Airbus SWOT Analysis

Airbus SWOT Analysis

Airbus, one of the leading manufacturers of commercial aircrafts is headquartered at Toulouse France. It has produced a large, modern and efficient range of airliners with capacity ranging from 100 to 500 seats. The company employees around 55000 people globally. It is known for its focus on innovation and has sold more than 16300 aircrafts to more than 400 customers globally. Its design and production facilities and their subsidiaries are coated across the globe throughout several nations.

Apart from these things, it has continued to expand its international network so as to provide the best level of customer support to its customers. Airbus is now a four decades old success story. Its customers are from all parts of the globe. The company has accumulated a heavy backlog which could mean at least ten years of production for it. This is a good sign since it means Airbus is loaded with orders. Here is a SWOT analysis of Airbus highlighting its strengths, weaknesses, opportunities and threats.

Chairman and CEO: Allan McArtor

Headquarters: Toulouse, France

Competitors: Boeing, Bombardier, Embraer

Strengths:

  • Established brand name (forty year old success)

Airbus is now a forty year old success. In the meantime, it has delivered more than 16300 aircrafts. Today, it employs more than 55000 employees.

  • Leading manufacturer of commercial aircrafts.

Airbus is a leading producer of commercial aircrafts and its only major competitor is Boeing. From A 321s to A 320- neo there are several models known for fuel efficiency and cabin comfort that it makes.

  • Focus on research and innovation

Airbus has also focused on research and innovation. It has established the Airbus Bizlab to faster change innovative ideas into reality. It has played an important role in the evolution of the air transport industry.

  • Manufacturing and design facilities located globally

Airbus’ manufacturing and design facilities are located across several nations throughout the globe.  Its design and manufacturing facilities are located in France, Germany, the UK, and Spain, as well as subsidiaries in the US, China, Japan, India and in the Middle East.

  • Producer of a large range of modern and efficient airliners

Airbus makes a large range of modern and fuel efficient aircrafts. From the medium-haul A300 and A310 to the best-selling single-aisle A320 product line, long-range A330/340 Family, new-generation A350 XWB and double-deck A380, it has a large fleet of airliners known for efficiency.

  • Large gross market share

Airbus has acquired larger gross market share over time compared to Boeing. Based on the number of units sold its 2015 market share was 58% whereas that of Boeing was 42%. Based on revenue its market share was 55% and that of Boeing 45%.

  • Increased presence in satellite business

Airbus’ presence in satellite business has also grew. In 2015, its space business won orders for 5 telecommunication satellites.  Total orders amounted to 14.4 billion Euros.

  • New aircraft models with higher fuel efficiency.

Boeing has produced several models with higher fuel efficiency. It’s a 320 neo us a highly fuel efficient model in which Airbus has made fuel burn and seating improvements of up to 23%.

Weaknesses:

  • Declining popularity of A380s

At the time, Airbus launched the A380s, it expected its super jumbo jet was going to be a super hit. It also achieved some success in the short run but in the long run failed to be as successful as Airbus had expected. Several airlines cancelled their orders for the A380s. Production of A 380s is expected to be reduced to one per month.

  • High costs of production and operations

The costs of production and operation at Airbus are quite high which is a major weakness.

  • Trouble with key programs

Several of its key programs have faced trouble. Its vA350s are plagued with problems. The delays are happening because of cabin items and several other items. By July 2016, it had delivered only 8 A320 Neos against planned 30 +. There have been troubles in its helicopter division too after one of its Super Puma helicopters crashed.

Opportunities:

  • Increased demand for air travel

The demand for air travel has increased in the 21st century. Apart from the millenials, the middle class customers and professionals also prefer air travel against other modes. This demand is expected to rise manifold over the next fifteen years.

  • Better economic conditions

The recession is past and the world economy has grown stronger since the recession. The condition of employment has grown better worldwide which has led to increased expenditure on tour and travel. The rise of the middle class is another factor driving growth in airlines business.

  • Technological innovation

Airbus will need to focus more on technological innovation. While it has produced some great models with high fuel efficiency and seating comfort, their production has generally remained delayed. Technological innovation also helps combat the competitive pressure better.

  • A large backlog of orders

Airbus has accumulated a very large backlog of orders which amounts to billions. Its backlog is larger than that of its competitor Boeing which also signifies higher demand.

Threats:

  • Intense competition

While Airbus has grown its market share vastly, still Boeing is a formidable competitor. It has made some great fuel efficient and long range models whose performance is tough to match.

  • Regulatory pressure

Regulatory challenges for aircraft manufacturers and airlines companies have increased. From passenger safety to other issues there are several laws and regulations that create immense pressure for Airbus. Apart from it there are financial issues like the use of third parties to seal deals overseas where compliance may become a challenge and create pressure.

Sources:

Airbus 2015 commercial review

https://airwaysmag.com/industry/a-look-at-the-remaining-airbus-a380-and-boeing-747-orders-deliveries/
http://annualreport.airbusgroup.com/business/
http://www.airbus.com/innovation/
http://www.airbus.com/company/market/orders-deliveries/10000th-delivery/
https://leehamnews.com/2016/07/27/airbus-group-1h2016-results-trouble-key-programs/

 

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.