Airbus Group has appointed Alan McArtor to lead the US-based division that consolidates Airbus Americas and EADS North America (NA).
Sean O’Keefe, who has led the defence-focused EADS NA unit since 2009, will retire, citing medical complications from a 2010 aircraft crash in Alaska. The crash killed Alaska senator Ted Stevens, and left O'Keefe with nagging injuries that require additional rehabilitation. "This is a good time to make that life decision [to retire]," O'Keefe says in an interview with Flightglobal.
The leadership change coincides with the corporate-wide rebranding of the Airbus Group, and also as the North American unit places a new emphasis on commercial growth with the scheduled opening of an A320 final assembly plant in Alabama in 2015.
As chairman and CEO of the Airbus Group Inc. after 1 March, McArtor will manage three US-based divisions – Airbus, Airbus Defence and Space and Airbus Helicopters.
“Where we are now is a really exciting chapter for the corporation,” O’Keefe says. “We’re all Airbus and we’re divided into three divisions to go out and compete in the marketplace. That’s a whole lot more succinct and straightforward and definable not only to ourselves but also to the markets we seek to be competitive in.”
As a former US Air Force combat fighter pilot, FedEx executive and US Federal Aviation Administration (FAA) leader, McArtor has an “aviation-rich” background that “will give us tremendous lift and thrust in the US”, says Airbus Group CEO Tom Enders.
At the same time, Airbus Group has taken a more pragmatic view of the US defence market, abandoning a seven-year old vision to raise $10 billion in yearly revenues from non-Airbus commercial markets in the USA by 2020.
“We’re not going to hit that by any means,” says O’Keefe, also a former White House budget chief, NASA Administrator and president of Louisiana State University. “The [defence] market is in a completely different condition than it was in 2007. Right now it is a tortured market space.”
The last seven years has also seen Airbus struggle to gain traction in the lucrative US military market. The company lost bids to supply tankers to the US Air Force and light fixed-wing transports to the US Army. "
Meanwhile, the company’s signature victory – selling EC-145-based UH-72 helicopters to the US Army – is nearly fulfilled, and a potential follow-on order for armed scout aircraft has stalled amidst budget cuts.
“It’s not a challenge that’s peculiar to Airbus,” O’Keefe says. “The challenge is really affecting the industry. I don’t know any company out there that says, you bet, we forecast a steady pattern as far as the eye can see. This has been a very tumultuous, very difficult market to participate it.”
The defence market is complicated by two, completing opposing trends, O’Keefe says. On the one hand, top officials in the US Department of Defense have cleared up years of miscommunications with the defence industry, allowing company executives to understand where to invest to meet the military’s needs, he says. But a rising climate of political gridlock and obstructionism has made it almost impossible for military planners to follow through with resources.
“It’s an amazing convergence of two really quite different elements,” O’Keefe says. “One that is really fantastic and the other that is debilitating.”
The commercial market looks far more promising for Airbus in the USA. In July 2012, the company announced plans to raise a new final assembly line for A320s in Mobile, Alabama. Airbus broke ground at the site on Brookley Field last April. The first aircraft from the factory is scheduled for delivery in 2016. Production is expected to ramp to four A320neos per month by 2018, but there has been talk of pushing output even higher.
While defence revenues may remain stagnant, the company’s commercial business will surely grow. The commercial unit has outlined plans to grow spending on US suppliers from $7 billion to $20 billion by 2020. Airbus also has been expanding its engineering presence in the USA, with new design centres in Mobile and Wichita, Kansas. McArtor and other company executives have also reportedly met with top politicians in Boeing’s ancestral home of Washington state.