Airbus SE is Europes largest aircraft manufacturer with revenues exceeding $71 billion in 2018. Boeing, the companys chief rival, dominated the long-haul market with its flagship, double-decker 747 aircraft for decades. In 2005 Airbus unveiled its A380 aircraft with a range of 8,000 nautical miles to challenge Boeings dominance of this important market. The four-engine A380 superjumbo is certified for up to 853 passengers, making it the worlds largest passenger aircraft. We want you to consider how the decision-making process led Airbus in 2019 to cease production of the A380. Overall, the company expects to have sold 251 planes by the time it ceases production in 2021, well under its breakeven target.130 The decision to stop production also means a reduction of about 3,500 jobs, and the company will not recoup the roughly $25 billion it invested in the aircraft project.131 CHANGING MARKET DEMANDS Airbus began development of the A380 in the 1990s. The manufacturer believed it had identified an opportunity: as air travel increased there would be a need for larger aircraft. Airports in hub cities, such as London, T okyo, and New Y ork, only had so much capacity. So a massive aircraft that could seat a large number of passengers seemed like an ideal solution.132 The gigantic aircraft was a hit with airplane enthusi- asts, but the industry was experiencing three unex- pected changes. First, bilateral and multilateral agreements eased airport congestion. Traditionally, countries granted each other landing rights for a fixed number of flights per week to a fixed destination. Then came Open Skies agreements that provided unre- stricted access to all airports.133 These agreements facilitated the growth of secondary airports so passen- gers could take advantage of lower fare tickets. The A380 was better suited to 1995, before air routes fragmented, said Richard Aboulafia, an aviation expert.134 For example, London was no longer the premier destination in the UK with cities such as Manchester becoming hubs of their own.135 Second, Airbus grossly misjudged future passenger preferences. The companys initial research in the 1990s focused on Boeings 747, which offered fewer flights, but more capacity on each one. The A380 launched more than a decade after this research was conducted. Passenger preferences had actually switched to wanting more flight times by the time the A380 went into service. Business travelers needed flexibility for flight departures between popular desti- nations, and this often meant more flights with each not operating at full capacity.136 An airline strategist told Bloomberg that the A380 was T oo costly to fly anything but near full, and unusable on any less dense sectors.137 Finally, many airlines have turned to smaller, fuel- efficient aircraft, such as Boeings 787 Dreamliner. As smaller, more efficient planes flood the market . . . [it kills] the case for larger aircraft, according to the New Y ork Times.138 The two-engine Dreamliner has a lightweight carbon fiber body with significantly less fuel cost than the A380. The Dreamliner is much smaller than the A380, but that works out just fine in an era where each flight consists of fewer passen- gers who demand flexibility in the number of flights available to them.139 THE PRODUCTION PROCESS Airbus had trouble delivering the first A380s on time and within budget because the manufacturer realized it had underestimated the complexity of wiring the air- craft and it used a multinational design team. Airbus is in fact a partnership between different European nations. This results in different designers, using differ- ent software, making group decisions on the design of aircraft. Multinational representation at Airbus went all the way to the upper echelons of the company until 2006. In fact, the manufacturer was led by French and German co-CEOs throughout the development of the A380. The superjumbo, dubbed the Eighth Wonder of

the World, represented all that was great about the European Union, including shared leadership.140 From its inception, the A380 was a grand European project, according to Bloomberg.141 This pride may have interfered in the production groups decision-making processes. Airbus stum- bled into this production fiasco because of overcon- fidence in its own abilities, company veterans told The Wall Street Journal. These issues also caused the goal of the project to shift. Steven Udvar-Hazy, a pioneer of aircraft leasing, told the Journal that the A380 went from its original goal of hub-to-hub trans- port during congested times to pure . . . political ambition to outdo Boeing Co.s 747 jumbo jet as the worlds largest airliner.142 EMIRATES IMPACTS DECISION MAKING AT AIRBUS Emirates Airlines is known as the chief sponsor of the A380 and ordered more than 160 units, far more than any other carrier.143 The Dubai-based airline also placed an order for 20 additional planes in January 2018, giving life to the floundering program. Emirates canceled the order a year later when it was not able to secure price and performance concessions from engine-maker Rolls-Royce.144 The cancellation was the last straw for Airbus. As a result of this decision we have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years, former Airbus CEO T om Enders said.145 Airbus was thus forced to terminate production of an aircraft that could not match its popu- lar appeal with revenues.

accomplished, decide which one is most important and focus on it for steps 2 and 3. B. Cases have protagonists (key players), and problems are generally viewed from a particu- lar protagonists perspective. Take the per- spective of a member of the task force investigating this problem. C. Use details in the case to identify the key prob- lem. Dont assume, infer, or create problems that are not included in the case. STEP 2: Identify causes of the problem by using material from this chapter, summarized in the Organizing Framework shown in Figure 11.7. Causes will appear in either the Inputs box or the Processes box. A. Start by looking at the Organizing Framework to identify which person factors, if any, are most likely causes to the defined problem. For each cause, ask yourself, Why is this a cause of the problem? Asking why multiple times is more likely to lead you to root causes of the problem. B. Follow the same process for the situation factors. C. Now consider the Processes box shown in Figure 11.7. Consider concepts listed at all three levels. For any concept that might be a cause, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at root causes. C. T o check the accuracy or appropriateness of the causes, map them onto the defined problem. STEP 3: Make your recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recom- mendation is desirable and feasible? A. Given the causes identified in Step 2, what are your best recommendations? Use the content in Chapter 11 or one of the earlier chapters to propose a solution. B. Y ou may find potential solutions in the OB in Action boxes and Applying OB boxes within this chapter. These features provide insights into what other individuals or companies are doing in relationship to the topic at hand. C. Create an action plan for implementing your recommendations.