Business Report On The Airbus Engineering Essay

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The Aviation Industry is considered as one of the largest industry globally. Being there for many years, recently airline industry has become one of the largest sections of business travel and vacations. Airlines differ from the one which carries cargo or mail, through the airlines which operates some hundreds of aircraft. The services of airline industries can be divided as domestic, international, intra continental, intercontinental and also as scheduled charters and services.

The First Airlines

The world's first airline was DELAG; Deutsche Luftschiffahrts-Aktiengesellschaft. The headquarter of this airline is in Frankfurt. With the government support it was established in November 16, 1909 and with The Zeppelin Corporation also manufactured the airships. Some of the oldest airlines existing in the present world are, Czech Republic's Czech Airlines, Netherlands' KLM, Australia's Qantas, Colombia's Avianca, and Mexico's Mexicana.

Early Development

For the Saint Petersburg routes a commercial aircraft was scheduled on January 1, 1914 by Tony Jannus. During 1920's the service provided was very irregular and concentrated a lot on carrying the mail bags. However, in 1925 Ford Motor Company Over took the Stout Aircraft Company and started constructing the metal Ford Trimotor, which ultimately became the first Successful American airline. The passenger service was profitable by Trimitor, which was having a 12 passenger capacity. In the American Transport Network Air service was added as an addition to the rail service. U.S. airline industry was in a good profitable situation in the time of depression, because of the introduction of Boeing 247 and Douglas DC-3 around 1930's.

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With a 12-passenger capacity, the Trimotor made passenger service potentially profitable. Air service was seen as a supplement to rail service in the American transportation network. With the introduction of the Boeing 247 and Douglas DC-3 in the 1930s, the U.S. airline industry was generally profitable, even during the Great Depression. This movement continued until the world war II started.

European Airline Industry

The countries which held the air transport in Europe were France, Finland, the Netherlands, the United Kingdom and Germany. In 1919 KLM was originated and it is the oldest airline which is still functioning under its original name. KLM's early growth depended heavily on the needs to service links with far-flung colonial possessions (Dutch Indies). It is only after the loss of the Dutch Empire that KLM found itself based at a small country with few potential passengers, depending heavily on transfer traffic, and was one of the first to introduce the hub-system to facilitate easy connections.

The Airbus - An introduction

Airbus is an association of the European Airline Industries. In 1970 Airbus was formally originated only after Germany's Deutsche Airbus joined with France's Sud-Aviation. The term Airbus was selected as it was the terminology which was used in 1060's for the airplanes and also it was well suitable for the French language. With the most of the modern and wide-range family of airlines in the market Airbus is considered as one of the leading manufacturer of airlines. Its capacity ranges from 100 and even to more than 500 seats. Airbus turnover in 2003 was around 19.3 billion euro.

Head Quarters

The birthplace of Airbus is France. France is home to three of the company's manufacturing sites: Toulouse, Nantes and Saint-Nazaire; along with three final assembly lines and the company's headquarters. In the Toulouse area 11,500 people have being employed. Toulouse plays a key role as it is considered as home to a large mock-up centre. Airbus training centres are also located in Toulouse. Nearly 4,500 people are employed at Airbus headquarters complex in Toulouse, which is a short drive away from Toulouse-Blagnac International Airport's passenger terminal. The company's customer services department is based here, as are Airbus' President & CEO and the Executive Committee members - each of whom are responsible for core functions within Airbus. In addition, the headquarters is home to key Airbus departments, such as finance, design, marketing, engineering, customer relations, operations, programmes, procurement and communications. In addition, Airbus has subsidiaries in Japan, The United States and in Russia. Final Assembly of Airbus' planes is in Toulouse, France and Hamburg, Germany.

It's Journey in the Airline Industry

The goal of Airbus is getting it right for the first time- as it believes in delivering the airplane on time, on quality and on cost. Airbus makes it very clear that it wants to offer the safest airplane. On Airbus' own website it states that, "Airbus' customers expect quality in the aircraft they buy" (Airbus, 2006).

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Airbus first manufactured model was A300 which was developed in 1972 and also A300 was the world's first twin-aisle aircraft with two engines.

