Economically Attractive

The ‘Dreamliner’ project can be considered as economically attractive if Boeing could sell enough planes in a certain time period above a specific price.

The internal rate of return given is 15.7% and although it is an estimate, it is sensitive to variations in different assumptions and gives the project a net present value of 0. From exhibit 9 we can convey that within the first 20 years Boeing will have to sell 2500 7E7 aircraft at a price premium of 0% or higher to achieve growth in the wealth of shareholders.

An interim report by the Interagency Task Force found that the imbalance of supply and demand with the added pressure of growing economies will continue to put upwards pressure on oil prices. Airlines that are facing increasing fuel costs will opt for demand of this new Boeing airliner as it provides unmatched fuel efficiency, using 20 percent less fuel for comparable missions than todays similar sized airplane, and also resulting in exceptional environmental performance which is becoming an important issue when manufacturing new aircraft. Travelling at speeds similar to todays fastest wide body aircraft airlines will enjoy more cargo revenue capacity, and will be 10% cheaper to operate than its Airbus A330-200.

This decrease in running costs of the aircraft could lead to a decrease of airline fares for passengers and make airline firms even more competitive with the purchasing of this aircraft. Passengers will also see improvements with the new airplane, from an interior environment with higher humidity to increased comfort and convenience. Boeings safety record is attractive compared to that of Airbus in the last three years, which will greatly promote this new aircraft. Also, unlike the Airbus A380 that demands bigger terminal space, and longer runways as well as the problem of linking major international hubs such as London and Hong Kong. With lightweight composite materials, which, combined with newer engines and aerodynamics the ‘Dreamliner’ does...