Reference no: EM133045909

Question - Textron Aviation unites Hawker®, Beechcraft® and Cessna® brands, creating aviation's most iconic family of aircraft and the industry's broadest product portfolio and largest company-owned service network (Textron Aviation, 2016). The most noticeable feature to appear on airliners and smaller airplanes alike, since 2000, are winglets. These are wing tip extensions which reduce lift-induced drag, and provide extra lift (Larson, 2001). The original winglet design was by NASA Langley aeronautical engineer Richard Whitcomb during the 1973 oil crisis: most essentially, they reduce fuel consumption by reducing drag. One available brand of Winglets is estimated to reduce interference drag to provide a 4% fuel-burn reduction over long ranges. Thus, Winglets are now available as a standard production line option on many varieties of airplanes. Many well-known makers now utilize Winglets. For instance, Bombardier's Challenger 601 (first flown 1987), for instance, was one of the first aircraft with production-standard Winglets (Warwick, 2016).

Assume that you are the project manager at Textron Aviation (TXT). Textron Aviation products include corporate and business, personal, and military aircraft. For purposes of this discussion, you have knowledge that in recent years most of Textron Aviation's military products have, where possible, been outfitted with Winglets. Further, the design of these wing components has evolved to make them more efficient and maximize the fuel savings they provide. Textron Aviation flight operations manager reports finding that the addition of Winglets to an existing aircraft offers fuel savings of approximately 3% of the gas bill, or 150,000 gallons of jet fuel per year (Aviation Partners, Inc., n.d.). At a cost of $1.06 per gallon (which for simplicity, we will assume to be stable), this is a significant source of cost-reduction which accrues to the end user over the useful life of an aircraft. While the useful life of the corporate craft is 30 years, Textron's research indicates that clients typically use a 10-year planning horizon, at most.

Will the firm's overall financial policy have an effect on the viability of the project? Why or why not?