In 1984, Airbus proclaimed the manufacturing of the A320 series aircraft. In the market A320 was the aircraft having widest single-aisle fuselage. On quality and safety Airbus prides itself. The association obtained 411 industry deals from around 50 customers in the end of 1984.firm deals came around 900 from around 74 customers with 450 delivered aircrafts by the end of the year 1988. Airbus continued in developing and was building the success. Every year attaining a market share in the contested organizations in the world. Airbus is now preparing to enhance the industry to a long range by exposing/unveiling A320. A330 and A340 four engine airplanes were launched combinely in June 1987 that was when A320 was launched 4 months before these aircrafts. Airbus once again has shown some of the remarkable inventiveness by launching the two aircrafts combinely. This was the world's first combined aircraft programme. The similarity was there in the A330 and A340 aircraft like sharing the same cockpit systems, and this similarity was not just only in between these aircrafts but also in A320 and the other group belonging to this family. So the pilots who were trained o flying any of the Airbus was qualified for flying any Airbus of this family just by giving some additional training. It was possible due the similarities between the aircrafts. Airbus family was enhancing and was growing slowly and in a reasonable way. A340 provides the quietest cabin in the sky. A330 belonging to Airbus family marked yet another success by introducing first Rolce-Royce engine-the Trent 700 in an aircraft. In January 2005 Airbus launched A380 a double-decker aircraft by aiming to take back the market once again. It is the largest plane ever having the seating arrangement for 555-840 people and also Airbus is a very well-known industry throughout the globe.

The Changing Airline industry

Air travel industry always will remain as one among the very fast growing industries. In some of the past decades, aviation industry has developed and enhanced per year by 7%. Business trip or a leisure trip has grown very strongly. There was an important change that was focused by a strong mixture of economics and technology. Apart from the other means of transport always the travellers the spare time always the travellers select primarily the airlines depending upon the cost. Incorporation of minimizing the budget had become more important corporate and business travel alternatives and also containing low-cost air carriers. An airplane should be developed from A380 which can accommodate a large number of passengers while compared to the previous airplanes models and also operating at a very low cost.

According to a thumb rule in the manufacturing of aircraft, If the passengers are double in number it will lead to increase the weight of the plane around four times larger. Hence, while manufacturing aircraft weight-saving materials are used. GLARE or fibre-glass resistant aluminium is used in the 3% of the shell of the Airbus. These are the materials by which a mixture is prepared having the combination and layers of aluminium and fibre glass for developing the aircraft. Aluminium is heavier than GLARE and also GLARE gives more resistance against deterioration and also decreases the weight of A380. Any damage can be set by using conventional repair methodology and also carbon fibre is used as a substitute. Steel is 60% heavier than carbon fibre. As, the carbon fibre is lighter it maximizes the stability of the aircraft. A380 is first ever airplane consisting the carbon fibre in the wing mountings. The estimated carbon material present in the complete manufacture is of about 40%. The largest engine ever built for the passengers is Trent-900 engine by Rolls-Royce. A380 also include some of the technologies like Integrated Modular Avionics, Network System Servers, Power-by-Wire Flight Controls and the 350 bar hydraulic system. This kind of system architecture decreases the various devices, maintenance is very easy and decreases the cost. Airbus is very well equipped and is able to take any kind of direct challenges.

SWOT Analysis

A SWOT analysis -- a review of strengths, weaknesses, opportunities, and threats is a major prerequisite of an industry, and necessary to understand. The unstable airline industry has no exemptions. The individual airlines identify and analyze the decision depending upon their circumstances and in general there is some resemblance which every airline experience.

Strengths

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Diversity plays a major key role in the success of Airbus. Airbus is fastly growing at international levels because of its global presence. For the diversity of its employees Airbus takes the pride. An organization can flourish at the time of considering the combination of ideas, visualization and knowledge like mixture of cultures can generate. This creativity facilitated Airbus for prospering in the past three decades. Ever since 1970, it has enhanced as a competitor globally, going beyond Boeing 2005, Industry which is in the business since 1916. Airbus achieved success through various reasons and one among the reasons is in terms of the customer support is frequent statement to freeze the costs of the spare parts. This practice is continuing since past three years.

Weakness

One among the biggest weaknesses of the Airbus is delaying A380. Due to which even the parent industry EADS (European Aeronautical Defence and Space) changed the management in October 2006. The present EADS financial officer Hans Peter Ring will become the CFO of Airbus and formally Fabrice Breigier the head of another EADS section Eurocopter, named as chief operating officer. Airbus is planning to decrease the dealers it uses due to the transformation in the higher management. Airbus predicts the strategy which could cut the industries dealer rolls from the present 3000 to 500 which could decrease the cost of the materials by around $2 billion by over next three years in future. Indeed the dealer consolidation would decrease costs around $446.5 million. The CEO of Airbus Louise Gallois said that the company should cut the costs in order to become most competitive. The implementation of cost cutting was to be implied urgently to allow the launch of A350 a new airplane. Airbus initially surprised its share holders and customers in the month of June by increasing the seating arrangement by doubling the initial figure and also delayed the launch of A380's manufacturing, reasoning as problems with the wiring. However, in the month of October Airbus delayed the launch for two years and stated as the delay may swab $6 billion off the profits of the parent company EADS for over four years. This supply graph is showing the striking turn down of EADS value at the time when the delay was broadcasted in the month of June. In 2006, FedEx cancelled10 deals for the double-decker due to the additional consequences for the delay of A380 which hurt Airbus very badly. Instead FedEx opted ordering Boeing 777 freighters.

