Since 2005, sales have been robust for both Boeing and Airbus with their various planes. In early January 2008, their combined orders were for nearly 7,000 planes, valued at more than $750 billion before discounts. As the world moved toward a recession due to the mortgage crisis, they faced several tough questions: Have their customers ordered more planes than they could afford? How many will renege or even go out of business before the planes can be made, perhaps years in the future? (For example, the Dreamliner is booked up until 2014.) How much should production facilities be expanded to handle this increased volume?
The uncertainty was confounded by the credit crunch, record fuel prices, a weak dollar, and an uncertain economy. Adding to the concern was that many of the recent orders were placed by new carriers and leasing companies not even in business a few years before, or else came from countries like China and India where air travel was surging now but where demand might not hold up.
What would you do about production if you were the decision maker at Boeing and Airbus?