“Airbus vs. Boeing in Super Jumbos: A Case of Failed Preemptionâ€Â
“Airbus vs. Boeing in Super Jumbos: A Case of Failed Preemptionâ€Â
“Airbus vs. Boeing in Super Jumbos: A Case of Failed Preemptionâ€Â
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Table IISimplified Valuation Analysis for the Airbus A3XX2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Required InvestmentResearch & Development $970 $1,940 $1,940 $1,940 $1,164 $776 $582 $388 $0 $0Capital Expenditure $0 $300 $420 $420 $60 $0 $0 $0 $0 $0Net Work<strong>in</strong>g Capital $0 $150 $300 $300 $200 $50 $0 $0 $0 $0$970 $2,390 $2,660 $2,660 $1,424 $826 $582 $388 $0 $0Cumulative Start-up InvestmentResearch and Dvlp $970 $2,910 $4,850 $6,790 $7,954 $8,730 $9,312 $9,700 $9,700 $9,700Capital Expenditures $0 $300 $720 $1,140 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200Net Work<strong>in</strong>g Capital $0 $150 $450 $750 $950 $1,000 $1,000 $1,000 $1,000 $1,000Cash FlowsRevenue $2,811 $8,382 $11,250 $11,475 $11,705Ramp-up (% <strong>of</strong> steady state sales) 25% 75% 100% 100% 100%Number <strong>of</strong> Planes 13 38 50 50 50Price per Plane $216 $221 $225 $230 $234Operat<strong>in</strong>g Pr<strong>of</strong>it $422 $1,257 $1,688 $1,721 $1,756Development CostsR&D Expense ($970) ($1,940) ($1,940) ($1,940) ($1,164) ($776) ($582) ($388) $0 $0Depreciation $0 ($30) ($72) ($114) ($120) ($120) ($120) ($120) ($120) ($120)Depr. Adjustment $0 $0 $0 $0 $0 $120 $120 $120 $120 $120EBIT ($970) ($1,970) ($2,012) ($2,054) ($1,284) ($354) $675 $1,300 $1,721 $1,756Taxes @ 38% $369 $749 $765 $781 $488 $135 ($257) ($494) ($654) ($667)EBIAT ($601) ($1,221) ($1,247) ($1,273) ($796) ($220) $419 $806 $1,067 $1,089+ Depreciation $0 $30 $72 $114 $120 $120 $120 $120 $120 $120- Capital Expenditures $0 ($300) ($420) ($420) ($60) ($120) ($120) ($120) ($120) ($120)- Incr. <strong>in</strong> Work<strong>in</strong>g Capital $0 ($150) ($300) ($300) ($200) ($50) ($20) ($20) ($21) ($21)Free Cash Flow ($601) ($1,641) ($1,895) ($1,879) ($936) ($270) $399 $785 $1,046 $1,067Discount Rate 11.0%Discount Factor 0.901 0.811 0.730 0.658 0.592 0.533 0.480 0.433 0.390 0.351Term<strong>in</strong>al Value (Grow<strong>in</strong>g Perpetuity)Growth rate 2.0%Total Free Cash Flow ($601) ($1,641) ($1,895) ($1,879) ($936) ($270) $399 $785 $1,046 $1,067Discounted FCF ($542) ($1,331) ($1,384) ($1,236) ($555) ($144) $192 $340 $408 $375Present ValuesInvest<strong>in</strong>g CF to 2020 ($5,691)Operat<strong>in</strong>g CF to 2020 $4,231Term<strong>in</strong>al Value after 2020 $1,808Net Present Value $348Internal Rate <strong>of</strong> Return (after tax) 11.6%50
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