinct. The case describes the events which led to the delay. The first was the fuselage wiring issue which was caused by the different software versions used by Airbus’ German and French engineers. Wake vortexes, the air tornadoes developed by an aircraft behind it, was very powerful in the case of an A380, because of its huge size and four high thrust engines. The ICAO, recommendation that additional nautical miles be used to separate other aircraft and A380, was a blow to Airbus, since already strained airports could not offer additional space to an A380, which cancelled its benefit of carrying passengers almost twice that of its nearest rival B 747.

The case describes the political turmoil regarding the Airbus’ restructuring plan ‘Power8’. 10,000 job cuts, hiving off six manufacturing plants spread over three countries and cost cutting are few measures which Airbus planned to implement hoping to revive its fortunes, amidst stiff opposition from participating governments and labor unions.

Pedagogical Objectives:

• Project Management and Product Development Cycle
• Dynamics in Aviation Industry
• Political and Social factors in Business environment.

Keywords : Airbus A380; Boeing 787 Dreamliner; Catia V5 CAD Software; Wake Vortex of A380; Managing in Troubled Times Case Study; ICAO recommendations on A380; EADS; A380 order cancellations; Power8 Restructuring plan; Long haul aircraft

Contents:

• Global Aviation Industry and Airbus' Reasoning on A380
• Airbus' A380 – A Dream Turned Nightmare
• Airbus Embroiled in Rivalry – Political and Professional