Professional Documents
Culture Documents
Team X-Factor
Team X-Factor
Team Members:
• Govind Biyani
• Harit Agarwal
• Saurav Mansingka
• Shanky Jain
Malfunctioning Manoeuvring
Characteristics Augmentation
System(MCAS), installed on both
the planes by Boeing.
US Federal Aviation
Administration(FAA) which
certified the plane as safe.
Impact on Earnings and Boeing had a backlog of 400 planes that have been built but not delivered since the grounding.
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Boeing recorded an after-tax charge of $4.9 Billion, in relation to an estimate of potential concessions and other
considerations to their airlines customers due to 737 MAX grounding.
Revenues With the change in production rates, production costs of airplane were $1.7 Billion higher in 2 nd Quarter.
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Grounding of 737 Max Jets reduced the revenue and earnings of Boeing by $5.6 Billion in the second quarter.
Impact on Operating ●
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Even during the grounding Boeing had continued to build 42 of the jets every month.
Boeing reported 3rd Quarter Revenues of $20 Billion in 2019 as compared to $25 Billion in 2018.
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Operating cash flow of Boeing for Quarter 3 turned negative to -$2.4 Billion as compared to
Cash flow. $4.5 Billion, an year ago.
Financial Impact of Grounding on Airlines
• The worldwide grounding of Boeing 737 Max has driven up costs for airlines as they have cancelled thousands of flights.
• Airlines lack access to more than 370 Max jets that were in their fleets worldwide at the time of grounding and the
hundreds more that they were to receive from Boeing this year.
• Airlines are losing on revenues which has dented their profits and dashed their growth plans.
• Therefore, airlines seek compensation from Boeing, against this financial setback.
• Global airline industry has been estimated to incur a total loss of $4.1 Billion for 2019.
Boeing ●
11,000 Boeing B737 Delivered
Airbus ●
8,000 Airbus A320 Delivered
• Airbus is the prime competitor of Boeing and the only competitor in various categories of commercial
aviation including Narrow-Body Aircraft Market.
• Airbus and Boeing run a modern day duopoly in airplane manufacturing industry and have a fierce rivalry.
If one of them offers a better plane, the other could lose a lot of money.
• With the grounding of Boeing 737 Max jets, in the wake of deadly crashes, Airbus was poised to dominate
the Aircraft market.
• Jetliner Deliveries of Boeing fell by more than a third in the 1 st half of 2019.
• More than 6200 A320 Neos are scheduled to be delivered in the coming years. This is larger than Boeing’s
entire orderbook of about 5900 aircraft.
• SpiceJet which has served as lifeline for Boeing in Indian Narrow-Body aircraft market is considering to
buy 100 aircraft worth $10 Billion from Airbus.
Boeing Vs Airbus (Narrow-Body Airliners)
• Narrow Body Aircraft are Versatile, easy to fill with a capacity in between 150-200 and a range of about
6000km, these aircraft fit perfectly into fleet of modern airlines.
• Can fly short as well as medium-range routes carrying passengers to the hubs for their onward flight or
destination in case of point to point model.
HYPER TRANSPARENCY
• It will involve efforts to regain credibility amongst its airlines customers,
pilots and passengers.
• Proactive efforts in sharing information about the steps taken to mend for
the faults involved in the designing of the aircrafts and pilot training, under
stringent controls and testing conditions, to make 737 Max a safe airplane.
• Making presentations for reinforcement of core values of Safety, Quality
and Integrity, along with improvements in technical functionalities, on
global air shows platforms.
Strategic Plan for Reintroduction of
Boeing 737 Max
Updated Foremost software enhancement strategy with additional layers of protection.
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New MCAS system should compare inputs from 2 Angle of Attack(AOA) sensors, and
should get activated, only if data from both sensors agree that AOA is too high.
MCAS system
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Pilots should be able to override it, to prevent automatic reactivation of the system,
by deactivating the MCAS by turning off the automatic trim system.
Comprehensiv Boeing should demonstrate its close working with global regulators, on training programme
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to hep enhance pilots’ understanding of the updated 737 Max flight control systems.
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In India, DGCA has clearly mentioned Pilot training as a serious matter and airlines will need
e Pilot Training
to work on building pilot confidence. Boeing should produce comprehensive flight data and
mandated simulator sessions for pilot training, with ongoing pilot feedback.
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Company should strengthen the culture of safety at Boeing and encourage actions to drive
Operations and ●
quality and stability across production system.
