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Uncertain times take Airbus back to the drawing board

, February 15, 2018, 0 Comments

airbus-uncertain-times-marketexpress-inThe European aircraft manufacturer has never faced as much upheaval as it does today. At Airbus’ headquarters in Toulouse, there is much uncertainty, but many also see opportunities. DW’s Andreas Spaeth reports.

It was a surprise not to see Airbus’ legendary sales boss John Leahy sitting on the podium at the company’s Singapore Air Show press briefing last week: In his place was his successor Eric Schulz.

After more than 30 years at Airbus, where Leahy played a key role in turning the European aircraft-making consortium from a newcomer into the global market leader, the 67-year-old New Yorker has sold his villa in Toulouse and is moving back home.

His French successor, who is 10 years younger, comes from the engine manufacturer Rolls Royce and has yet to show that he can fill the huge footsteps left by Leahy.

This week, another Airbus heavyweight will make his last major appearance. Fabrice Bregier (56), the head of the firm’s commercial aircraft division, will present the Airbus’ financial results for 2017 on Thursday in Toulouse, before leaving the aircraft manufacturer later in the month.

Unlike John Leahy, whose doctors have urged to adapt a healthier lifestyle after persistent heart problems, Bregier is leaving because he failed in his bid to succeed the German CEO Tom Enders (59), who in turn will wrap up more than a decade at the helm in April 2019.

Turbulent times for new management

The current turbulence being felt in Toulouse is probably the biggest upheaval in Airbus’ 48-year history.

Both Enders and Brégier find themselves in the spotlight of investigators following massive allegations of corruption against Airbus’ military and civilian operations, although so far no personal misconduct has been proven.

In November, a raid took place at Airbus’ Paris offices in connection with a probe into a satellite business with Kazakhstan in 2010. Enders by then had already prepared his staff to expect “hard and turbulent times.”. “We need fresh faces for the 2020s,” he told them.

Bregiers will be replaced by the former head of Airbus’ helicopter division, Guillaume Faury (49). That will ensure the delicate balance of German and French control at the top of Airbus will be maintained. But whether Ender’s successor will be German remains uncertain.

Enders had always endeavored to change the small-minded national mindset at Airbus, but achieved only moderate success. He moved the corporate headquarters from Munich to Toulouse and put its Paris office up for sale, ignoring the disquiet in political circles. But he has not been able to completely stop many of the national resentments that still fester within the group.

Insiders hope that Enders, in his remaining year in charge and with more autonomy than ever, will be able to force through further integration measures, and set the company on a firm footing for the future.

Airbus and Boeing’s eternal duel

The corruption charges, internal squabbles, and now the changes at the top of Airbus, have diverted attention internally. As a result, some staff are unsettled.

Some industry insiders fear that the aircraft maker has allowed its succession plans to detract from important issues, especially the troubles in its commercial aircraft division.

But the fact is, Airbus had a surprisingly successful year in 2017, largely due to major year-end sales. In December 2017 alone, Airbus took 776 firm orders following the Dubai Air Show, more than in 2016 as a whole.

Overall, Airbus ended 2017 with 1,109 orders, far ahead of Boeing with 912, maintaining an advance that Airbus has kept for years and years.

Airbus has, however, traditionally often lagged Boeing in terms of aircraft delivered, as it did again in 2017. The Europeans delivered a total of 718 jets from their factories in Toulouse; Hamburg; Mobile, Alabama; and Tianjin, China, compared to the 763 aircraft that left Boeing’s.

A380: saved for the time being

Before leaving, outgoing sales chief Leahy had not only posted the biggest order of all time at the Dubai Air Show — 430 aircraft at a total list price of nearly $50 billion (€45 billion) for the US investment firm Indigo and four affiliated airlines. But in January the firm revealed a significant deal for the ailing A380, the world’s largest passenger plane.

After Emirates Airline refused to sign a contract to buy more A380s, Leahy threatened the double-decker plane’s biggest customer publicly by announcing that the entire A380 program would have to be discontinued without an Emirates order.

Just a few days later, Emirates signed a letter of intent to buy 36 of the giant planes (20 directly with the option to buy another 16). The deal was finalized in Abu Dhabi earlier this week.

The deal has saved the A380 program for now, which means production is likely to continue for at least the next ten years.