It’s hard to think of a more horrendous day for EADS and Airbus than the one they have just gone through. And I wonder if the current management line-up can come back from it.
They’ve had to tell two of their most important customers that they’ve badly let them down; they’ve had to apologise to investors for losing their cash; a big widebody order is on its way to Boeing; and the CEOs of EADS and Airbus sound as though they’re barely talking. If you’re one of the few people left on the planet who needs telling, the gory details are here and here.
The basic problem is that Airbus can’t build the A380 on time. (Not, as EADS CEO Noel Forgeard was falling over himself today to stress, that there is anything wrong with the design. Fair enough.) The other problem is that the EADS management only realised this in the last week!
With a further six-month delay on the aircraft, which pushed EADS stock down more than 30% at one point (although it recovered a lot of that), even the hitherto unembarassable Forgeard felt obliged to apologise when he explained matters to European analysts. Or did he…
Here’s a few quotes from the conference call from the man who, remember, used to be CEO of Airbus itself and wanted to run both companies.
“You know 18 months ago I used to be in the plant at Airbus, now I am no longer in the plant I have to rely on the information I receive. And my colleagues and I rely on the information we receive. And from the situation I knew when I left Airbus I had no particular reason to believe that the delivery plan that had been built at that time could be challenged. So the future proved the contrary.”
Translation: Everything was fine when I left, I can’t know what nobody tells me.
“So the fact that to have management teams close to the business, close to the product, I believe is a good thing. Now it is true that there is a new situation because we had no reason to believe Airbus had a problem and obviously we were wrong.”
Translation: It’s always good to delegate. Unfortunately of course sometimes people let you down.
“So either we change the rules of transparency or together with [Airbus CEO] Mr Humbert we take some measures inside the Airbus team, or we change the overall scheme…to be more centralised. This is a decision we have not yet made.”
Translation: Airbus is going to be on a damn short leash from now on.
However, it’s not quite as simple as all that. Fact is that Gustav Humbert, who was Forgeard’s COO while he was at Airbus and was forced onto him as the new CEO by the German faction in EADS, has been at odds with his boss all year, publicly on occasion. The suspicion has to be that Forgeard has let a situation develop in which he did not know, or chose not to listen, to what was happening.
I’ve met Humbert – he’s as unlike Forgeard as can be imagined and is as quintessentially German as his boss is French. Humbert is unglamorous and process-driven but, to me anyway, oozes old-fashioned integrity. I simply can’t believe he hasn’t been warning EADS of the problems on the A380 line.
For now, the overwhelming, desperate need to get the A380 back on track will drive the EADS board to keep both men in place. But whether they fail or succeed, it’s hard to see how they can both be there once that job is done.