Spend any time in the company of John Leahy and it is quickly apparent that the Airbus super-salesman does not like coming in as runner-up.
So he probably did not enjoy 2012, when Airbus unusually found itself playing second fiddle to its US rival. Boeing came back strongly last year in both the order and delivery stakes, after a decade in the shadow of its rival in one or both metrics. But Leahy sees this as a blip, and given his track record, that is no surprise.
“One year isn’t a trend,” he says. “You’ve got to look at the two years together. Because 2011 was a record [order] year for us, we expected Boeing would come back in 2012. So when you add the two together, Airbus is in the lead.”
Leahy has been Airbus’s chief sales strategist in Toulouse for almost two decades, during which he has seen six chief executives come and go, and racked up 10,600 orders worth over $1.1 trillion – easily making him the industry’s greatest salesman of all time.
Airbus’s “trillion dollar man” joined in January 1985 at the airframer’s North American headquarters in Washington DC, before moving to Toulouse in 1994 to become chief commercial officer. He has been chief operating officer for customers since 2005.
Leahy was handpicked by the company’s then chief executive, ebullient Frenchman Jean Pierson after the previous incumbent – British Aerospace executive Charles Masefield – moved on after just a few months into the job. He became the first American to hold such a senior position.
“There were a lot of politics in that. It had always been a job reserved for the Brits,” says Leahy. “But when Charles took the ministry of defence job after two or three months, then Pierson had a freehand to pick anyone he wanted.”
When Leahy touched down in Toulouse, Airbus’s global share of the mainline market was around 18%. But he quickly set about raising this, and by the beginning of the 2000s, the share was beyond 50% – where it has pretty much remained until 2012. Leahy has also overseen the commercial launch of the A380 and he was central to Airbus’s strategy to counter-attack Boeing’s 787 – the early success of which seemed to catch Toulouse off-guard.
His boundless energy is legendary among colleagues. Leahy has regularly made weekly commutes between Toulouse and the USA, Asia or even Australasia to nail contracts with key customers.
Leahy says he is still fully engaged and hands-on with the customers even after three decades flogging Toulouse’s wares.
“You’d never believe me if I told you who I’m having lunch with here tomorrow,” he says with a smirk. “I’ve got a big team and obviously I delegate. But I’ll probably be involved if there’s a board presentation or the final negotiation on a big deal.”
But Leahy is uncharacteristically modest about his reputation as “the 10,000 airplane salesman”. He says: “Actually, I’m the man who led the team that sold 10,000 airplanes.”
Leahy, who turns 63 in August, still spends a lot of time airborne, but admits that as he gets older, that aspect of the job gets more wearing. His secret to staying motivated is “looking in the mirror and realising that you’re incapable of doing anything else really”.
The rise of Airbus and Leahy has been inextricably entwined since the two first came together. Back in 1985, Airbus was just a two-product manufacturer, but had its secret weapon – the 150-seat fly-by-wire A320 – transitioning from drawing board to reality.
Boeing and McDonnell Douglas had the single-aisle market sewn up, and Leahy was tasked with getting some big US orders, but he faced some fundamental problems beyond the cynicism surrounding the A320’s advanced technology: “We had a better mousetrap, but we just had to convince people. Back then, some US airlines still hadn’t even heard of Airbus. In the mid-1980s, it wasn’t easy even getting in the door to talk to people.”
One of the big turning points for the A320 – and for Airbus – came in October 1986 when Northwest Airlines signed for 100 aircraft. “That was my deal,” says Leahy, his face lighting up as he recounts how he snatched a key customer from under his rival’s nose.
“Boeing never believed Northwest would ever go with Airbus, which always gave us a chance. But Northwest studied the airplane and checked all the stories our competitors used to tell about poor support. You know, that ‘Airbus works 35h weeks and you’ll never get a part on weekends, etc’.”
Leahy views that large Northwest commitment as a key breakthrough. “That was when you started realising that the A320 had some real value.”
The A320 and its siblings are now approaching the 9,200 sales mark and that success was central to Airbus’s arrival firstly as a genuine threat to the established players and more recently, as the world’s leading manufacturer.
But Leahy also has some painful memories of his dealings with US airlines at other times: “About the time I was transitioning from America to Toulouse, [Boeing Commercial Airplanes boss] Ron Woodard convinced American Airlines first and then some other US airlines to a 20-year exclusivity contract.
“I didn’t realise how desperate Boeing was to avoid competition at that point with Airbus. To sign your life away to say you’d never look at another airplane for 20 years really allowed Boeing to get away with murder, to do deals, to make profits that would normally not happen in a competitive environment. I really feel bad we weren’t as persuasive as we should have been and airline managements were sucked into Ron Woodard’s ‘trust us in the morning and we’re always going to give you good deals and don’t worry about it’.”
Those bad memories were banished in 2011 when Airbus finally resurrected a flat-lining commercial relationship with American, which signed a massive order for A320s – both current variants and the re-engined Neo. That deal did, of course, spark a reaction from Seattle, which launched its own re-engined narrowbody – the 737 Max – to ensure it did not lose all of American’s business.
