Professional Documents
Culture Documents
Dean's Research Fellow Michael Kane and Professor Benjamin Esty prepared this case with
assistance from Research Associate Fuaad A. Qureshi as the basis for class discussion rather than
to illustrate either effective or ineffective handling of an aministrative situation. The case was
prepared from public sources of information only.
1
Exhibit 1
Exhibit 1 Sales of Commercial Airplane and Aviation Support Services ($ 1999, billions)
Aircraft Deliveries
Regional Aircraft $3.8 NA NA
Airbus 16.0 $60.6 $729.5
Boeing 36.7 56.9 692.5
Total Aircraft Deliveries $56.5 $117.5 $1,422.0
Sources: Boeing Current Market Outlook, 2000; The Airline Monitor, July 2000.
2
Exhibit 3
Average Number of Seats 140 390 220 410 350 265 220 150 310 300
Actual Deliveries
1967 4
1968 105
1969 114 3
1970 37 40
1971 29 40
1972 22 17
1973 18 19
1974 47 15
1975 51 19 1
1976 41 21 6
1977 25 18 10
1978 40 28 10
1979 77 60 18
1980 92 67 31
1981 108 53 37
1982 95 24 20 37
1983 82 22 55 19 17
1984 67 15 29 17 26
1985 115 24 25 15 26
1986 141 35 24 10 18
1987 161 23 36 10 19
1988 165 24 53 17 28 14
1989 146 4 35 41 24 23 57
1990 174 8 60 62 18 18 57
1991 215 2 62 62 23 19 119
1992 218 0 63 61 22 23 111
1993 152 51 55 22 22 72 1 21
1994 121 40 40 23 2 48 9 25
1995 89 36 25 13 17 2 32 30 19
1996 76 42 25 32 14 2 38 10 28
1997 135 41 39 59 6 2 57 14 33
1998 274 47 53 74 13 1 80 23 24
1999 295 44 47 83 8 0 101 44 20
Total 3,531 581 763 510 261 428 248 786 131 170
Average Yearly Deliveries 107 25 42 46 52 17 15 66 19 24
Sources: The Airline Monitor, May 2000 (deliveries); CSFB Global Commercial Aerospace Monthly, May 2000 (orders).
Note: The Boeing 737 includes three model versions: 737-200 (1967-1988), 737-3/500 (1984-present), and 737-6/900 (1997-present).
3
Exhibit 4A
Balance Sheet
Cash and Short-term Investments $3,730 $5,469 $4,420 $2,741 $3,554
Total Assets 22,040 37,880 38,024 36,672 36,147
Total Debt 2,615 7,489 6,854 6,972 6,732
Income Statement
Sales 32,960 35,453 45,800 56,154 57,993 $9,600 $8,800 $11,600 $13,300 $16,700
Depreciation and amortization 1,306 1,267 1,458 1,622 1,645
EBIT (316) 2,618 (355) 1,567 3,349 NA NA 335 579 896b
Net Income (36) 1,818 (178) 1,120 2,309
Market Value
Number of Shares (millions) 344 347 973 938 871
Stock Price (year end) 78 107 49 33 41
Bond Rating AA AA AA AA- AA-
Market Share (% by Units)
Deliveries 67.5% 68.1% 67.3% 70.7% 66.9% 32.5% 31.9% 32.7% 29.3% 33.1%
Orders NA 71.1% 56.1% 53.6% 45.2% NA 28.9% 43.9% 46.4% 54.8%
Sources: Boeing Annual Reports; Airbus Industrie Website; The Airline Monitor, July 2000; The Wall Street Journal, June 26, 2000, p. A28.
Boeing acquired McDonnell Douglas on August 1, 1997. The income statement and balance sheet data (except for 1995 balance sheet) reflect the combined financial statements.
a
b
EADS Offering Memorandum dated July 9, 2000, p. 48. Because launch aid was ganted to the partners, not to Airbus, the partners recognized the effects of launch aid on their own
financial statements. In 1999, BAE Systems (a 20% owner) reported a loss of £42 million ($67 million) after launch aid repayment.
4
Exhibit 4B
EADS Participants
100% Spanish
Ownership 100% Public 48% French State 100% Publicd State
3% Lagardere
17% Public
2% Employees
Market Capitalization (e)b 18.5 8.6 59.1d
S&P Bond Rating A A- A+d NA
Source: EADS Offering Memorandum, July 9, 2000; BAE Systems 1999 Annual Report.
a
The e/$ exchange rate on June 30, 2000 was e1=$0.9545; The e/£ exchange rate on June 30, 2000 was e1=£0.6209.
b
Presented in accordance with International Accounting Standards (IAS).
c
Unaudited, pro-forma consolidation of Aerospatiale Matra, DASA, and CASA after accounting adjustments and eliminations. Different forms of accounting
recognition (full consolidation vs. equity method) prevent the amounts from summing across the EADS participants. EADS net loss is due to an
extraordinary charge of e1.9 billion related to foreign currency hedging positions.
d
This figure refers to the parent corporation, DaimlerChrysler AG.
5
Exhibit 6
Exhibit 6 Comparison of Boeing and Airbus 20-Year Market Forecasts (by year of forecast)
Sources: Boeing Current Market Outlook, Airbus Global Market Forecast, and casewriter estimates. (Airbus did not issue a GMF in 1996 and did not publish data on the cargo
market until 1999).
a
Includes both the Boeing 747-400 and the Airbus A3XX.
6
Exhibit 8
Exhibit 8 Estimated Market for Very Large Aircraft (VLA, >500 seats) by 2019
Sources: Casewriter estimates; Lehman Brothers Equity Research Report, December 6, 1999; Airbus Industrie Global Market Forecast 2000.
Notes:
(D) Retirements are based on current fleet age and composition.
(H) The number of seats per VLA is a function of the mix of plane types.
(I) Does not include VLA freighters, which could represent another 315 new aircraft to be delivered by 2019, according to Airbus.
7
Exhibit 9
Exhibit 9 Fleet Composition for the 15 Largest Boeing 747 Operators in 1997
Note: Widebody jets include Boeing's 747, 767, MD-11, L10-111, and 777, and Airbus' A300, A310, A330, and A340.
8
Exhibit 10
Investment 2001 2002 2003 2004 2005 2006 2007 2008 Total
R&D Expenditure $1,100 $2,200 $2,200 $2,200 $1,320 $880 $660 $440 $11,000
Capital Expenditures 0 250 350 350 50 0 0 0 $1,000
Working Capital 0 150 300 300 200 50 0 0 $1,000
Total R&D Cost $1,100 $2,600 $2,850 $2,850 $1,570 $930 $660 $440 $13,000
Source: Dresdner Kleinwort Benson, Aereospace and Defense Report, May 8, 2000.
9
Exhibit 11
Announced Orders
Air France 10 - 10
Emirates 7 5 12
International Lease Finance Corp. (ILFC) 5 5 10
Total 22 10 32
Probable Orders
Atlas Aira 8 6 14
Federal Expressa 10 5 15
Singapore Airlines 10 6 16
Virgin Atlantic 6 4 10
Total 34 21 55
Potential Orders
Cathay Pacific 6 4 10
Cargoluxa 6 4 10
Korean Air 6 4 10
Malaysian Airways 6 4 10
Qantas 6 4 10
Total 30 20 50
Source: Lehman Brothers Aerospace and Defense Report, June 23, 2000; The Wall Street Journal,
July 26, 2000, p. A21.
a
Denotes cargo operator.