Boeing continues to maintain its technological leadership as it remains at the forefront of
innovation. Boeing should leverage its innovative supremacy over Airbus to re establish their
Innovation ●
products in narrow body segment.
Company should restate its core values, customer support and their good times with airlines.
Rebranding
• Boeing can consider renaming its aircraft Boeing 737 Max
Rebrand
Associate with a new
Time Tested
d Mishap Strategy
name
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Customers say they don’t ●
Technical glitches in the aircraft ●
Rebranding has been a
want to fly on the plane after will be fixed and some new time tested strategy to put
its two fatal crashes. great features can be added.
a tragedy behind.
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The 2 deadly crashes have ●
The aircraft then should be
come up to be deeply launched with a new name to
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Used by Air India in past
ingrained with the name 737 be recognised with its for the aircraft which was
Max. upgraded outlook. hijacked by the terrorists.
Long Term Strategy
• Airbus has unveiled its plans for a new
long-range variant of its model A321. The
move aims to sentence the death of • Reality is that financial
Boeing in the segment in which 737 Max situation of the company
seems to indicate that this
competes. might be impossible at the
• Therefore, Boeing could invest huge moment.
amount in the development of new • Disaster caused Boeing to
aircraft to compete with A321, within the retain 500 of these aircrafts in
its facilities which represents
medium range it represents, with limited huge expenses. They also have
capacity but high scope and efficiency. to disburse funds to pay
• Or, it can invest close to $15000 million in compensation against 73
development of true successor to 737, an lawsuits filed against them,
• Therefore these strategies can
amount which is considerably less than be undertaken long term when
that required for development of new the current position of Boeing
model. is stabilised and it is able to
regain its market domination
Potential Aircraft Markets
• Asia Pacific Region presents the biggest market
with aircraft fleet size of 19,420 units in next 2
decades.
• Asia is destined to grow and become the centre
of world demand for aviation and aircraft,
newer trends in aircraft industry will emerge.
• Asia Pacific is home to approximately 60% of
world population and is expected to generate
58% increase in economic growth over next 20
years, which will generate remarkable growth
for commercial aviation industry.
• Indian market predominantly consists of Airbus
aircraft. Boeing itself claimed India will be
world’s fastest-growing aviation market for next
20 years with total requirement exceeding 2380
aircraft and net worth close to $330 Billion.
• In addition to Asia Pacific, North America and
Europe are also the 2nd and 3rd high potential
markets respectively.
Regional Connectivity Scheme of India
• India is pushing for regional connectivity and regional airport development.
• Development of underserved and unserved regional airports and add
several hundred financially-viable, capped airfare, new flight routes to
Ude Desh connect theses underserved and unserved airports.
Naagrik
aircraft that accommodates less
than 100 people on shorter routes.
• Small and more efficient airplanes such as B-787 Dreamliner, A-330 neo, A350, B777 have
emerged for long haul and ultra long haul routes.
• They utilize state of the art technologies such as utilizing carbon fiber to reduce weight and larger
engines for better efficiency, whose engines sip up 20% less fuel.
• Boeing had the first mover’s advantage while utilizing composite materials in the wide-body
market starting with the introduction of Boeing 787. Also, Boeing has better fuel efficient variant
and has sold more number of units from 2010-19, as compared to Airbus.
• Boeing can use this to its advantage, especially in India, to tap its international passengers market.
Operation of long-distance routes by
Indian Airlines
• With the introduction of more efficient B-787, Air India could turn some of its long distance unprofitable routes
around.
• Grounding of Jet Airways has created a void, which was the only private carrier offering flight connections
between India and London.
• Indigo is coming up with an opportunity while scouting for an aircraft to launch direct services to long haul
destinations.
For Indigo, in future half the capacity will be domestic and half will
be international.
Continents Countries
United States
North America
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London
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Europe ●
Singapore
Dubai
Asia Pacific
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France
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Australia ●
Switzerland
Aircraft variant for an International route
There are three things that need to work perfectly to fly ultra long haul
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• Jumbo jets and super-jumbo jets which had 4 engines and were inefficient have become
obsolete.
• There is a demand for newer and lighter planes that sip up less fuel and carry fewer than 300
passengers.
• Fuel efficiency is important. Longer the flight, the more fuel you need to carry and you end up
carrying fuel just to carry the fuel. Fuel takes a greater proportion of total cost as flight length
increases.
• Using single aisle aircraft which have fewer toilets, less space to stretch, give a more
claustrophobic feel. Passengers like space and therefore Wide-body aircraft are preferred
which are spacious and are often used for international flights.
THANKYOU