Opportunities

The reason of being success continuously for the Airbus is their commitment to go green. The companies that want to be in the leading position in the major change of clean technology, and wants to enjoy the benefits from it, this commitment is a win/win situation for them. Development of new technologies that would rather lower the lifetime of an aircraft, carbon footprint is a seeking an attribute that any airline company wants to get it behind. The thinking of people on the effects of global warming and the Earth is finally going to change because the proof of the summit Airbus and the other organizations were present in 2006 that they are ready for change. It helps in keeping the Earth clean and it also makes the smart business sense. Hence, it would become the first industry leaders on being environmentally green. At present and in the future it is very important for the companies to be environmentally very clean the customers are happy if the companies are preserving the resources for future and as well as doing their business.

As stated 18 on Airbus' own Annual review on their website "As a leader to the industries the Airbus decided to move towards environmental growth, along with its manufacturing sites and for its products. Its phrasing that it is taking a lot of efforts to improve continuously the friendliness with the environment and being a good neighbour. To this effect, it is making sure that all the manufacturing sites are updated with the latest specifications for the environmental friendliness (Airbus, 2006). "In 2005, ISO 14001 certification has been sent to the nine more Airbus manufacturing sites as a part of a companywide policy of implementing (EMS) Environmental Management System to enhance further in the performance of the environment, getting the total complaint sites to 14 out of 16" (Airbus, 2006).

The ISO 14001 is an internationally known standard which is given to all the companies with the steps to decrease their impact on the environment. The ISO 14001 is completely voluntary and applies to all types of companies. As a leader of industry, Airbus commitment is to move accordingly with the environmental enhancement and the major and important assistance is given by the Environmental Management System in order to show it is accordingly integrated to improve the environmental practices into all areas of business.

Recycling of the planes has also setup by the Airbus and will be decommissioned in the future. According to the Airbus estimation, more than 4,000 airplanes will get retired in coming next 20 years (Ballpark figures: 200 airplanes a year). In order to help with the recycling of nearly 19 airplanes which has been removed from the services, EADS is working with the partners like SITA (a waste management company).

This company is specialized in recycling and recovering of used materials like tires, plastics and batteries. However, Airbus is attempting in pleasing the customers by its leadership in environmentally green race, but many other people also think that they could even do a better job in the future. So, from this we can notice that Airbus holds pride in being very safe and clean to the environment.

Threats

Every industry faces some threats, in the same way Airbus is not an expectation from this. In the year 1992 plane crash almost near the city of Strasbourg, Airbus along with Air France was found guilty. In Germany 87 people died due to this. No one could find the problem and the evidence failed to point to one specific reason to the cause of the plane to crash in the mountains. They have concluded with the perception that many factors ranging from an inexperienced crew to a possible faulty guidance system might have been at fault

$27 million was already paid by the Air France to most of the victims families. It may also command Airbus to pay their share of the damages. The major problem what Airbus was facing was the currency exchange, because it is a universal company which was having the customers and suppliers throughout the world and that was going to affect the profits of Airbus.

Airbus has many external risks like terrorist attacks in New York and Madrid which is almost of their control and spreading of SARS (Severe Acute Respiratory Syndrome) virus have shown. These kind of activities can affect negatively public thinking of the comfort and the safety in air travel, which was also going to affect the production of new business aircrafts and the demand for air travel (EADS, 2006). Public's perception on safety of a given class of aircraft can change due to the major airplane crashes. In order to come forward with these many problems Airbus is compelled to take costly security and safety measures.

Value chain Analysis

Due to urbanisation and rapid economic growth in Asia, Airbus has developed A380 a very large aircraft to overcome the demand generated by the two key dynamics in the world development economy. By the years 2020 world wide population will be more than 20 million in the 16 cities, 10 million of the population will be in the Asia-Pacific region. Based in the new urban centres along the east coast, in China 20 million new middle class customers are emerging.

A380 can handle this new traffic because of its large size. By the year 2015, only 3 Chinese cities, where major air hubs are present will have the population of 40 million. This destination choice is 90% of all the air travellers when looked at US to China travel. In the last decade London-Dubai has been the fastest growing route in the world, but London-Chicago also shows rapid growth. These are the major world wide routes which are already very much congested, but A380 overcomes all these problems and increase the density on these routes.

