Airbus Crisis Worsens
October 5, 2006
If the problems with the troubled A380 superjumbo weren't enough of a headache for European plane maker Airbus, new concerns about two other projects and an announcement that the company had fallen behind main rival Boeing by at least 10 years will surely give parent company European Aeronautic, Defense and Space Co. (EADS) a mighty migraine.
The delays to the delivery of the A380 may be putting plans to build the mid-sized A350, an aircraft Airbus insists is "fundamental" to its future, in severe danger, according to reports Thursday. Airbus also announced that there were fears that the A400M military airlifter, on order from seven European NATO countries, would be delayed and would fail to make the company money unless costs were slashed.
"The (A400M) timetable is exactly on the edge....We are exactly on track but without any reserves (of time)," Airbus Chief Executive Christian Streiff told the Financial Times.
Parent company EADS exerted pressure for the first time since the crisis erupted last week, saying it would not sanction the launch of the A350 until Airbus sorted out its finance and development structure and solved the problems that caused the A380 roll-out to be put off for at least a year.
"There is a decision to be made but first we have to do our homework," EADS spokesman Michael Hauger said.
Mid-range market becomes the main battleground
The A350 would be Airbus' biggest player in the mid-range market, which is turning out to be the main battleground between the European company and its US rival. Boeing plans to launch the 787 Dreamliner as its own flagship and Airbus has countered the threat by adapting the 350's design to meet the demands. This, however, has seen the development budget increase from 4 billion euros to 8 billion euros ($5bn-$10bn), adding to the financial strain the A380 is putting on the firm.
"The A350 is fundamental for us. It is up to the EADS board to decide," CEO Streiff told Le Monde in an interview. "We will need 10 years to return to the same level as Boeing in terms of development and efficiency. Their production benefits from a weak dollar," he told the French newspaper.
Meanwhile in Berlin, Thomas Enders, the German co-CEO at EADS met with German government officials as anxiety grew that Germany would be shut out of the project to build the giant A380 jets.
Although the double-decker aircraft has passed its flying tests, series production will be delayed by many months while engineers in Hamburg train to use the same design software as Airbus uses at its main assembly plant in Toulouse, France.
Enders met with German Economics Minister Michael Glos and the mayor of Hamburg, Ole von Beust, to explain the crisis. Airbus CEO Streiff, who had earlier been expected to speak for the company, did not attend.
Superjumbo customers up in arms
A380 customers responded with anger to Tuesday's postponement of delivery, the third so far. Airbus said the root cause of the delay in installing electrical wires in its biggest jet was that employees were still learning to use software that records the wiring design.
Airbus has called for changes to a plan whereby empty A380 planes are being built in Toulouse and flown to Hamburg to receive cabin interiors and wiring. German politicians charge that this will cost German jobs.
In Hamburg, an Airbus spokesman, Tore Prang, said meanwhile that plans to assemble the company's successful smaller A320 jet in China were on track and not affected by the crisis over the bigger plane. "We are in the project phase. There are intensive talks under way with our Chinese partners," he said.
The Chinese city of Tianjin was chosen in June as the assembly site. Airbus has had a cooperation program since 1985 with China embracing jet sales, purchase of parts and training in China.