Abstract
EADS, the parent company of Airbus, is the second largest aerospace and defence corporation in the world after Boeing. Though a latecomer, EADS surpassed Boeing in sales revenue in 2008. However, its profitability has always lagged behind Boeing’s. This is partly because EADS has invested heavily in the development of new aircraft, and partly because of the mismatch between dollar-denominated revenue and euro-denominated costs that makes EADS vulnerable to foreign exchange risks. According to EADS’s estimates, a 10-cent drop in the dollar against the euro would wipe 1 billion euro off its operating profit. This case focuses how EADS uses natural hedges and financial hedges to minimize the impact of exchange rate volatility on its operating profit.
Original language | English |
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Number of pages | 13 |
Publication status | Published - 1 Jan 2011 |
Case number
ACC-14-115Case normative number
ACC-14-115-CECase type
LibraryUpdate date
2016-06-21Published by
China Europe International Business SchoolKeywords
- Aviation Industry
- European Aeronautic Defense and Space Company(EADS)
- Foreign Exchange
- Risk Management
Case studies discipline
- Accounting
- Finance
Case studies industry
- Manufacturing