“There are no more 20-year exclusivity deals, so I guess they’ve walked away from Boeing on that,” says Leahy.
After the success in Fort Worth two years ago, Leahy still has a couple of key items left on his “to-do” list in the North American market: secure a customer for the A380 and persuade Southwest Airlines to try adding a little European flavour to its all-Boeing fleet.
On the latter, Leahy says he does not expect Southwest to remain an all-Boeing customer forever and would clearly love to get the iconic low-cost airline onto Airbus’s books.
The A380 sales story is unfinished business for Leahy, who sees the addition of a US airline as only a matter of time. “I think it’s inevitable we’ll sell the A380 in North America,” he says, although he declines to discuss if there are any sales campaigns currently active.
Leahy is convinced that the unique passenger appeal of the A380 means that some big US airlines will eventually find the 525-seater irresistible.
“There’s a lot of Pacific traffic going into the USA and as we all know, if you put an A380 on a route, you’ll pick up the first and business class traffic, and even a lot of economy,” he says. “The ‘A380 effect’ will force carriers – and some who are still in the mode of the USA that think passengers can’t tell the difference – [to order it] or it will cost them premium traffic.”
US customer or not, the last year has been a slow one for A380 sales, with orders falling well short of Leahy’s publicly stated target. “I said 30 and we got to nine. But we at least delivered 30.”
Leahy acknowledges that Airbus should ideally be selling as many A380s as it is delivering, but he is not overly concerned at this stage, with the current backlog at around 160 aircraft. “One or even two years [of output ahead of orders] is not a big issue, but if this continues for a couple of years then we’d have a problem.”
Airbus has never managed to stabilise A380 production anywhere near the 40-plus a year that it had envisaged in the build-up, which means it is still working through a lengthy backlog and new customers still face quite long lead times. Leahy thinks this is blighting the sales effort.
“I need to get the backlog down a little bit to get the slots available in a relatively short period of time and we’re in the process of doing that. If you decide you want an A380, you want it soon.” He adds that there are currently “one or two” open A380 delivery positions in late 2015 and some in 2016/17.
Airbus designed the A380 with a stretch in mind that would boost capacity by around 100 passengers. Big A380 customer Emirates has been a vocal proponent of the stretch and Leahy thinks that developing a bigger A380 is a no-brainer.
“There’s no doubt if we do a stretch we’d double our order book. Almost everybody who’s already got an A380 would buy it. Just like everyone who had [Boeing] 747-200s got -400s. But the question is the economics and our resources. We’ve got to execute professionally and profitably. We’ve got the A400M and the A350 to get out the door, and the A320neo on our plate. Now is not the time to start another new airplane, but once these things are done we can look at the stretch.”
An immediate priority is the A350, which is due to begin flight testing this year and enter service in 2014. The twinjet’s birth was somewhat painful, going through several redesigns as Airbus fought back against the success of Boeing’s all-new, all-electric Dreamliner.
Airbus followed much of Boeing’s design lead, for example, adopting carbonfibre for the fuselage. But with the 787’s lengthy grounding caused by safety concerns surrounding its lithium-ion batteries, Leahy is relieved that A350 engineers did not listen to him when he urged them to incorporate similar electrical architecture.
“I’m guilty as the commercial guy for pounding the table saying ‘look [the 787’s] all-electric – it’s game-changing’,” admits Leahy. But trade-off studies by Airbus engineers could not justify adopting the technology.
They told me: “You’re not going to like the reliability – it’s going to be complex, heavy, and hard to maintain.”
While he has “no doubt” that Boeing will make the 787 safe, Leahy says “game-changing technology should not be on airplanes just to be different”.
Since McDonnell Douglas disappeared into Boeing more than a decade ago, Toulouse and Seattle have enjoyed a duopoly which has seen them effectively sharing the spoils. But Leahy is under no illusions that this is a permanent state of affairs as other manufacturers look to get a slice of the action.
“The Airbus/Boeing duopoly will be stable for at least 10 years. In 20 years, it clearly will not,” he says, pointing to China as the biggest threat to that stability. “If they’ve got the technology to put a man in space, then they can have a commercial aircraft industry – but it’s going to take time. And you can’t just have one offering, you’ve got to build multiple products.
“It will cost them $2-3 billion a year minimum in losses and investment for the next 10-20 years, but the Chinese will do it.”
And as Airbus’s competitor landscape evolves, so will that of the people it sells to. Leahy says that while consolidation among the top-tier carriers will continue, he expects the low-cost steamroller to continue across the globe. “There are many parts of the world that still need low-cost carriers. 100% of all the traffic that isn’t interlining, that’s just connecting within a region, will be going with low-cost carriers. And that’s good because it means we’ll have a constant flow of entrepreneurship and new markets will open up. Africa will see a lot of growth over the next 10 years, the Middle East still has a lot of room to grow, and look at India.”
And as Leahy talks about these growth areas, you can bet he is already calculating how he will make sure that the new business comes to Toulouse, rather than Seattle.