Supplier

The major purchases for the Airbus include the following:

(Below details are the current purchases as mentioned in Procurement commodities and major Supplier, by Voinot_c)

1. Aerostructures

1.1 - Five commodity subgroups exist within this sector

Metallic Assemblies

Composite Assemblies

Interiors

Electrical

Detailed parts

1.2 - The major Suppliers for Aerostructure are currently:

BAE Systems

Belairbus

Bombardier

C&D

EADS-M

Eurocopter

Moores

Ruag

SPS

2. Materials

2.1 - Five commodity subgroups exist within this sector

Aluminium and special Alloys

Titanium, Forgings and Castings

Fasteners

Hardware

Composite and Consumable

2.2 - The major Suppliers for Material are currently

Alcoa

All Metal Services

Aubert & Duval Holdings

Aviation Metals

Kaiser

PRC-Desoto

RMI Reamet

SARMA

SPS Technologies

Zodiac Aerospace

3. Equipment Systems

3.1 - Fourteen commodity subgroups exist within this sector

Landing gear

Fuel systems

Avionics (modular, LRU's)

Com-Nav, Maintenance, Warning

Navigation and flight Management systems

Air systems

Hydraulic systems

Electrical systems

Flight controls, flight Guidance

Auxiliary power units Cabin systems (IFE, Seats, Galleys)

Cargo Loading Systems

Wheels and Brakes / Braking Systems

Cockpit display systems and units

3.2 - The major Suppliers for Equipment Systems are currently

BE Aerospace

C&D

Hamilton Sundstrand (UTC group)

Honeywell

Parker

Rockwell Collins

Safran

Smiths

Zodiac

4. Propulsion Systems

4.1 - Two commodity subgroups exist within this sector

Engines

Nacelle

4.2 - The major Suppliers for Propulsion Systems are currently

CFMI

General Electric

Engine Alliance

Goodrich

Hurel Hispano (SNECMA Group)

IAE

Pratt & Whitney

Rolls Royce

5. Enterprise Consumables and Services Procurement

5.1 - Eight commodity subgroups exist within this sector

Marketing & Public Relation Services

Transportation and logistics

Office Supplies and furniture

Facility management

Consumables

Consultants

Personnel Services

Special Services

5.2 - The major Suppliers for Enterprise Consumables and Services

Procurement are currently

Accenture

Adecco

Cromwell Tools Ltd.

Daimler-Chrysler Services Fleet

Danzas

Euro RSCG

Havas

Sodexho

6. Product Related Services Procurement

6.1 - Four commodity subgroups exist within this sector

Engineering Services

Technical Documentation

Mechanical Services

Special Services

6.2 - The major Suppliers for Product Related Services Procurement are currently

AAA

Aeroconseil Group

CEAT

CDI

CISIA/EADS Military/Bowne Global/MTAD

CS

Ferchau

Sonovision/ Eurodoc/ Pennant/Indra (Network)

STTS

Teccon

7. IT & Telecom

7.1 - Four commodity subgroups exist within this sector

IT/IS Hardware Procurement

IT/IS Software Procurement

IT/IS Services

Telecom Network Procurement

7.2 - The major IT & Telecom are currently

CSC

Fujitsu-Siemens

Cap Gemini - Ernst & Young

Hewlett Packard

IBM

Microsoft

Oracle

SAP

SUN

8. Capital Equipment & Facilities

8.1 - Five commodity subgroups exist within this sector

Building & Construction

Machine tools

Jigs, Fixtures & Assembly tools

Cutting & Power tools

Measuring & Test Equipment

8.2 - The major IT & Telecom are currently

Atlas Copco

Broetje

Cooper Tools

M Torres

Sandwik

Scholz

Starrag-Heckert

Inbound Logistics

Airbus has entered into an agreement with Kuehne + Nagel for inbound logistics. They have entered into a six year agreement which reads out that Kuehne + Nagel will manage and handle about six regional hubs which in Germany (Hamburg), France (Toulouse, Nantes-Saint Nazaire), Spain (Madrid, Puerto-Real) and the UK (Broughton) .This includes management and utilization 150,000 m2 of warehousing space for storing aircraft equipment and raw materials.

Outbound Logistics

With DHL it has entered into a five year agreement. This will include contract negotiations, execution, measurement and follow-ups. The medium of transport will include air and ocean freight, road freight, customs and value added services.

Consultants

Airbus UK has the design and also the manufacturing responsibility for the most intricate part of aircraft that is the wing congregation. The organization identified very early about the new processes might help in achieving the dead lines which were called for. Airbus required a transformation to approach the A380 and even it saw value by taking in some new aims and objectives which helped to identify and apply some new methods of working. IBM Global Business Services were customized by Airbus UK team to combine a group of expertise people for analyzing the designs, methodology and production operations. IBM acts as an advisor for Airbus UK. IBM has very vast wideness and also had depth in the information, having experienced in the business, financial and managerial control along with aircraft and computer technology. The major IBM Business Services Programme committee consists of aircraft industry specialists, project managers and strategic business consultants. This committee had been spread over based on the requirements which outlines in the consultants and also the specialists who will carry an example of a business and the technical skills related to a particular problem being tackled.